Investment advice

[corydorus]

Very happy for 15% on average. So far around 9% (XIRR) annualized across 15 years and i still feel lucky.
Still not doing right i guess.

[gautam]

Indeed, it's a tough consideration when passing of wealth needs to be done. Personally, I have been thinking of the issue of "passing down" my portfolio to my children before I go, but before I do that I need to have a hold their hands and watch their moves before handing over the reins to them. So far I have averaged quite a decent CAGR for nearly the past decade, while I do not expect them to repeat my performance or even better it, the last thing I would want after I pass on(I won't know even if this happens), is that my children turn speculators and lose every cent which I painstakingly build up over the years.

Thus I would need to keep a watchful eye for as long as possible after my children turn adults. Alas, things can still go wrong even with the best of my intentions. That's where the this might come handy:

There's this book titled "ALL ABOUT DIVIDEND INVESTING" by don schreiber, which a classic story about how a grocery store keeper gave his 2 sons 10k in 1944. He told them them to just buy big names in DJI. The son who keep doing compoundation managed to increase his initial sum by 650 times to date in 2009 which the other son who used up the dividends but kept the principle intact managed to do 76 times during the same time frame.

As a parent, I do want to make sure that my children's lives are taken care of to a certain extent. So instead of burdening them with a heavy portfolio just when they turn 21, I believe one way of starting would be to hand them 100k each when they turn 21 and give them the same instructions. But they will still need to find work and feed themselves. Anyway 100k is not a lot of money, maybe can't even buy a COE. I am a staunch believer that history would prove itself and would repeat itself. Markets have to move up in the long long run, be there epidemics, wars, disasters etc.

Hope I did not bore anyone with the above.

Gautam

[gzbkel]

CityFarmer, I think your daughter is quite fortunate.
If she becomes interested, she will have someone to ask all the investment questions. Can learn much faster than just by reading books.
Even if she is not interest, she can just ape all your buy/sells

For me, I think I will adopt a passive investing style first until I get more experienced.
If I get more experienced and confident, I may devote a portion of my funds to active stocking picking and scale up if it works. If doesn't work I will just passive all the way.

[gzbkel]

I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

[Dividend Warrior]

Hi CityFarmer,

How will you tell which category your daughter falls into?

I will not do so. My daughter will tell me, at a right time, with my help. The right time is many years down the road.

Furthermore it isn't a one-time decision. Transition from one method to another is possible, with changes in preference. As long as one knows the choice made, and sticks with the rules, it should be no issue.

CityFarmer, you are a good Daddy.

[FatBoi]

Hi Temperament, CityFarmer

Thanks alot for the links and book recommendation. Will look more into it.

Temperament, I do agree that there are many ways to make money.
For me, I am OK with average or mediocre returns. Mainly, I hope not lose money like what your signature says.
Now trying to find a way that suits my personality/skill (or rather lack of skills).

I am not quality to advice, but let me share a thought.

I am mulling over a topic, what should I advise my daughter on investment, in the future (a very far future indeed)? At the moment, the options are the following, depending on her preference then

If the preference is passive and no time/effort will be allocated. Than may be a ETF seems an good option. Base on the current historical data, the return is approx 10% over long term, and should be sufficient to beat inflation and with a reasonable growth for her.

If the preference is, willing to learn, but a newbie then. Than may be a slightly active approach seems a good option. I will advise her to follow a approach similar as Joel Greenblatt's magic formula. Simply base on few fundamentals e.g. high earning yield and ROA/ROE, and with a reasonable diversification over 30-50 stocks, will do the trick, IMO. The return should be in the range of 20% over long term, if done right.

If I am lucky, or we are lucky, she is gifted for investment, and with great interest to learn, than a fully active approach should be a good option. A return of 30% or above is not unthinkable over long term, with a simple approach of "buy a dollar for 50 cents". The challenges are to make sure the dollar worth a dollar, and she is patience enough to wait for the 50 cents opportunities.

I hope I didn't bore anyone here.

My younger brother got interested in investing - sorry, I mean the money that can come from successful investing. So we talked about it.

I tried to "advise" my younger brother on investments, and coincidentally our discussion took us through the broad three categories as well.

At the end of the day, after his own trial and error, he settled for something that can be categorised as neither of the three or a hybrid.

I don't agree with his approach due to the un-addressed risks but it is one which he felt he had the discipline to stick to, not too into the details. So far, making money. But Mr Market..well we never know, maybe some tuition fees will come along the way. In any case, he promised to keep transaction size reasonably small and learn.

Probably a nod to the earlier point made about there are many ways to make money in the stock market.

Investing can be pretty personal, so eventually the individual has to explore what works (for himself / herself). Ready sound advice certainly helps but how well absorbed really depends on the personality of the receiver.

Maybe the biggest assumption is that the receiver wants the investing advice. He/She may not? (rub chin) And if his / her motivation is the fish rather than how to fish, it can be difficult.

[Temperament]

Ha! Ha!
"He/She may not? (rub chin) And if his / her motivation is the fish rather than how to fish, it can be difficult".

