Before going into the details, what was summarised in the spreadsheet, "Entrance value" and his one-time lumpsum value of 100k is already out of tally.

A one-time investment does not need the excel function XIRR to calculate the IRR. The simple CAGR formula could do the job. Based on the current values of his 9 funds, they totaled to about 118.46k or an ROI of 18.46% or IRR (CAGR) of 6.1%.

Yup, it is obviously not easy... else we can conduct a poll and goes with the most votes.

1. The numbers are past history... while we are investing for the future. And everyone can speculates...

2. It would still boils down to his/her individual objective, and how they invest... ie. 1-time lumpsum or DCA, how long is the DCA, how much is the DCA out of his/her salary and savings... etc. etc.

3. There are other things to consider too, depending on the individual's objective and investment means,
- which fund company should he select... how stable is it? Will it present any anxiety when there is any adverse news on the economy? Will it be there?

- what are the other funds the fund company also have, such that inter-fund switch can be done without doing a sell and buy another fund in another company, without paying the service charge again. Switching fees can gradually adds up to a huge sum... but it would still be cheaper than paying service charges again and again.

4. If doing DCA, it would boils down to which fund would you like to regularly invest/buy without any further anxiety, ie. no need to think twice whether you should continue on with the fund whenever you want to buy.



This post has been edited by j.passing.by: Sep 10 2016, 05:15 PM

VA may sounds good in theory, but what is its advantage over DCA, especially if the regular amount to put in is "tiny" like a few hundred ringgits? If a fund dropped 10% or 1k in value this month, are you ready to pour in 1k next month when the regular investment budget is only $400?

Being very objective and unemotional would means sticking to the set plan. The plan may be this, out of the savings from monthly salary, some is put in fd or fixed income funds, some in equity funds, say $400. So without fail, whether sunshine or earthquake, must buy $400 worth of equity funds every month.

This would be DCA style.

We can varies it slightly by choosing say 4 funds out of our existing 5 funds to put the $400 (with $100 per fund or S200 into 2 funds each.) How the 2 or more funds is selected out of the 5 funds is not upmost important. Every method will have its own weakness - sometimes you win, sometimes you lose, sometimes we get lucky, sometimes not - this is the reason why we do it DCA, not one-time lumpsum.

(If it is a regional fund, sometimes I looked into the stock index for that particular market... for example choose the fund with its market index below the 200-day MA. https://sg.finance.yahoo.com/q/ta?t=2y&l=on...&s=%5EAXJO&ql=1 )

Now, with VA, you will need to put in some calculations and more effort in knowing the current values of the funds. Because VA is "topping up" the fund to the desired level. (The desired level can be a fixed number or percentage or a constant value. It can also be an increasing value... ie. you want it to grow 4% or 5% every year.)

As said, are you ready to "top-up" when the fund drops more than your planned budget?

Yes, you could move the data on your initial purchases to another excel tab, and the IRR calculations would work fine with these initial purchases data (dates and amount spend) and the current value of your portfolio.

All the manipulations on the portfolio - how you switch funds, how often you do it, how much you improve (or make worse) the gains from the switches, no matter how you "rebalance" the portfolio - have no "creative accounting" effect on the IRR.

Because the IRR is depended solely on the initial purhases - initial dates and amounts spend.

All the subsequent trading or swithces or rebalancing are just a 'black box' operations to improve the current value of the porfolio; and it does not really matter to the excel function XIRR one bit if you discard or put all this switching/trading data on another tab; except for the current value of the portfolio.

Yes, fresh funds* added in would have an immediate effect on the IRR - because these would be new "initial purchases".

If I were you (with inital bad purchases and dismay IRR), I would look more into the year-to-year growth. If the yearly growth for the past recent years are satisfactory, then be happy with it - as this shows that you are on the right track.

Being on the right track would boost the confidence of a person who maybe is deciding whether or not to add more fresh money into his portfolio - say a huge amount of money withdrawn from EPF at age 50 or 55.

(This yearly growth or short term growth might not be that important to another person who is still in the accumulation stage with regular fresh purchases with longer term investment plan.)

*fresh funds as in fresh money, not switching to a new fund.

