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!
From start 2010 to end 2017:
ReplyDeleteOpportunity 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!