Well put.
Many beginners put their focus on the FISH first after all it seems friends and relatives make so much "easy" money in a Bull trending market.
On the other hand if he has witnessed a Bear market, where some of his friends may lose even the shirts on their backs (so to speak). Then he will most probably think how to fish first in case he met a shark. That's he still have the wit and guts to fish.

i think even before one fish, one must check whether he can afford the bait to fish besides other considerations. Aka one's temperament /suitability to invest in the markets.

[CityFarmer]

IMO, there are many way to make money in the stock market, but each way should comes as package, rather than pick-and-match as wishes. For example, a purely quantitative way similar as Walter Schloss's, need reasonable diversification to de-risk, while the same diversification on the "buy a dollar for 50 cents" way, may dilute the gain.

On the other hand, "知之者不如好之者" (Preference triumph capability on performance). Individual preference is also important.

It makes the advising, a difficult task

I am not quality to advice, but let meshare a thought.

I am mulling over a topic, what should I advise my daughter on investment, in the future (a very far future indeed)? At the moment, the options are the following, depending on her preference then

If the preference is passive and no time/effort will be allocated. Than may be a ETF seems an good option. Base on the current historical data, the return is approx 10% over long term, and should be sufficient to beat inflation and with a reasonable growth for her.

If the preference is, willing to learn, but a newbie then. Than may be a slightly active approach seems a good option. I will advise her to follow a approach similar as Joel Greenblatt's magic formula. Simply base on few fundamentals e.g. high earning yield and ROA/ROE, and with a reasonable diversification over 30-50 stocks, will do the trick, IMO. The return should be in the range of 20% over long term, if done right.

If I am lucky, or we are lucky, she is gifted for investment, and with great interest to learn, than a fully active approach should be a good option. A return of 30% or above is not unthinkable over long term, with a simple approach of "buy a dollar for 50 cents". The challenges are to make sure the dollar worth a dollar, and she is patience enough to wait for the 50 cents opportunities.

I hope I didn't bore anyone here.

My younger brother got interested in investing - sorry, I mean the money that can come from successful investing. So we talked about it.

I tried to "advise" my younger brother on investments, and coincidentally our discussion took us through the broad three categories as well.

At the end of the day, after his own trial and error, he settled for something that can be categorised as neither of the three or a hybrid.

I don't agree with his approach due to the un-addressed risks but it is one which he felt he had the discipline to stick to, not too into the details. So far, making money. But Mr Market..well we never know, maybe some tuition fees will come along the way. In any case, he promised to keep transaction size reasonably small and learn.

Probably a nod to the earlier point made about there are many ways to make money in the stock market.

Investing can be pretty personal, so eventually the individual has to explore what works (for himself / herself). Ready sound advice certainly helps but how well absorbed really depends on the personality of the receiver.

Maybe the biggest assumption is that the receiver wants the investing advice. He/She may not? (rub chin) And if his / her motivation is the fish rather than how to fish, it can be difficult.

[Dividend Warrior]

I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

Hi,

This is my 2 cents worth opinion.

I am also heavily vested in REITs (around 70% of portfolio). I intend to stay fully-vested because:

-I am single. No children to feed. No housing loan. No car loan. So, I can take the risks.
-I am a net buyer of stocks at the current stage of my life. If prices drop, I will probably average down more. This requires discipline in saving and building up a substantial war chest of cash. I intend to use my salary, dividends and bonuses for this purpose.
-by staying vested, I can still benefit from the dividends while waiting for the correction to happen. If the correction takes a long time to come, at least I have the dividends.

Hope my opinion is useful to u. Do consider carefully before making a decision. I have the lowest reputation points in this forum. so u should take my advice with a huge dose of salt. Good luck!

[funman168]

Dividend warrior, u r indeed a very smart young man.
Most ppl of ur age grp only knows how to splurge future income.

I think the phrasing in my original post is not very good. I should not use the word "advice", because naturally it makes everyone cautious. I would like to rephrase my question.

If you are in my position right now (heavily vested in REITs, not very experienced in investing), what would you do?
- Would you stay vested in REITs, collect dividend, and try to ride through possible capital drop due to rising interest rates?
- Or would you divest and go into some other investment that is less sensitive to interest rates?

Just hoping to know more about other people's views.
Of course views are just views. In the end, I still need to decide for myself and take full responsibility for my own investments

Hi,

This is my 2 cents worth opinion.

I am also heavily vested in REITs (around 70% of portfolio). I intend to stay fully-vested because:

-I am single. No children to feed. No housing loan. No car loan. So, I can take the risks.
-I am a net buyer of stocks at the current stage of my life. If prices drop, I will probably average down more. This requires discipline in saving and building up a substantial war chest of cash. I intend to use my salary, dividends and bonuses for this purpose.
-by staying vested, I can still benefit from the dividends while waiting for the correction to happen. If the correction takes a long time to come, at least I have the dividends.

Hope my opinion is useful to u. Do consider carefully before making a decision. I have the lowest reputation points in this forum. so u should take my advice with a huge dose of salt. Good luck!