I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


Click to email CW8888 or Email ID : jacobng1@gmail.com



Welcome to Ministry of Wealth!

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

It is here where I share with you how I did it! FREE Education in stock market wisdom.

Think Investing as Tug of War - Read more? Click and scroll down



Important Notice and Attention: If you are looking for such ideas; here is the wrong blog to visit.

Value Investing
Dividend/Income Investing
Technical Analysis and Charting
Stock Tips

Saturday 10 September 2011

Investing Made Simple by Uncle8888 (25)

Read? Investing Made Simple by Uncle8888 (24)

Read? Don't Be a Yield Pig

Who is the Yield Pig? Someone who is chasing for higher yield without seriously considering the risk of capital loss in risk/reward analysis.

Risk, Inflation, and Time Horizon

So what is the risk in stock investing? Capital loss?

So is capital loss the real risk in stock investing? Yes or no. It is actually very much depending on your investing time horizon.

If you are a very short-term investor who will need money next year to fund big ticket expenses. Your risk is capital loss as the stock market may force you into realizing your losses by liquidating your losing positions to raise money to fund your expenses.

But, if you are a long-term investor with 20-year time horizon holding a portfolio of solid blue chips, what is this current paper losses means to you?

Nothing!

Probably, this paper losses may cause you some emotional stress and heartache. That is all! You are not going to jump out of the window. Right?

Risk to a short-term investor and long-term investor is totally different. As a short-term investor, your risk is capital loss so you may like to re-read that article on "Don't be a Yield Pig!" and fully understand it.

But, if you are a very long-term investor, your risk is actually inflation and yield on your portfolio. If you can't grow your portfolio faster enough to over ride the year-on-year inflationary effect. You may be a dead pig at the end of your 20-year time horizon. So don't be afraid to be a Yield Pig if you are a long-term investor.


No comments:

Post a Comment

Related Posts with Thumbnails