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Another method to know whether you are on the right track, is basing the IRR on the current portfolio, and ignoring the dates and values of the "intial purchases".

The 'current portfolio' is the funds you are having now. Just consider the dates and values of the purchases/switches that built up the funds you have currently. The IRR calculated would be the IRR of the current portfolio, without back dating to the day you really started into UT investment.

To keep track of the actual ROI, you would need to keep track of all the past switches you have done (can put them into a separate exel file or tab), so that you have the ROI of the past switches. This ROI together with the ROI from the 'current portfolio' will add up to the actual ROI you have since day 1.

This post has been edited by j.passing.by: Sep 22 2016, 05:48 PM

Maybe it would helps if you can explain what you intended to do with the 'maths', rather than showing the 'maths' and asking whether it is done correctly.

As what you have done was only to show that the ROI and IRR goes up and down. This we already know - that equity funds can be volatile.

I think you are being kind to my long, grandpa post eventhough it looks gibberish to you.

Seriously, at least try to read it again... as what I was saying is using IRR as a measuring gauge in another manner - to gauge the past recent history of your portfolio performance.

Just as we can look towards the future in short term as well as long term viewpoint, we can also look into the past performance history in terms of recent history as well as deeper history.

Why do you need to have maths to prove something that is already known? Common sense already tell us that UT funds are volatile. Even if we do nothing to the portfolio, the ROI (and indrectly, the IRR) will move along with the volatility of the portfolio. Of course, there would be added movement whenever we adjust and fiddle with the portfolio by switching from one fund to another, or one category to another.

Look, IRR is just an 'effective rate'. It is for having an apple to apple comparison. For example, banks can have a FD promotion with step up rates from 3.5% to 4.8% on every subsequent 3-months deposits. At the bottom of the brochure, the "effective rate" would be stated too. This "effective rate" is the actual interest rate if the deposit is only withdrawn at the maturity date 12-months later.

So, to compare whether the step-up FD promotion is better than another bank's FD promotion, we just need to compare their "effective rate".

In that previous post, the last part is on doing IRR on the current porfolio without back dating it to Day1 of your investment adventure. I put that into the post because you will eventually need the IRR (or the "effective rate") after monitoring the yearly growth for a few years.

Each year will have a different growth rate - just like in the step-up FD promotion every 3 months. This is the reason to have IRR - to have an "effective rate" to make comparison on the returns of the current portfolio against FD and/or EPF rates.

Lastly, the phrase, I think, you were looking for is not 'creative accounting' - which is lying using numbers. It is 'playing with numbers' - meaning fiddling with several options/scenarios and asking lots of what ifs. For example, what if the bond ratio in the portfolio is adjusted from 45% to 50%, what if equity fund A is increased from 5% to 8%, etc. etc.

"IF" Irr values can be "played" by that,.....then frequent traders "may" have a better performing IRR."

No, IRR cannot be "played" like that, As explained, it is only an "effective rate".

What was being played around is the portfolio - by trading (moving funds in and out by selling and buying them), and switching from one fund to another. How frequent you turn the portfolio around - which can be called "portfolio turnover" as in "inventory turnover" - will definitely affect the returns (which is the ROI, and the IRR too) - for better or for worse.

(You seem to have forgotten the previous posts on that favorite quote from the first Dirty Harry movie. )

Yes, the 'effective rate' is the annualised rate. Also the CAGR rate. Same thing.

(Why we are using the term IRR? You will need to know why we have to use the Excel spreadsheet function XIRR to calculate the 'effective rate'.)

It is the returns of your portfolio that is being measured... I don't see how you could link the 'effective rate' to volatility or expense ratio of the fund itself.

The performance of the fund on its own is one thing... which different from your investor's returns since you bought into the fund at different times at various NAV prices.

In other words, you and your friend could be having the same fund, yet each of you is having different returns because you did not buy into the fund at the same time as your friend.

As for 'portfolio turnover', let's say we started a small business with seed capital of 100k. We use the 100k to buy some stocks or inventory. The more times we have inventory turnover, the higher would be the revenue for the year. But this higher turnover and higher revenue do not necessary means higher income or returns. Don't forget that we have to pay to replenish the inventory. And some of the inventory may be damaged or sold at a lost.

