QUOTE(chabalang @ Sep 5 2011, 10:38 PM)
Equities: 13% p.a. is DIFFICULT to achieve in the long-run for MOST investors. Please bear in mind the 13% p.a. assumption is compounded over a long period (e.g. 20 years or more for retirement purposes) and for the whole equity portfolio, not just a few outstanding stocks (what's good in the past ten/twenty years may not be equally good in the future - very few companies can maintain outperformance for more than 20 years). Yes, some people may argue that their track record over the past ten or twenty years were more than that...all I can say these investors are GOOD (or lucky?)
I will give you an example why it is difficult to achieve 13% p.a..
Let's look at KLCI (a composite index of "leading" companies in M'sia) or now, known as FBM-KLCI (I am using Yahoo Finance data - unable to access full Bloomberg data on my current PC). KLCI excludes dividend (so you can add another 2% to 3% to compounded returns stated below)
(i) Based on the longest data available on Yahoo Finance, the KLCI data starts from Dec 1993 (which happened to at the tail end of the 'super bull' in 1990s)...KLCI was 1275 (Dec 1993) and 1447 (Aug 2011) -> annual compounded return of
0.72% p.a. over the 17.67 years.
Of course, it is based on the last peak (or near the last historical peak) to current level.
(ii) Let's use 2000 to Aug 2011 - return. KLCI was 812 (Dec 1999) and 1447 (Aug 2011) -> annual compounded return of
5.08% p.a. over the 2000-current.
(iii) Excellent market timer - bought at bottom in Aug 1998 to Aug 2011. KLCI was 303 (Aug 1998) and 1447 (Aug 2011)-> annual compounded return of
12.81% p.a. over the period.
So, get a 13% p.a., you have to be really, really good.
For my own equity portfolio, I am assuming less than 10% (it's blended with heavier weighting on emerging/Asia markets). I consider myself to be quite a decent equity investor since I am semi-retired (still involved in finance/investment industry for the fun/thrill of it) and can live comfortably on the dividends from my equity portfolio.
Please bear in mind - even for well-run sovereign funds such as GIC (blended:equity, fixed income, etc) achieved only 7.2% over a 20-year period (7.6% for a composite portfolio of 70% global equity and 30% global bonds)
http://www.gic.com.sg/data/pdf/GIC_Report_2011.pdf .
I just do not want fellow forumers to be using unrealistic returns for their retirement planning and get disappointed in the future. Nevertheless, I do like most of your replies and writings
In the article below, over 1985-2007, annual returns based on KLCI was 8.6% (+2% dividend yield = 10.6%).http://biz.thestar.com.my/news/story.asp?f...87&sec=business Yup yup - agreed bro Chabalang. No one can argue with proper statistics and law of averages. Thus, my caveat is as always "personal expected/assumed average pa returns"
I dont buy much stocks but when i do, tend to be lucky (touch wood) maybe coz i wait for blood/suicides nowadays, or at least when i hear people swearing off stocks and not blindly "buy equities" based on Asset Allocation (which i do use just to allocate $) / re-balancing.
Paid lots of "tuition fees" to the market in my younger and dumber daze. Now still dumb but not THAT dumb
BTW, 2008 crash - i put most of my $ into LPI (sold liao last month, hit my Trailing Stop Loss thus forced to realize profit) and PBBANK (still held now) + TWRREIT (still held now) (Dec 2008 till 1st qtr 2009). These stocks.. phew.. it's not just a matter of timing / value but also filter/selection of stocks/equity funds that's the kicker. Much much more than 12.81% or my own 13%pa (CAGR) target. Touch wood touch wood. i was eyeing these 3 for awhile before end 2008, especially LPI & PBBANK. TWRREITs was something "new" since REITs were kind of "new" in MY market
- lucky shot for that i guess.
1997 - 1998 double-dips, i was also lucky in the sense that i sold out before the currency crisis (stocks and equity funds) as there were plans for those $ and i didnt have that much $ to monkey around with. God works in mysterious ways
Equity funds-wise, i'm lucky in the sense of buying with more $/EPF during "downs" due to value-averaging component of my programmatic approach
+ mid-long term trend-based buys after recovery and in new accumulation stage.
Thus, overall equity fund returns goes up (based the donkey XIRR formula in Excel lar coz i'm way too lazy to go calculate one by one and do a crazy consolidated CAGR).
Note - the only DCA i do is just to leverage on the "agent investment", which is at NAV without any service charges. Kiamsiap / cheapskate lar me bro, how to say no to this?
To each his own - plans & map to investment success, as everyone has very different risk appetites, focus and experience/skills. The main idea i'm trying to share is to HAVE A PLAN + EXECUTE the plan + TRACK, else how to manage and edit the plan
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This post has been edited by wongmunkeong: Sep 5 2011, 11:12 PM 
Sep 5 2011, 10:27 AM
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) and mind, the methods put forward are costly. Like you said as well : there are other methods for migration too. And perfectly legal methods too at that, like I said earlier, follow the rules of the chosen country.
Winner = bursa + securities firm (trading charges)
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