Me & My Money Series (Sunday Times)

[Musicwhiz]

Your 1st $200k probably took you 10yrs as it was coming mainly from savings. The 1st 10yrs is also the toughest as there're many expenses to be paid, especially for those who have gotten married, set-up their own house and perhaps with kids coming along.

I think your next $200k will take a lot shorter (likely within next 5yrs) to come along. The 1st $200k is already put to good use and working hard for you. There'll also be lower "CAPEX" demands (unless you choose to buy a new house) or you suddenly acquire expensive tastes.

After that, perhaps another 5yrs to double your Net Worth (your $$ need to continue to work hard for you). At that point in time, 10yrs from now, you'd be in a position to choose to retire from the rat race if you so desire. With some "luck" (more homework done usually equates to better luck), one single multi-bagger where you'd put in a substantial amount to invest could also shorten the time towards financial freedom.

I'm speaking from my own experience and I don't even do half as much analysis as you. I could have been lucky, but I'd also gone through a few major corrections and had not lost eveything... yet. So, I don't think you really need to wait till your 60s!

Hi KopiKat,

Yes the first $200,000 did indeed take about 7-8 years and you are very right to say that it was tough because of:-

1) My wedding expenses
2) Fully self-funded my own MBA
3) Purchase of a house and renovation-related expenses (also funded with 100% equity, no debt)
4) Honeymoon (blew about $10,000 to fly to Europe)
5) My child (birth + upkeep and other recurring expenses)

I am just glad I don't have to add "car" to the list, I still survive by using my own "BMW C Series" (Bus, MRT, Walk and Cycle).

But I think looking at another $200,000 in the next 5 years is a little optimistic, as the economy is down, my job is not great (but at least it's stable) and with no major opportunities for windfall gains. I suspect I may have to slog, save and invest another 10 years to reach the $500,000 mark, after which admittedly it may be easier as the compounding kicks in.

THe multi-bagger thing is definitely going to be a boost but I am not hoping for it - just getting consistent dividends and protecting my capital is sufficient enough for me, as I see many others being unable to achieve that. I am just glad that I managed to build up a "base" over the years in my investing which I can use as a cushion for bad times.

Sadly, more analysis may not bring better returns. Though you say you do less analysis than me, perhaps you may have more luck or other factors such as career may have given you a boost?

For those who had just started off with their careers, it pays more to put in more energy into your daily job. Given some luck and having a good boss, the returns will be much higher than investing in the early phase till mid-career of the work life.

After a decade of investment, my humble opinion of annual average investment return is..
5% return - a reasonably good investor.
10% return - a good investor.
15% return - outstanding investor.
20% return - outstanding investor and with some luck.

Anything that is above 20%, the god is smiling at you.

Hi yeokiwi,

Good point! So far I have not been investing long enough to compute my returns over a 10-year period, but so far for this year my XIRR is about -5%, though overall portfolio is still in the black as of today.

I think I will try and target 10% lah. If cannot, then at least above inflation of 5.5% (as of Oct 2011).

[Jared Seah]

Of course it's better late than never...

But all things being equal (as with everything in life), it's better to start young:

http://singaporemanofleisure.blogspot.co...young.html

[weijian]

For those who had just started off with their careers, it pays more to put in more energy into your daily job. Given some luck and having a good boss, the returns will be much higher than investing in the early phase till mid-career of the work life.

I agree with this. This is especially true if one has more time/drive when they are younger. The rate of increase of their pay in their earlier years will be higher, compared to the later years. (with the same amount of effort). When one starts to hit the 'wage ceiling', they can start to shift focus on something else....

[wsreader]

".....So, you don't really need to be a good investor to get >5% return for the last 10 years! Just use DCA and invest in STI ETF will do! ....."

Note that this timeframe overlapped the period when Temperament started to invest from age 40 to 63. My point is to sound a word of caution using the gain achieved from the bull period of last 20 years, to extrapolate for the period going forward.

[Temperament]

To be exact i started to invest from 1987/8 till now. Of course, including me it is always easy to explain with hindsight. If i am to invest all over again from 40 to 63 i will definitely invest differently presuming human beings mass investment psychology doesn't change much. In fact now, i am investing "differently" after all the mistakes i have made throughout the years. At least i am more patient and less excitable about the market's happenings. Don't you think it is normal to be so?
I also really understand why WB said:
1) Rule NO. 1 do not lose money.
2) Rule NO. 2 refer to Rule NO. 1.

[cookieguy]

For those who had just started off with their careers, it pays more to put in more energy into your daily job. Given some luck and having a good boss, the returns will be much higher than investing in the early phase till mid-career of the work life.

I agree with this. This is especially true if one has more time/drive when they are younger. The rate of increase of their pay in their earlier years will be higher, compared to the later years. (with the same amount of effort). When one starts to hit the 'wage ceiling', they can start to shift focus on something else....

Yes, career transition is important as an individual needs evolve over time through experiences, beliefs, people and values.

Thus, when the "wage ceiling" is hit based on several factors combined together, it will be back to the drawing board - what exactly is your career objective for the next phase?

It will always be helpful to anticipate such challenges early and start planning when you envision your focus to shift.

---

From what I heard, it is the low 5 figures.
There are many such "quiet" professions by free-lancers which can earn so much... most bordering on the education side...

i.e.
Fitness Education
School Education
Piano School

etc...