What matters at the end of the (financial) year, is the net profit or net returns. Which is the basis of the ROI (and IRR) calculations.

No matter how many times you turnover the inventory, how you sell and buy at what price, you don't need to tell me (or the Excel XIRR function) - since I'm only interested in the net profit to calculate the ROI (and the IRR too, since I already know when we used the seed capital).

(On a side note: this is the reason I used the term 'black box operation' in a previous post... inventory turnover is smilar to portfolio turnover... I only need to know the seed capital and its date, and the portfolio current value to calculate the ROI and IRR. What funds had been switched, how many times it was switch, at what profit or lost, at what NAV prices... the only thing that matters is the current value of the portfolio.)

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BTW. I think some investors is too impatient... make some changes today, too quick to take stock on how the portfolio is performing the next week... make a purchase today, so happy that it went up the next week, and then thinking whether to take profit or not (and the IRR is in triple digits - true kah?). How lah? You call this 'investment into UT" or "trading UT"?

Many, many times - already mentioned that UT has risk and can be volatile - not like FD or fixed price funds... yet want to demand that the UT fund the investor is holding must give consistent positive growth every year... how lah? Like this, is there proper understanding or not before entering into the UT fund?

I think the current buzzword is 'asset allocation', and everyone is going 'what's the perfect portfolio'. At the same time, asking what is the bond/equity ratio to hold... so gave them some formula like using 100 minus your age. So what happens when a newbie posted his list of funds he is holding... everyone becomes an expert like what funds he should dropped, what funds to add... as for all we know he is 70 yrs-old and not a 22 yrs-old youngsters. Wow, so risky la... 100% into equity when he is actually risking only 1k and having another 300k in fd.

I don't know what's going on between you and pink, and I don't care either.

But I do notice that most of the time, the posts you were posting here were very subtle posts or questions, which subtlety raises the same question "Why people is crazy or stupid enough to invest into normal UT funds when there are EPF and fix priced funds?"

You seemed like a regular poster, both posting and browsing this thread regularly... yet at times, you seemed not to remember some posts on the basic background of investing into UT funds... and make remarks for further clarification... how do you expect another poster to give a respectful and proper reply to you without digging up all the basic background info and not taking up too much of his time to answer, and in his eyes, a troll?

For example, in a previous post, I was going on about the importance of doing DCA... and in the next post, you were trying to say that lumpsum investment could give the same effect or result as DCA. Which I did not reply... because it is all too obvious to a working adult who is just joining the rat race that it would not be easy to save up 100k. But not to you, who is still a student living on allowances. (Or maybe you are alreay working... then, beg your pardon.)

You are talking in theories, and in a vacuum in absence of other things. If you think a bit deeper, you would understand why you would not want to wait till the savings grow to 100k before starting the investment.

If you think a bit deeper on your own, you would also understand what is an 'investment' and why a working adult would want to put part of his savings into riskier normal UT funds too, instead all in FD, EPF or fix priced UT funds.

Is UT funds riskier? Yes. Can UT funds have better returns? Yes.

Does the working adult worry that he may loose his job tomorrow? Yes. Does the working adult worry that his savings is not enough? Yes.

Is he willing to risk some of his savings for better returns to secure his future financially? Yes.

Is UT funds a viable investment option for better returns? Yes.

How much better? 15-18% can or not? Can, no problem.

So many yes.... so many good reasons to set up a new investment company...

Welcome to FSM.

(If you think you are the only smart person to predict that all these UT companies will closed shop sooner or later... I don't care, and don't want to discuss it with you. Get lost! )

I'm on the same page as you - any investment is related to personal money management... no money, no savings, no need to think so much of having this or that.

I think, it is being rather impractical to just talk (and nothing more than just empty talk) about the merits and cons of any particular investment vehicle as if when it is not suitable for one ownself, then it is not suitable for others.

It is more practical to employ all tools - different tools for different pockets. Being conservative when necessary, and take on more risk when it is appropriate to do so.

The 1st pocket would includes fixed-price UT funds, and bond funds too... and bear in mind that fixed-price UT funds have caps or max limit... and would be filled up without room and space for any more excess savings.

