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Tuesday, 9 May 2017

What's The Edge For Successful Retail "Investors"?



Their day job.



To be precise, it's their annual cash injections to their portfolio.



Especially when the annual cash injections in dollars exceed the annual portfolio returns in dollars!






40 comments:

  1. The same edge the monkey guru has ... yeah day job (trading course)

    ReplyDelete
    Replies
    1. Yaruzi,

      That's the secret sauce, isn't it?

      If I can inject $100K into my portfolio every year, I can let it rot in cash for 10 years, and after 10 years, it will be a cool $1 million ;)

      I can market my investment course with:

      How to turn $100K into $1 million in 10 years!

      Delete
  2. Er....100k into a stock portfolio every year or into FD?

    ReplyDelete
    Replies
    1. temperament,

      It does not matter. Its better to call it portfolio since many conveniently "forget" to include cash into their portfolio returns calculation ;)

      A portfolio can be 100% in cash, no? LOL!

      Zero yield. Not a single cent of yield and yet still beat the majority of retail "investors" out there!

      How?


      If $100K annually too high (not high for doctors, lawyers, top management), we can lower it to $50K? Then it takes 20 years to hit a million.

      And if we lower it further to $25K per year, then it will take 40 years... OK, it sucks. Most people say they are LONG term "investors", but they don't want to wait 40 years, do they?


      That's why a Dividend Investing strategy would work better if we have a day job that does the bigger compounding part ;)

      Or build up a meaningful lump sum FIRST before embarking on a Dividend Investing strategy.


      Delete
    2. You are right.

      Someone had say, "i live on the interest of the interest of the interest....

      WB, LKS... can definitely say it.

      But for us if we can preserve our pricipal(Net Worth)at retirement, as long as possible year in and year out, i think we will be very happy already.

      LOL!

      Delete
    3. "It does not matter. Its better to call it portfolio since many conveniently "forget" to include cash into their portfolio returns calculation ;)"

      i think it's matters a lot.

      Money injected into the stock market means anything can happen.

      Delete
    4. Of course if you just inject as cash only, then why?

      Why not FD?

      Delete
    5. temperament,

      1. Size matters ;)

      4% of $10 million is very comfortable!

      That's why CPF have caps here caps there. They
      don't want the rich to just plant their
      monies in CPF doing nothing.

      Big daddy wants the funds to be invested with
      private fund management so we can develop
      Singapore as the premier wealth management
      centre in the region.


      2. You misunderstood me.

      By calling it portfolio, I meant to include ALL
      cash or cash-like equivalents like:

      Bonds, fixed deposits, money market funds,
      CPFIS, peer-to-peer loans, gold, silver,
      bitcoins and what not!

      You are reading too literary...

      I am merely emphasising that even with zero
      interest, a high earner/saver can easily
      outperform someone with lesser means when it
      comes to portfolio "growth" ;)


      3. Many "bei-kambings" with poor reading skills
      often make this mistake.

      They see their shepherd is "100% vested" in
      stocks so they follow blindly too.

      What they didn't know is that the shepherd's
      share of stocks in his Total Portfolio could
      be only 20-30%.

      So in a bear market, the shepherd can do asset
      relocation and switch cash and cash-like
      asset classes to equities at bargain basement
      prices.

      The followers can't. All their opportunity funds
      stuck at 50% losses :(


      Delete
  3. Many confuse saving as investing.

    ReplyDelete
    Replies
    1. CW,

      Yes.

      These are two separate processes, although they have a symbiotic relationship.

      To invest, we need capital. Unless we inherit or marry into it, capital usually have to come from savings.

      Savings come from earnings.


      Investing is about earning. Its requires more brain power than savings.

      Hence we see people being scammed every year from their hard earned savings - money that have NEVER been earned from investing...


      Investing is a lot harder if we can't save our returns to re-invest; we consume the golden eggs instead of letting them hatch into little goslings.

      Some even kill the golden goose to raid the golden eggs in the belly!


      To those who are risk adverse and clueless about investing, a Savings strategy like putting 25K into CPF annually may ensure better sleeping nights.

      With 4% interest rates as tailwind support, you won't need 40 years to hit a million ;)

      Not sexy, but a lot better than those colleagues you've shared that lost big time their retirement savings through "investing" :(

      You are the few who shares REAL PEOPLE; REAL STORIES.




      Delete
  4. Hi SMOL,

    True story. My portfolio grows because of my capital injection from my savings, which is more than the portfolio returns, at least at this stage in my life. Hence, my focus is on my job and not in investment. I think my capital injection from savings as a percentage to my total portfolio is less than the portfolio returns (either dividends or capital gains or both), I should just focus on what brings the higher 'returns' to my portfolio.

