That so? sharelah your example then....

I also want to know this "high returns with low risk" investment....

Me agree and I am actually investment as a job. Once my investment portfolio reach certain size that to generate enough averge annual return that is twice of my current salary, I will quite my job and be a full time investors. Then investment and fund management would be my own job, although it's on a personal basis instead of working some other fund management firms.

but just out of curiosity... assuming annual salary 100k (easy calculation, can be anything)...

This means investment portfolio = RM1,000,000
Returns about 20% of RM100k or RM20k

This would mean return of about 2% only per annum....

Can't be that low right?

Mind to share investment strategy to generate this passive income?

Do you mind me asking u your age? And when did your investment portfolio return reach your salary level?

It is easy, go understand the value investing strategy. IMHO, it is a row risks high return strategy for investments. The principal is to understand that value is what you get and price is what you pay. When you buy at cheap, your risk is lower with potential to earn higher return, of course you should be the non-believer of efficient market hyphotesis.

For example, most normal investors would think a share that drop from RM100 to RM10 (drop by 90%) is more risky than a share drop from RM100 to RM50 (drop by 50%) due to volatility. However, I look at da ifferent angel that there is more room for RM50 to drop to RM5 (drop by 90%) than RM10 to RM5 (drop by 50%) and thus more risky to buy at RM50. So buying a share from RM100 to RM10 (drop by 90%) is having lower risky than a share drop from RM100 to RM50.

When the share price bounce back from RM10 back to RM100 (appreciate by 1000%) and making profiting than if it was to bounce back from RM50 to RM100 (appreciated by 200%).

This is what I am emphasising on low risk high return.

I'm age 30 now. I started to invest when I was 21. Even though at that early 20s, I need to settle my study loan, I still save few percent from my salary per month for my investment portfolio. Of course, I did a bit sacrifice on my spending on other items such as I did not own a car at my 20s, not fancy gadget, no overseas vacation at personal cost etc.

When at age 26, I had an investment portfolio that was twice of my salary, then I took a break to full time study my master for years. After that I completed the program and worked again and continue the same practice and eventually I am here today with a decent size of investment portfolio and this allows me to choose the job that I like to work with.

Ah shares izzit...

Tell me, which companies then do you pile your money in... ?

If they are so "low risks"...explain why so many people get their arse burnt in the '98 crisis...

When you said you have an investment portfolio twice your salary, you mean the return is twice your salary, or the portfolio value is twice your salary? If the return is consistently twice your salary at the age of 26, you have my utmost respect!

may you share which stock or your real experince to support above theory? Juz newbies curiosity

1998.. that was a bad year for Malaysia, but it also presented great opportunity for a lot of people..

It's always easy to say rather than do. When actual money is involved, emotions comes to play. There is no low risk high return, companies can go bankrupt and delisted as well.. so lower can become lower until zero. By proper investing and diversification, you can only reduce your alpha risk but not your beta (ie. global/constant) risk.

By all means minibonds and CDO is percepted to be high income and low risk (high interest, AAA investment grade) until it blows up...

Also as in Value investing, the price of stock is irrelevant even it is RM 50 or RM 100. What is important is the value of company in relative to the price.

Some time in short run ie. 2008-2010 period everyone thinks they are master share investor with gains of over 100% as they caught the low, but looking at bigger picture and longer period they may not be always so lucky.

To get constant 20% per year is near impossible, the best investor in the world (WB) is only averaging around 20-24% p.a.

Value investing is a good concept, but IMHO reasonable assumption for equity gain should be only 8%. This is so you do not overestimate your 'earning' power. For retirement purpose best to assume 4% income rate to have proper buffer before you decide to take the plunge.

This post has been edited by gark: Feb 22 2013, 12:46 PM

Yeah, and I have a crystal ball that tells me which is which, I will be richer than Warren Buffet already...

