Uncle8888 has been cashing out 100% of his investment income i.e. dividends and trading profits to Cash Reservoir (bank account) to fund household expenses since 2017. He is quite surprised that even with ZERO compounding rate investing strategy as retiree who is depending on investment income; his investment portfolio can hit another new record high in Mar 2021!
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Hi Uncle8888,
ReplyDeleteMore higher highs still to come 😁 Long term bond rates rising & old school economy re-opening.
As long US-China don't start a major war! 😂
While you don't compound your take-out payout ratio, the companies do retain their portion & hopefully use the $$$ wisely to compound future earnings growth for more profits to distribute!
Future wars will be fought not between countries, but between cultures, according to the "Clash of Civilisation" theory propounded by Harvard professor Samuel Huntington in the 1990s. This theory was critised by many, including our late LKY. But having lived in western societies and dealed with westerners in works for years, I think there is some truth in the theory. The human race has yet to develop to the stage that differences in culture can be ignored completely. So long as western societies can't accept that they are being overtaken by other cultures in economy/technology/many other aspects (after 2 centuries of being at the top of the world), conflicts (hopefully not full sacle war) will be unaviodable.
ReplyDeleteCW,
ReplyDeleteThat's the joy of CAPITAL GAINS, isn't it?
Contrast it with those who say just as long can get regular dividends, even suffering some capital losses they don't mind...
That's some next level Godzilla sized DENIAL or what?
When we suffer capital losses on a dividend stock, no way dividends can remain the same - it will be either reduced or scrapped. One is the object; the other is the shadow.
The only thing that sucks about CAPITAL GAINS is that unless its REALISED, its just ephemeral - like the reflection of the moon on the lake.
Perhaps that's why some prefer SAVINGS - no capital gains; no capital losses (at least nominally). Life a bit simpler.
Investing is hard on the ego and self esteem...
Stocks go up, then down. Bang head why never SELL?
Stock go down, then up. Bang chest why never BUY more?
LOL!
May be after 10 to 20 yrs then one may realize that successful investment outcome is mainly through our Mind and Money Management and Method is over-rated!
DeleteHi Uncle8888,
ReplyDeleteFrom Jan 1990 till Mar 2021, MSCI Singapore has a CAGR of 2.0% capital gains.
In terms of total returns, the CAGR is 4.9%.
I.e. 59% of the returns is from reinvested dividends.
3 observations about Singapore market:
1) it's more for trading, rather than lumpsum buy & hold. When to buy and sell, and trend following are all important.
2) if really want to buy & hold, then it's important to reinvest dividends to grow the portfolio meaningfully.
3) Singapore's stock market is quite volatile even on long term basis (like China), hence DCA works well for longer term building up of portfolio if don't want to monitor for trading in & out.
Let see how one Panda/Koala performs in SGX without re-investing a single cent of investment income from dividends and trading over the next few years (2017 to 2026) :-)
DeleteCW,
DeleteThat would be an interesting real people real experience endeavour!
Let's review in 5 years' time.
Your pure CAPITAL GAINS and consume all dividends and trading profits strategy versus my parody strategy of socking $50K per year under the mattress and be a millionaire in 20 years - no need capital gains and dividends!
Agree with you - Method is overrated!
LOL!
Heheh Uncle8888,
DeleteYou already proved yourself lah. :)
Using the same start time as your serious investing ... Jan 2000 ... the total returns (incl. reinvested dividends) of MSCI S'pore is only 3.7% CAGR till now.
Your total returns is 6+% CAGR. 😁
A strong foundation works in the long term. :)
ReplyDelete