    If I can inject 30k into my portfolio of 300k, it's still 10% contribution. That's a irr that's hard to beat. If I can inject 30k into my portfolio of 400k, that's 7.5%. Manageable, but hard. If my portfolio if 500k, and I'm still injecting 30k, then it'll be about 6%. I guess that's the time I should focus on my investment. As I am typing out this response, my mind whirred and I realised I'm like 8 to 9 years away before I should focus on investing LOL

    ReplyDelete
    Replies
    1. LP,

      What I like to share from this watering-hole is the culmination of my total experiences.

      I am not really into who and who wrote this or who said that. I'm the cat who behaves like a grasshopper; not a parrot.

      "My Story" is similar to your experiences ;)

      My first pot of silver was from my day job. I was focusing on earning more as 20% savings rate on $1000 is a lot more than 90% savings rate on $100 ;)

      Made some serious investing mistakes in the beginning; thankfully that was BEFORE I had my pot of silver.

      Pure dumb luck 2009 came when I had my first pot of silver :)

      Now that's the power of cash for you! And not being 100% vested during 2007/8 ;)


      My lifestyle is paid for by the investment side of the equation, but you don't see me calling myself a "Dividend Investor".

      Honestly, how hard is that? And the fact I don't like to be associated with "orphans and widows"... (I know, I'm not politically correct enough)

      Now that I DON'T have to trade for a living, I can focus full time on my trading! Its quite counter-intuitive, isn't it?

      LOL!


      Eh, 8-9 years later, its around the same ballpark figure for Andy and me. I think that's the "median" age for serious investing with REAL money?


      Delete
    2. Hi SMOL,

      Wah, we seem to have discovered the hidden truths behind serious investing LOL It's the age!

      Delete
    3. LP,

      When we young, we say its YOUTH!

      When middle-aged, we say its MATURITY!

      When we young like CW, we say its the SALT!

      LOL!


      Delete
    4. So start at a later age investing in the stock market has it's advantages too, right?

      Delete
    5. temperament,

      No.

      Its better to start YOUNG!

      This way, even if we blow-up, the damage is not so big. How much money can we lose when we are in our 20s?

      By accumulating lessons learnt along the way, when we reach our 40s, that's usually when we hit our peak earning power too!

      Knowledge tempered with experience plus serious money to boot! That's what I meant. (LP saves 50K per year so 8-9 years later you do the math)


      Its a lot more "dangerous" when people in their 40s to late 50s start to invest - especially to makeup for lost time or investing to escape.

      They have money but zero investing experience.


      From scammers to private bankers to brokers to insurance agents to seminar gurus - bei kambings with money but are virgin investors - they make the juiciest customers!



      Delete
    6. In a way, you are right too.

      Though i started at the age of 40, i have been learning and observing on the sideline all this while.

      You may said there is some difference but i don't start from zero either.

      i think many of the bloggers here started late too.

      At least the capital part is right.

      At the age of 25 and at the age of 40 there is quite a different amount of capital to invest.

      Futher more my accumulated capital was DINK & ND until the age 40 year-old.

      So it was dangerous but there were defintely some advantages too.

      Delete
    7. temperament,

      As with most things, its never about absolutes ;)

      I didn't start young too. I started at age 32 :)


      We play the cards we were dealt the best we can.


      By starting at age 32, I have an "extra" 8 years compared to if I started at 40.

      We need TIME to compound money; we also need TIME to compound our knowledge and experience so they become one as competence ;)







      Delete
    8. O. K.

      We are all talking male chicken but there are definitely some truth & wisdom.

      You strated 32 now you are 50 = 18 years in the market and you are ambidextrous. (definite one up already).

      You still got 20 years to reach my age.

      All the best for your future 20 years in the stock market.

      Me?

      i still in the market leh.

      And unlike you, i am only right handed.

      Delete
    9. temperament,

      Yes, its all about having fun at this watering-hole!


      You started at 40, now you at 70 - 30 years in the market!!!

      Now that's more than me ;)


      When you shared how much share equities in your Total Portfolio, remember I gave you a salute?

      Your 30 years of long only investing experience shows :)


      Compare this to someone who retired at 65 and started 5 years ago in 2012. This investor would definitely have a different % equity share than yours. And may even "laugh" at you...

      He has only known higher highs and higher lows. And buy the freaking dip!

      He has yet to experience what is Risk Management ;)


      Delete
  5. Oh? Me me me. *kee chiu*

    ReplyDelete
    Replies
    1. Kevin,

      I see you!

      You are definitely one of the more refreshing and transparent ones out there!

      Eh? Am I describing you or Sprite?

      LOL!


      Delete
  6. There is much investment wisdom in this blog.

    I read your story. May I ask how old are you now ?

    ReplyDelete
    Replies
    1. Ah! A new visitor to this watering-hole!

