Dear Readers,
Thank you for coming here!
I got some free time this week, so I did a quick review of my investment journey, including going through the transactions, the notes from discussions and my own diary.
The outcome was shocking.
I could have easily earned 200K SGD extra returns from my investments.
And the number could potentially be much bigger because it is just a ballpark figure.
I spent more time reviewing my thinking process rather than trying to get the figure accurate. The number does not matter too much now anyway.
I always knew I deviated from the simple strategy, which caused negative impact on the investment returns.
Still, 200K! I never expected the impact to be so shockingly big!
This is a significant amount, even compared to our Net-Worth now, after we both have worked for more than 10 years!
So here is a brief overview of my journey.
1.The strategy
After reading a few books, discussion forums and discussing with the friends in the industry, I gathered a few investment strategies.
After evaluating my interest, estimating the time I can invest in the area and recalling my inability to balance a balance sheet in university, I decided to take up a simple one and a proven one:
- Use CPF as bond component
- Invest all my other investable asset in stocks with 90–10 split into world index and SG index
- Adopt the DCA method with monthly capital injection
2.The first deviation
The first deviation from this strategy came almost immediately after I started.
SG index started to drop significantly and continuously and I thought that was the chance to lower my cost.
So I invested more and more in SG index.
Thinking back, that was so stupid.
I added positions so frequently that the price difference was barely noticeable between buys.
I added positions so heavily that I emptied my war chest very quickly.
And that was only the beginning of the drop.
When I had to stop to review, SG index was so heavy in my portfolio that the split was inverted.
90% of my capital was invested in SG index.
And during the same period of SG index dropping, world index was growing incredibly well.
Seeing the deviation from the strategy, with an empty war chest and SG index continuing to drop, I struggled between continuing to invest in SG index and switching to invest in world index, with my only cash flow — what’s left over from my salary after expenses.
I was lucky to take a rational look at that time.
- The event that Creative decided to go public in HK made me realize that SG market was small and lacked the upside potential.
So I switched to world index.
That was when my return started to recover.
I thought of selling the SG index to restore my portfolio split, but I was a firm “buy and hold” believer at that time and the fee with the banks was high (there were less choices for brokers then).
So my return was only very slowly recovering.
3.Staying the course
For the next one year or so, I stayed the course to invest in world index on a monthly basis.
And the amount was quite consistent since my salary and family expenses were quite consistent.
So I was actually DCA-ing. This is probably the only period I really practiced DCA.
Before I deviated again from the strategy, my portfolio split was only close to 50–50.
The returns were good.
During the same period, I also took my money in China out of P2P lending and started to invest in China index.
The return was also good.
To be continued!
Note: This is much more time consuming than I thought as I had to flip through my notes and transaction history to confirm my memories and get the facts right.
I definitely do not want to rush this entry, as I believe this could be a good summary for both you and me.
I had to stop here as the rest of my day is filled with meetings.
I will split this into two posts or even three if I have much thoughts to share after the journey.
Sorry for this and hope you can stay tuned. I really hope you enjoy the read and at the same time, take away my lessons to avoid mistakes in your lives.
Till next time!
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