Those people who bought overvalued price shares and were overleveraging were to have their arse burnt at '98 crisis. If I were to start to invest at '98 crisis, likely I would not get burn with the strategy I am applying. Whereby in 2008 crisis, a lot investors get burn but I was exciting with the crisis and made good return.

It is irrelevant which companies I invest, I used to tell me friend that process is more important than the outcome. So I share you the investment framework that I is important. Whether you could understand or accept of that framework, that is up to you.

I mean when my investment portfolio generate annual return up to twice of my salary in the future, I will retire.

I also mentioned I had an investment portfolio with a value that was twice of my annual salary age 26, so I do not what makes you think that that value of investment portfolio value = return of investment portfolio.

This post has been edited by kinwing: Feb 22 2013, 01:25 PM

Hehe, no. I do not share my investment, I only share my opinion and investment framework.

ok..thanks your sharing opinion and investmentframework. may i know your age?

You got your point, I have my own.

As I am giving connotation of RM10 VS RM50 VS RM100, I do not mean we should judge investment with absolute value. Let me elaborate another way that if the intrisinc value of a share is RM100, then which position of the price is safer? RM50 or RM100? If RM50 is a safer position to buy, would not it be a position to make more profit when the price reflect the real value. So my arguement still stick.

"To get constant 20% per year is near impossible, the best investor in the world (WB) is only averaging around 20-24% p.a." ---> How you know is near impossible? So far I am getting CAGR 20% per year .

Warren Buffet indeed achieved more than 20% in his initial year of investment. He used to have achived 30% or 40% in his early year of investment. But when his portfolio size is getting bigger and bigger and eventually it becomes the size of the mini-market, his portfolio is only able to generate average return as what the market achieves. But with his earlier excellance achievement of 30% to 40%, that would still in average raise his 50-year CAGR by 10% higher than the market return at 8% to 10%.

Since I am not Warren Buffet, hence I only achieve 20% in my earlier age of investment (not like Warrent Buffet getting 30% to 40% at his early year of investment), eventually if my portfolio size increased, my return would mean reverse close to the market index at 8% to 10%. Then my CAGR return since inception could be reduced to 15% or lower.

Whether it is reasonable assumption for equity gain should be 8% or not, that would be subject to your capability of achieving it. Maybe you can't do it but that does not mean other people cannot achieve it. Or you are too just preduent to think that bad year may happen and you wouldn't be able to survive by 4% or not willing to erode your investment portolio, then you it's up to you to have accumulated higher a investment portfolio before you retire.

Whereby me had in certain years only achieved return lower than the FD or even negative, but I believe with my researh skill and investment framework will also able to catch some good years for my investment with a return of up to 30% to 40% or even 100% a year, so by average my CAGR is approximately 20% by now, maybe in later years it would reduce to 15% when my portfolio size grows bigger.

This post has been edited by kinwing: Feb 22 2013, 01:59 PM

-delete-

This post has been edited by kinwing: Feb 22 2013, 02:00 PM

http://forum.lowyat.net/index.php?showtopi...post&p=58432209

Yes as you say yourself over the long term and with higher investment amount, you will not get 20% constantly. Good for you to get 20% CAGR for the past few years, but stating that high income with low risk is not correct. Stock market is high risk, you may be lucky to flip several coins in a row to get outsized returns but that does not mean that you will get the same flip year after year. Stock market is high risk and high gain, the risk is measurable by votality, so it is not an implied risk. By stating your view, you might inadvertently encourage people to think that stock market is a free lunch, which it is not, it is dangerous and required loads of hard work to make it work. It is not for everyone, especially those with low tolerance for risk.

If you start investing in the 2000's 20% CAGR is not a problem until now, my investment gains more than doubled when I start investing in 2006 until now, but as you say the higher amount you have you will feel the constraints. But who knows on the future, anything might happen, so taking 8% long term view on equity and 4% withdrawal rate is prudent financial practice. Since you are a student of Graham & Buffett, you should be familiar with the quote 'margin of safety'.

This post has been edited by gark: Feb 22 2013, 02:15 PM