I can help build you a "capital guaranteed" structure, but not 100% pure UT. 😉😉

It's around that region...

So true Mr Looi.

Everyone thinks they are an expert.

Until they take a 15% loss.

I'm guessing the tone was somewhat sarcastic, as the numbers are for a nationwide median. Meaning if you don't mind moving to a small town, you'll probably survive. If your in a major city, you're probably SOL.

I suppose that's possible, assuming you have no debt or commitments to worry about.

You've taken the simple return, where all returns are paid out at the end of the term.

He's using the IRR calculation where calculations are done monthly.

As usual dasecret keeps her high level kung fu a secret, but finally she shares with us mere mortals.

Heres a quick apple to apple comparison:
Current portfolio = 50% RHB Bond, 50% RHB SCOUT
Smart Balanced = 40-60% FI, 40-60% equities (less than 1B valuation)



This post has been edited by lukenn: Aug 3 2016, 04:17 PM

But you know where to get your fix right ?

At a withdrawal rate of 5-8%, and if the portfolio is sustainable, you might just get away with it, but remember that this number is not inflation adjusted. Withdrawals, especially at the beginning, will put you at a disadvantage.

5-8% is quite a realistic number, however do bare in mind that most portfolios will not be able to to achieve this every single year. During bad years, you may be required to dip into capital.

On top of that, there maybe some incidental expenditure (servicing of car, repairs to house etc) which are not yet accounted for. All this is on top of that fact that I'm assuming that you are debt and liability free.

As some of the old timers here have suggested, continuing to work, full time or otherwise, at the very least to delay drawing down on your savings is probably the best way to go.

Good luck !

boss, i think for the kind of risk you're willing to take, you're not using the right instrument.

Thanks for the vote of confidence, guys !

Ok, lets have a look at what we know :
1. Your most recent IRR is 3.XX, lets assume 4%.
2. Your portfolio was incepted in May 2013, just over 3 years old.

I'm going to do some mental math, so pls don't shoot me if I get this wrong.

Lets assume you want to push your IRR up by 2% to ~6%, by May 2017. Total of 4 years. You would need your ENTIRE portfolio to be up at least 12%.

So to achieve this in 3.5 months, you would need to to be up .... sorry my brain cannot do this calculation

Anyway, to be practical, every single fund in your portfolio has to average out to this, to get your desired results. I honestly have to say that this is quite hard to achieve, especially with funds and and our current economy being like this.

Sorry to be harsh

You would probably need to have quite a sizable amount in direct equities to stand a chance.

This post has been edited by lukenn: Aug 8 2016, 11:48 PM

Oh my, what kind of funds have you been investing into? Leveraged position?

I'm going to guess that it was a fixed income fund that defaulted... not many ways to take a 50%hit....

Where are you guys getting your data streams to do correlation and standard deviation calculations?

Aren't those denominated in USD ?

From what i understand MorningStar is calculating correlation based on the fund's USD value. Since the bulk of the local funds are denom in MYR, FX is taken into account, so correlation tends to be much higher that what it really is, if you are investing MYR.

I'm quite happy to see the conversation here is improving. I think for layman understanding of risk adjusted return we can consider 2 scenarios :

Scenario 1 : If I'm wrong I can lose RM30, if I'm right I can make RM50.
Scenario 2 : If I'm wrong I can lose RM10, if I'm right I can make RM20.

If the investor is only looking at upside, they will choose scenario 1, but if risk is a concern (which should always be the case), scenario 2 would be a better choice.

So in layman terms : risk adjusted return would be the potential return per unit risk.

Urrr ... why ah ? People don't believe your methodology isit ? I'm not a financial planner or CFP la. The licenses I hold don't allow me to also hold a CMSRL for financial planning. As for the ratios, haven't done them in a while. From a lifetime ago.

I find sharpe is a bit wishy washy, as it doesn't really describe anything well. M2 is a bit over engineered to answer my simple questions. My personal favourite is Sortino (return/downside risk - like a risk adjusted return on steroids), probably because I was previously more focused on risk management than asset selection.

Anyway, these ratios are WMDs as there is a tendency to curve fit to maximize the numbers, without understanding the implications.

These days, for laymen, the question/answer is simple : Build your portfolio any way you wish. Look at how it performed end 2007 to end 2008. In most cases, this will be 1.8 to 2.5 stddev. If they can swallow that kind of loss, then proceed. If they can't, then they're holding the wrong positions.

Office system does all the heavy lifting la. If it has to be done manually, I won't have time to layan LYN and chase Pokemon already. Anyway, I don't really rely on ratios when it comes to funds. Not useful when managers make changes to the portfolio, actively rebalance holdings or keluar mandate. It becomes qualitative instead of quantitative.



Investors tend to want to be spoon fed, or be given strict guidelines on how to make money. So when they are told simply that a high sharpe ratio is good, they will just sort funds by sharp ratio, and pick a few funds with the high returns ... fits the "curve".

Hypothetical situation :
4Q2014 :
- 1Y, 3Y Sharp ratios for CIMB APDI, Eastspring MY Focus, Kenanga Syariah Growth all above 1.3, APDI >2.0
- 1Y, 3Y (and some 5Y) performance was double digit.
- "High sharpe" and "high returns" ..... go balls deep lor.

1Q2016 :
- Invested for one year all the "winners" are now "losers".
- Portfolio is down 10-20%.
- Too painful, cut loss. The end.

10-20% may not sound like a lot, but when it can buy a house, it can be painful, even to HNIs. Which is why WMDs, weapon of mass destruction.

This post has been edited by lukenn: Aug 14 2016, 12:53 PM

HAHAAHAH ... Bugger you damn bad lor ... if at his age I was asking these questions, instead of trying to khau lui, I think I'll be much better off now.


Actually this isn't an explanation, this is what I see quite often. At least its better than "my friend said good, so I sai lang".