If the money is just enough to fill this 1st pocket, and can't afford to take on more risk, I think the investor should consider very, very carefully before he touches any equity funds and other investment tools in the 2nd pocket.

Anyhow, for youngsters, I would still (as I always do) advocate them to consider taking more risk than they think they should be taking - don't be too conservative, if you don't take any risk when you're young, you'll never will.

Just don't be too greedy, and pour in everything you have. Do it for the long term, to supplement your retirement nest egg... DCA method bit by bit over many years... and let the compounding effect do its job for you. A measly couple of percentage points difference in the fund's returns will make a huge difference over 20-30 years.

Aim for funds that could give above 10%... no risk, no gains.

What is going on? EPF is going to increase the basic savings again! Wasn't it the former chairman (or maybe it was the former ceo) who said that EPF is getting too large and too much money to find good investments? And the withdrawal scheme was to allow members to manage some of their money on their own?

KUALA LUMPUR: The Employees Provident Fund (EPF) has announced that the quantum for the basic savings will be revised from RM196,800 to RM228,000 effective Jan 1, 2017.

Read More : http://www.nst.com.my/news/2016/09/177215/...-old-set-rm228k

I don't know what to make out of above... except that people are getting higher salaries than they were getting 2 years ago when the previous revision was in 2014 - higher salaries due to inflation and the recent introduction of minimal wages?

So 30% instead of 20% is eligible to withdraw - and they got worried and scared? "Eligible to withdraw" does not necessary mean that all will do so...

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BTW for the uninitiated, the withdrawal is only a small portion out of your total money in EPF. The total money is split to Account 1 and 2; and out of Account 1, you can only withdraw 20% of the excess money above the 'basic savings table' (the table shows the amount according to age), and you can only do this once in 3 months.

Increasing the savings table will cut down the amount that can be withdrawn.

(And I know what you are thinking! ) No, you will not have the money in your hands - if and when you sold the UT funds, the money will revert back to EPF... unless you reached your 55th birthday.

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Wait... it just hit me that I had been reading the above wrongly and spill out a bunch on nonsense. Had read it as "the amount of eligible members".

The new savings table will set a higher level and will chop off those who was above the previous level and now deemed 'poor' to the new higher level.

To those who are still above the new level, there might not be any changes to the withdrawn amount - excess money above the mark is reduced, but can now withdraw up to 30% of it.

Tip: Be careful with the amount you are withdrawing - you don't need to follow anyone's suggestion to fully withdraw the whole 20% (or the newer 30%) if you don't find the need to do so. I often round it down to the nearest 5k or 10k.



This post has been edited by j.passing.by: Sep 30 2016, 10:03 PM

Wah, like this also called 'heated debate'? Sing song, tok cok also can say heated debate meh?

Universal truth like buy cheap, buy at basement price bargains also need to have mathematical proof to show advantage over friend? So high class one the discussions... 3 days long weekend no go holiday or jam the malls?

I top-up 2 weeks ago, so damn regret la... nav price drop 1% last Friday, should have waited till Friday.
If it drop again next 2-3 weeks another 8-9%, more regret la...

But ask me in 10 years time, what's the returns, hopefully I can boast "don't know la, maybe 110% or just above 120%... for sure more than 100."

In 10 years time, I would also forgot what's the NAV price I bought, and what's the 'rugi' I didn't buy at cheaper price. No luck... already buy, then price drop... buy somemore, price drop again.

Always no luck, so keep on buying...

Wait, dont' say no luck... don't talk like newbie... be more 'veteran' - "I'm using DCA method".



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Bond funds is for old folks without fresh funds... no risk, no thrill.

Hey, why the 'malu' face? Is it because your returns is not doing great and cannot show others that it is better than theirs? We already know that the journey was started on the wrong foot and did not began well... that's why the low IRR.

If you already revamped the portfolio with new funds... then be patient and let the 'investment' grows on its own. The ROI should be moving up and down - this is normal with equity funds, and when it represent a major portion of the portfolio.

If you want it to move upwards in more or less a straight line, then have more MM and bond funds...

If you are more or less maintaining the same nest egg without regular income to add more every month to the nest egg, maybe it is about time to leave the more risky (and volatile) funds to the youngsters.

Cheers.