As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons 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

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Saturday, 1 October 2011

The next 10 years (2012 - 2021) Investing Goals










Setting Goals ~ Aristotle

  • First, have a definite, clear practical ideal; a goal, an objective.
  • Second, have the necessary means to achieve your ends; wisdom, money, materials, and methods.
  • Third, adjust all your means to that end!

Past Investing Goals (2003-2011)

In this long investing journey, I have successfully completed the Growth path; and by conventional wisdom of investing during retirement phase I should be taking the Income path for the next 10 years investing goals.

Next 10 years (2012 - 2021) investing goals




The current Investing/Trading strategy that takes me along this investing journey from 2003 - 2011 is as below:

But, I realize that there is some weakness in current investing/trading in meeting yearly investing goal. The short-term trading performance will tend to have significant impact on the investing goal. It can either lead to under or over-performing the yearly investing goal and also depends too much on trading profit and losses.

Reserve Capital from CPF OA

Now that I have unlocked the reserve capital from CPF OA for investing. I will have to think of new investing/trading strategy for the next 10 years investing goals and conventional wisdom is to take the Income path.

Strategy A - Change to Income investing and do some fun trading

Dumping most of the reserve capital into fixed capital and also re-diverting most of the current re-cycling capital into fixed capital to stay invested in the stock market for dividends; but retains some re-cycling capital for fun trading. 

This is passive income investing approach. Frankly speaking, I feel that there is nothing to shout about this strategy as there is no shortage of good dividend yielding stocks to pick. Dividend investing will require intensive fixed capital to stay invested in the stock market to receive those dividends so account size really matters. It is relatively easier for investors who have large capital to execute it well to meet their investing goals.

I will just need to pump in enough fixed capital to roughly receive the anticipated amount of dividends to meet the investing goal. If the anticipated dividends fall short, I will then pump in the rest of the reserve capital into fixed capital to make it works.

Strategy B - Change to Income investing, fun trading and fighting the next Bear







It is quite similar to Strategy A, but this one will require lots of patience to see cash rotting in the bank while waiting for the next Bear to come. But, will he come?

In Strategy B, it may limit my capability of pumping in more reserve capital into fixed capital to get enough dividends so there will be risk of not meeting the yearly investing goal.

Strategy C - Continue with current strategy with added capital






Allocating the reserve capital into fixed and re-cycling capital will greatly improve the chance of meeting yearly investing goal and even high chance of over-performing it.

Strategy D - Continue with current strategy but aiming to build more wealth in the next Bear 
  
Pumping in part of reserve capital into fixed capital to raise the level of passive income will improve the chance of meeting the yearly investing goal while waiting for the next Bear to strike to grow wealth.

Conclusion

A, B, C or D?

I still have few more months to think over it. Anyone? A,B,C, D?


2 comments:

  1. Hi CW8888,
    For me i aim to invest this way:- (bonds(CPF), real-estate for rental income, passive income from equity portfolio/maybe a little growth, and if i have to, i will start drawing down my retirement account). All the investments aim to generate more than enough to cover our daily/yearly living expenses. If we keep our lifestyle simple, i think it's not a problem.

    i suppose a real-estate is a illiquid asset/capital. Not much use except for rental collection and hopefully inflation proof.

    i consider CPF now as bond aka reserved account which i can use to invest in a BEAR MARKET. At the same time as emergency money account if needed.(i am entitle to withdraw all my CPF if there is an opportunity for better ROI.)

    Can you tell me how i can adapt to your A, B, C, D. with my investment aim?
    Is there some resemblance or none at all?
    Can you tell me where are the loopholes/weaknesses?
    You reserve the rights not to response if you think i am asking too much. Ya?

    ReplyDelete
  2. Hi Temperament,

    Thank for the ideas. I will follow up on it in the next few posts. hee hee!

    ReplyDelete

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