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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Sunday, 8 July 2018

De-compounding Of Investment Portfolio


How many marginal retirees (NOT those spending 50% of their investment income)  seriously re-think their investing strategy to factor in de-compounding of their investment portfolio towards their last phase of their investing journey?


Time for Uncle8888 to re-think!

What is the acceptable yearly Return on Capital during de-compounding phase and how much improvement is required to sustain this ROC?

There is no free lunch in the stock market!

Average yearly ROC is 10.4%

2018 ROC as on 7 Jul 2018 is 6.4%

To accept or to improve?







6 comments:

  1. CW,

    Ah!

    Excellent question from left-brained, precision, black and white facing side of the coin!

    10.4% versus 6.4%; accept or to improve?


    Just to share the perspective from right-brained, grey grey, fuzzy fuzzy facing side of the coin.

    The question I had asked in the past when I began questioning my performance, "Why did I started investing/trading in the first place?"

    Yup, its about 初心 ;)




    ReplyDelete
    Replies
    1. Why did I started investing in Jan 2018?

      To reach FI sooner than just working for earned income.

      So how?

      Quit the Game?

      :-)

      Delete
    2. CW,

      There you go!

      You reached FI status at age 60. Hence you were able to walk away.

      If not, you would be still working now. And still struggling with reaching FI "sooner" ;)


      Does that mean 10.4% you'll maintain your status as FI?

      But at 6.4% you'll slip back to non-FI status if this continues?


      Of course you will not ACCEPT slipping back to non-FI status. Hence your cash hoard ;)

      You've learnt your lesson in 2007; how it cost you trying to hit an arbitrary goal...


      Then it just leaves "improvement".

      WHY you want to "improve" regular readers know lah!

      It has nothing to do with WHY you started investing in the first place as you have shared ;)



      To your credit, you knew when to walk away (another way of saying quit). Many may not have your courage; hence they constantly move the goal posts and pretend its "continous improvement" or "kaisen".

      Don't be coy. You have quitted from the Game once before ;)

      Delete
  2. Uncle8888,

    Dangerous to use average if you have outliers like +41% and -48% ;)

    Put in another way, to get 10.4% you may end up taking undue risks & volatility.

    Needs, Ability, Willingness

    If your current 3 Taps have already achieved your needs, is there a Need to push the envelope further?

    Unless there is intention to grow & pass down Tap 3 as legacy? Hoho!!

    Hmmm, carve out a portion to create Tap 4 for legacy? LOL!

    ReplyDelete
    Replies
    1. True. Some time it is wiser for us to deploy our cash to the level we need than we want out of the market

      Delete
  3. Just like the saying, "a man can be drowned in a river of average 4 to 5 ft depth".

    i never believe in average as a number.

    i look at investment at my age as, if our assets can generate enough cash for living expenses per/annum, why take more risks.

    Never mind if U have some cash rotting in the banks.

    Because i look at this cash as an option money with no "time limit" to be deployed in the stock market- whenever there is an opportunity.

    Not necessary in a Bear market but rare case like buying a "It's Probably Overpriced, stupid"(IPOs).

    And other opportunity if U can spot one.

    i don't want to go up the mountain again.

    ReplyDelete

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