As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Value Investing
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Tuesday, 6 March 2018

Counting The Opportunity Cost Of Rotting Cash


Read? Investment Portfolio Draw-down Across Market Cycles


Cash is rotting due to inflation so the opportunity cost of holding is to beat inflation rate. Uncle8888 is assuming 2.5% yearly inflation rate.

His opportunity cost for rotting cash in his war chest is .... 


the number doesn't look too scary to beat it. To generate at least 68% ROC on war chest by 2030 i.e. another 12 years for the next Big Bear!





1 comment:

  1. From start 2010 to end 2017:

    Opportunity cost in inflation: 18.9%

    Opportunity cost with being invested in STI ETF (dividends re-invested): 42%

    For those who believe in global diversification;
    opportunity cost with being invested in ACWI ETF: 92% (in USD, slightly lesser in SGD) excluding dividends.

    Opportunity cost for being able to sleep well at night: Priceless! ;)

    PS: Portfolio value had some roller coaster rides if you were fully invested between 2010 & 2017. Especially STI ETF!

    ReplyDelete

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