When we are giving advice general public, we do not know the earning power and risk profile of the audience. As majority of the audiences are from the group of average people with average earning power and they tend to be risk adverse, then give top priority on savings and expanding income would be 2nd priority make sense for most of the people who are seeking for financial advice.

In addition, due to psychology, it is easier for a person to change his/her habit from being thrifty to lavish and not the other way. So that is why we should encourage people to nurture a habit of being thrifty, defer gratification and save for future purpose instead of focusing on future earnings and spend current income like no tomorrow. As people would tend to think they will earn more in the future, so they will spend their current income like no tomorrow without having a proper financial planning, but they forget future earnings are not certain.

No, just because you don't know does not mean that "There is no such thing as high returns low risks".

Manage risk on what sense and how? I do not see any clue from your post

This post has been edited by kinwing: Feb 18 2013, 12:08 PM

So are you going to have euthanasia at age 85 ?

No, this a wrong mind-set. Not all debt are bad, so should not get rid of debt at all cost.

If the cost of your debt is cheap, you should not repay your debt even you have the cash. Let's other people's money to work for you.

I have been making more than 10-20k yearly through investments.

I am from a poor family, when I started to work I had study loan to pay that took my few years to clear. Eventually I save and invest for years and build an investment portfolio which is about 10 times of my yearly salary and generate passive income close to 20% of my annual salary.

So you do not have the 1st hand information, and your above statement is only limited on you.

This post has been edited by kinwing: Feb 22 2013, 11:29 AM

I am not a bumiputra and I still hold on my opinion that "There is such thing as high returns low risks" and you ignore it at your own opportunity loss .

Other than that, I agree to your other statement on risk management, at least put in your thought instead saying generally "manage your risk appropriately".

This post has been edited by kinwing: Feb 22 2013, 11:28 AM

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.

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.

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.

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

For me, I pretty comfortable with share market and well understand the inherent risks of shares investment, and I know how to manage risks of share investment, hence to me share is a type of low risk and high return investment tool.

I am just stating my opinion and it is referring to my own experience. I do not ask everyone to follow my opinion, it is up to your call. I just let everyone to understand there could be a way to achieve low risk high return if you are willing to find that out. I still stick to my point that there is low risk high return investments, irregard of shares, properties or alternatives investments, as long as you are applying the correct investment framework, and value investing strategy is one of the frameworks that work well for me.

Of course I know MOS, and how do you know if I am not prudent not to aim of 4% to 8% instead of 20%. I mentioned I am now getting CAGR 20% by now, does not mean that I will retire when I achieve 20% return, otherwise I'd have retired long ago.

I was saying if my portfolio's annual return was twice of my salary then I would retire, and this portfolio's annual return could be 4% to 8% of my portfolio's value. Please read between the line.

I think either you have high income or you are rich in asset to do so. Possibly a new Hilux just 1% of your wealth .

300 or 600 is insignificant for investment and not cost effective. Go save enough up to RM3k or above before you start to invest, and most importantly get yourself an emergency fund just in case you lost your job.

For me it's simple, when I have a 6-month salary size of emergency fund, I'll pour all my savings and bonuses into investment portfolio, and normally my month savings is around 30% of my monthly currently salary.

I suggest you to save an emergency fund with a size of up to 6-month of your monthly spending, i.e. RM12,000 and put this amount into FD. About allocation of the FD, you could divide RM12,000 equally into 2 portions and put each into 1-month roll over and 3-month roll over.

Anyway, in my opinion, with such a small amount of FD (RM12k) and such a small difference FD rate between 1-month and 3-month, if I were you I would put all the emergency fund into 1-month roll over FD. The purpose of putting money into FD is for liquidity and not for long term for 3-month/12-month. If you want to earn more return, you should aim on mutual funds, equities or properties but FD.

felixmask,

I don't believe the theory of dollar cost averaging method. To me, it's a noob strategy. If you want to earn more return from investments, you should do more on investment research instead of being lazy to rely DCA method for your investment.

Anyway, it's good to see you move forward on trying other investment tools that indicate your plan and desire to earn more investing profit have driven you through the process from a rookie to a professional investors in the past few years. Hopefully you could do well and further improve on the knowledge of investments .