      Welcome TheValueFund!


      I'll be 50 years young end of this year. And that would mark the 6th year of my return to Singapore.

      I see you have moved overseas too ;)

      You still overseas or back?

      If back, you can jio CW and me for kopi!

      I'm shameless.

      LOL!




      Delete
  7. A double-edged whatever.

    Those paychecks from the day job are at the same time also the biggest addiction in our times. Well, maybe hand phone addiction has or will top the ranks soon.

    I reckon the edge to be "time". At least we do not have to report quarterly on our investment returns to our clients like the poor chaps aka institutional investors (funny name - always reminds me of mental institution - don't know why - but I digress).

    Yes, time is a great asset, if utilized properly.

    Hail, time for compounding everything that is helpful on the road to success (incl. those regular cash injections).

    ReplyDelete
    Replies
    1. Andy,

      Ah yes! A fat paycheck can be an addiction or golden handcuff to lull the person in forgetting why he gets up in the morning in the first place...


      Funny you should say that about institutional investors. Notice some self-professed retail "investors" update their portfolios monthly???

      I'm a trader and I only count my money once a year when the dealings done. I never count my money when I'm sitting at the table ;)


      Time heals...

      Time make us forget...

      In time, we will all go... And we can't bring it with us :(

      Delete
    2. What do you mean "we will all go"?
      I plan to live forever.
      So far so good.

      Yes, we can't bring it with us. But who accumulates monetary wealth to enjoy for themselves only? We all love to share it with our loved ones. Don't we?

      Delete
    3. Andy,

      Now you are poking fun at those who like to live in the future ;)

      Remember to wear your safety helmet when you go out!


      Ah! There lies the "excuse". So we move the goal posts yet again... LOL!

      Again you are poking!

      May I interest you in body armour, Sir?


      I think this is a good time to remind newer readers to not listen to what we SAY; listen to what we DO.

      Or what we did at 44 in this case ;)



      Delete
    4. LOL, could you kindly recommend a body armour brand?
      (and no, Under Armour is not a suitable brand for that purpose - who likes to wear underwear on the outside anyway?)
      I guess you have sourced for one before. Are you wearing it regularly? Did you find it useful yet?

      Delete
    5. I'm wearing one, look at my profile pic! lol

      Delete
    6. Andy,

      Who likes to wear underwear on the outside? Superman!

      Actually ladies too.

      Camisoles, tube tops, vests - all these used to be wore on the inside. Now they are wore on the outside ;)

      Not that I am complaining! I like the visuals :)


      Lucky you only have boys.

      I think I'll meltdown if I had a teenage daughter who wears micro-shorts with camisoles outdoors...

      LOL!


      Oh! About body armour:

      http://www.ebay.com/bhp/body-armor-vest


      Its crazy you can buy body armour online in the States!?

      Me? I don't wear body armour.

      I use humour. Nobody ever hits the funny guy :)

      You're German; don't even try.

      Don't hit the face!



      Delete
    7. LP,

      I've always thought that is one weird cat...

      He is not even smiling!?


      Delete
    8. Who dares to smile when he knows that he is about to get hit over the head?

      Quite true, nobody hits the funny guy. As long as he is still funny. That reminds me to never get into fights with ugly people, they have nothing to lose.
      And don't fight with women either. They may not hit harder, but they hit lower.

      Hmm, how did we get to this subject? Oh yes, the visual edge.

      Let's move on.

      Delete
    9. Andy,

      Yes, let's end on the visuals ;)


      Delete
  8. Exactly.... Even after 7 years of investing, my annual dividends still cannot match my one month's salary. I can't complain about that, since I put in much more effort in my day job than in dabbling with stocks. haha.

    ReplyDelete
    Replies
    1. Rainbow girl,

      Don't underestimate the progress you are making now.

      You are accumulating knowledge and experience more than investing returns.

      The time will come when you'll have access to "serious" money.

      Better to have competence in knowing what to do then yourself than to start asking bei kambing questions like:

      What stocks to buy?

      This price can enter?


      ;)

      Delete
    2. Hi SMOL,

      That's what my favourite quote says too - "If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability."

      Delete
  9. Hi all,

    Dividend investing is the way towards achieving financial freedom. In my personal opinion, it takes patience and sheer determination to keep on investing the fund (from active employment) into the portfolio on monthly basis. Apart from the fund (from the active employment), there are also dividend from the invested portfolio. Such dividend will be re-invested into the portfolio which will in turn churn out more dividends for one.

    In time to come, one will achieve financial independent. He/she chooses to work not because he has to. It is because he/she wants to.

    Ben

    ReplyDelete
    Replies
    1. Ben,

      You win liao!

      You're the first person here who comments with "Hi all".

      LOL!


      Delete

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