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 Fund Investment Corner v3, Funds101

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Yggdrasil
post Feb 27 2020, 11:45 PM

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QUOTE(rocketm @ Feb 21 2020, 04:59 PM)
Hi,

I just wanted to seek your opinion about investing in equity or REIT.

I just started to invest last year 4th quarter using Rakuten trade. Below is my portfolio.

user posted image

Until now, some of the shares are declared dividend. However, most of the time my portfolio is having loss.

I understand that current situation and other factors will lead to the fluctuation of the share price, but should I continue to put more money to increase my existing shares volume or invest into new share?

If the current losses continue on, how do you decide the timing to sell certain shares in order to get some liquid.

Do share your opinion or suggestion. Thank you.
*
I'm not too familiar with Rakuten layout so I'm guessing your portfolio is around RM3,553 correct?

If this is true, I believe there are several ways you can improve your investment technique.

1. Conduct transactions only if transaction value is above >RM8,000.
Each buy and sell already incur cost. Not mistaken, Rakuten charges RM7 for below RM1,000.
If you buy and sell, you already incur (RM7+RM7)/RM1,000 x 100% = 1.4%. This means you lost 1.4% already even before you made a profit.
It's better if you put this money in f.d. instead.
Instead, if you transact >RM8,000. Your cost per transaction is (RM9+RM9)/RM8000 x 100% = 0.23%. This is reasonable.

2. Reduce the counters you hold or diversify using ETF.
Yes, diversification is important BUT! You have too many counters in your portfolio. You need to spend time reading all the quarterly and annual reports to properly make decisions.
If you have a full time job, it is better you reduce the number of different companies you hold or use an ETF instead.

3. Set a cut loss.
You did not cut loss on certain stocks causing you to lose a large %.

Final Recommendation
Buy an ETF/mutual fund instead and focus on your career.
Yggdrasil
post Feb 27 2020, 11:51 PM

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QUOTE(mmweric @ Jan 20 2020, 07:53 PM)
Can you educate me on how you get your numbers for your CAGR and IRR?  I am just a bit curious.
*
That person used website to calculate.

CAGR formula = (Investment value/Total deposit)^(1/no. of years)

IRR is harder to calculate because you need the timing of cash flows to be accurate.
Generally, IRR is the discount rate which gives an NPV of 0.
Yggdrasil
post Feb 28 2020, 09:21 AM

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QUOTE(mmweric @ Feb 28 2020, 12:40 AM)
If there was a  single lump sum investment two years ago the CAGR and the IRR should be the same.

Since it is different there must have been multiple inflows and outflows of cashflow.

Hence it would not be possible to calculate CAGR and you would need to calculate the money-weighted return which is equivalent to the IRR. 

*
I think it's still possible to calculate CAGR.

For example, Portfolio Visualiser was able to calculate it.

user posted image

QUOTE(mmweric @ Feb 28 2020, 12:40 AM)
If you also look at the Sharpe ratio

which is Sharpe Ratio = (Return - Risk Free Rate) / Standard Deviation

I would assume he is using the IRR to calculate the Sharpe Ratio as the number would roughly be correct if he used IRR and not CAGR. So I am wondering
where the CAGR came from.

The numbers from the Sharpe ratio are also inconsistent.  I calculated for
a.  portfolio 1 the Risk Free Rate = 2.1801
b.  portfolio 2 the Risk Free Rate = 1.7716

The only way the two portfolios can have a different risk free rate is if the time periods are different in which case you can't compare both the portfolioos.
If the numbers don't tally I don't think it is possible to give a reasonable opinion till it is confirmed whether to use CAGR or IRR and
to confirm what is the standardized risk free rate base on the same time period to calcualte the relavant Sharpe and Sortino ratios..

For example if I used a risk free rate of 2%.  Portfolio 1 would have a higher sharpe ratio (1.13) then portfolio 2 (1.09) but in the above example
portfolio 2 (1.12) has a higher sharpe ratio then portfolio 1 (1.11).

Not sure whether my understanding of the concepts or calculations are correct so please correct me if I am wrong.
*
I'm not 100% sure which website that person used to calculate but I tried using this website and still got conflicting risk free rates blink.gif biggrin.gif
Yggdrasil
post Feb 28 2020, 02:26 PM

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QUOTE(rocketm @ Feb 28 2020, 01:53 PM)
I have full time job thus lack of time to study.
*
Based on this 2 reason, I suggest you stick to an ETF with low fees.
It provides you diversification and allows you to focus on your career.
A RM1000 increase in your monthly pay is more than what your RM4000 invested can return to you.

QUOTE(rocketm @ Feb 28 2020, 01:53 PM)
Under this situation, sell will incur loss thus is it better to maintain the number of counter and volume? If yes, then will the shares increase in future?
*
Eventually you will have to sell.
If I were you, I will keep the REITs and Sunway, sell AirAsia and Airport. Others cannot really comment.
Put the remaining money into ETF.
Individual stocks is not meant for retirement because it has no diversification.
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