It just depends on whether you know how to go about doing it, and your marketing strategy...

Interesting. But I guess the revenue is inconsistent, right? After all, the term "freelance" would imply ad-hoc jobs and so revenue would fluctuate depending on the quantity and type of assignments you get.

I understand freelance fitness trainers are earning good 4 figures per assignment and they are doing it full time....

[KopiKat]

".....So, you don't really need to be a good investor to get >5% return for the last 10 years! Just use DCA and invest in STI ETF will do! ....."

Note that this timeframe overlapped the period when Temperament started to invest from age 40 to 63. My point is to sound a word of caution using the gain achieved from the bull period of last 20 years, to extrapolate for the period going forward.

Yup! A good warning to all. My point was made in jest to an investor of 10 years who may be happy with a 5% annualised return. In my case, my benchmark is against the STI during bull periods and against the risk free rate (long term SGS bonds) during bear periods. During the last 20 years, I'd estimate we must have gone through at least 2-3 such cycles.

Sadly, more analysis may not bring better returns. Though you say you do less analysis than me, perhaps you may have more luck or other factors such as career may have given you a boost?

I did mention in an earlier post that my peers were drawing 50-100% more than me after 5-10 yrs on the job. So, no, I was never lucky in my career, as far as pay was concerned. In fact, I left my 10yrs+ job for a better paying one and ended up getting retrenched a year after 911.

Luck in stock selections? Mostly likely, yes. I often ask myself the same question after I stumbled on this community (from Wallstraits days) in 05 and realised how little I know, compared to the many forummers who're able to do such good and detailed analysis. Prior to that (I bought my 1st stock in 89/90), I don't even know how to properly read financial statements (despite having attended several courses in Financial Accounting during my school days + night courses). I do have a lot of losses but overall, it's usually an overall net profit for my portfolio.

Oh ya, I must really say a big thank you to all for the inspiration on what is achievable from FA and of course the internet for the easy and ready access to good information (20 years back, I'd have considered myself lucky if I could lay my hands on an outdated photocopy of an analysts' report).

I hope my luck continues through this bear cycle!

[yeokiwi]

Yup! A good warning to all. My point was made in jest to an investor of 10 years who may be happy with a 5% annualised return. In my case, my benchmark is against the STI during bull periods and against the risk free rate (long term SGS bonds) during bear periods. During the last 20 years, I'd estimate we must have gone through at least 2-3 such cycles.

The last ten years of economic growth is rather unique in Singapore's history. Those who got on the train and achieved more than 20% growth annualised return had their lucky stars to thank for.

Looking forward, I can hardly see how the GDP will enjoy the same kind of growth.
But, I may be wrong since I had never foreseen the economic growth that we had experienced in the last ten years too.

Sadly, more analysis may not bring better returns.

For better returns, there is a need to take on higher risks by buying high growth companies. Sadly speaking, REITs, blue chips and most dividend stocks are quite unlikely to fall into this category under normal time.

I still prefer small caps. There is always a good chance that their businesses can double or triple.

[Temperament]

Yup! A good warning to all. My point was made in jest to an investor of 10 years who may be happy with a 5% annualised return. In my case, my benchmark is against the STI during bull periods and against the risk free rate (long term SGS bonds) during bear periods. During the last 20 years, I'd estimate we must have gone through at least 2-3 such cycles.

The last ten years of economic growth is rather unique in Singapore's history. Those who got on the train and achieved more than 20% growth annualised return had their lucky stars to thank for.

Looking forward, I can hardly see how the GDP will enjoy the same kind of growth.
But, I may be wrong since I had never foreseen the economic growth that we had experienced in the last ten years too.

Sadly, more analysis may not bring better returns.

For better returns, there is a need to take on higher risks by buying high growth companies. Sadly speaking, REITs, blue chips and most dividend stocks are quite unlikely to fall into this category under normal time.

I still prefer small caps. There is always a good chance that their businesses can double or triple.

Not only triple, you may even find ten baggers among them. You remind me of Dr Michael Leong who specialises on small caps or new start-up companies. This is what i called "enterpreneur investor" i have read his book but i know i don't have his abilities and temperament. You only have to keep on investing in these small caps provided you know how.
And if you have find among them one or two 5 to 10 baggers, you should be doing very well already. Never mind some small caps you invested in may tanked.

[KopiKat]

Yup! A good warning to all. My point was made in jest to an investor of 10 years who may be happy with a 5% annualised return. In my case, my benchmark is against the STI during bull periods and against the risk free rate (long term SGS bonds) during bear periods. During the last 20 years, I'd estimate we must have gone through at least 2-3 such cycles.

The last ten years of economic growth is rather unique in Singapore's history. Those who got on the train and achieved more than 20% growth annualised return had their lucky stars to thank for.

Looking forward, I can hardly see how the GDP will enjoy the same kind of growth.
But, I may be wrong since I had never foreseen the economic growth that we had experienced in the last ten years too.

I'm trying very hard to follow Warren Buffett's wisdom here,

Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.

ie. What he's saying is to focus your energies to analyse (the business - the moat/franchise, the people, the product, ...) the stock of your choice, rather than stuff that are a lot more difficult for us laymen (economy, interest rate,...) to even understand.

Other useful quotes, many of which I find very meaningful when it comes to investing,

http://beginnersinvest.about.com/cs/warr...quotes.htm