Before asking anyone input and opinion, how did your own opinion came about? So you believed some bond funds will outperform EPF? Have you estimated by how much the bond fund will gain over EPF? 2%, 3%, 5% or more?

And when the market is less volatie and more stable, and when your think that EPF is giving better returns... will you move the money back to EPF or not?

Lastly is it worth the effort (since timing the market takes some effort to get the timing right) to switch some money out of EPF - if you take into consideration the potential gains in terms of percentage?

Let's say the bond fund will outperform EPF by 5%, and the "some money out of EPF" is about 10% of the total money in your EPF and also your current UT portfolio. So the total contribution to your total "EPF & UT" portfolio is 5% x 10% = 0.5%.

Which leads us to ask:
Will this difference of 0.5% be noticeable when the market is volative and in a market selloff, the portfolio can drop up to 2% in a day?

Can we get the timing right, and pull out the bond fund when it hit the 5% outperformance, if indeed it can hit this 5% outperformance?

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My 2 cents... it is easier to stick the original objective of getting into this "UT investment" and continue any tactic, strategy or plan or whatever... than begin pressured to react and adjust anything due to market trends.

bond not the way to go yet

Good point j.passing.by. How does one know the timing? What if one invest in bonds and US interest rates jump, bonds price will get affected no?

How does one tell when stocks will pick up again? When it goes up and then falls down? Or it goes up and up and up? How can one tell? Also UT funds takes a few days to buy and sell (forward pricing), so the timing is worse. By the time you buy or sell, the market has already moved a lot. Also when buying or selling UT funds, there may be transactional costs, right?

If you know these facts, then what is the better investment strategy, then?

The better method, if not the best, is using a bit of common sense.

If don't know how to time the market, then don't time the market. Spread out the purchase over the entire investment period, purchase bit by bit, 1% at a time....

As Warren Buffett would say, buy equities. Not bonds, not reits... stocks.

Instead of dabbling directly in the stock market, buy equity fund.

The pros and cons of equity fund is well discussed in this forum.

Red everywhere.

Is it going to be even worse for the rest of the year?

Red everywhere.

Is it going to be even worse for the rest of the year?


Attached thumbnail(s)

even my PRS fund also red for some time d... close ur eyes......

DCA all the waaaaaaay.
In this case, RCA I guess

Mine too, been red throughout the year

What is RCA?

what is DCA and RCA ?

Bond funds have the following characteristics:

1) it has low correlation with equity fund. Take a look at the chart centre at fundsupermart. Lets just look at Malaysian funds to ignore the exchange rate noise for simplification sake. Compare several Malaysian bond funds (libra anista bond, etc) to pure Malaysian equity fund (eg kgf etc). what is the performance of bond funds compared with equity funds?

2) Even if the bond funds drop the decrease is less than equity funds. Again lets look at some Malaysian bond funds eg Amb enhanced bond trust fund but if one compares with eg KGF what can one observe?


Guven these two characteristics, which investor is suited for bond funds?

Lets take two example, investor A who knows that in a few days time he has to pay his kids college fees. Should he sell his equity funds now and realised his losses? Wouldn't it be more prudent if he sell off his low risk bond funds while waiting for the market to recover?

Lets take another example, investor B who is 80 years old. He doesn't have any salary and he can't really predict his expenses. He knows that there will be a lot of emergency spending on medical, repairs etc. He also knows he may have 1-3 years left and doesnt want to burden his kids who are under debts and have their own family to support. Is equity funds really appopriate for him?

Investor C used low risk bond funds as a rebalancing tool. Once a year, he will reassess his porfolio. When stock market increase and is over the boundary say 10-15% of the assest allocations, he will sell some equity funds and put it in low risk bond funds. The converse is also applicable, when the stock market decrease like it is now. He will sell bond funds and buy his equity funds. He is applying the principle of buying low and selling high.

So there are uses for low risk bond funds. Don't blindly follow Buffet's advice because people like him, JhoLow are super wealthy. Millions are nothing to them. These principles may not apply to them.

As an aside not all bond funds are low risk. For example, foreign bond funds have higher risk due to exchange rate risk. There is also money market funds which has lower risk than bond funds.

Is there any fund that invested in vietnam market from fundsupermart?

Sorry I quite new to this feature.

DCA = dollar cost averaging. Lets take the example of purchasing UT. The idea is that because one doesn't know whether the price of funds will go even lower, it is more prudent to spread ot your purchases so that you don't buy at a higher price.

Suppose you have rm30,000 that you want to buy UT. Instead of investing all 30,000 now when the UT funds might go down further (eg Trump carzy policies, more bad things discovered in GLCs, US interest rates increase etc). You park say rm20,000 at money market funds earning about 3.5% interest, and invest 10,000 at equity funds. In the next month, you invest another 10,000 in UT while leaving 10k at the money market. In the following month you invest the last 10k.

The converse also applies to selling.

This post has been edited by ChessRook: Jun 21 2018, 11:39 AM

Ok i got it. I only know the full name lol

Thanks

This post has been edited by foofoosasa: Jun 21 2018, 11:44 AM

The bond can be zero value if the bond issuer suffer loss or cannot continue his business. They just default and nothing could not be done. If you buy equity that provide good financial standing and provide dividend at least once a year. You will not suffer losses even their prices down!

I am talking about bond funds and not individual bonds.

Yes, we are talking about unit trust or mutual funds.

In the longer term and in the chase for growth, and especially since this thread seems to be populated by youngsters who are just beginning to save and build up their wealth, equity funds are much more preferred than bond funds.

And there is a need to know what purpose it would serves the investor to hold bond funds (as you had explained).

There is not much reasons to divert money out of EPF into bond funds. (Mind you, this diversion from EPF is not necessary age 50 or 55 or 60 withdrawal, but within the EPF withdrawal scheme into unit trust funds.)

When it is within the EPF-UT withdrawal scheme, it is better to take on more risk and aim to outperform EPF by having an equty fund.

This post has been edited by j.passing.by: Jun 21 2018, 04:21 PM

That's not a good example of DCA. It is more like a lump sum investment, but split into 3 purchases at a monthly interval.

The regular puchase strategy, I often mentioned, should be:
1. Don't save and build up a lump sum.
2. Save and invest as you earn.
3. Buy equity fund with the spare savings you have for long term savings.

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- Strickly no timing at all. You don't wait, and wait, and wait for the market to fall, while your earnings and savings are gathering dust while waiting for the right time to begin your investment.

- You may try to wait and select the better day when all the market indices are falling to put in your regular purchase. But don't wait months to do so. Should pull the trigger within 7 days, since you have a job and income, and money is rolling in every month.

- Don't let the regular savings accumulate. Then you could put yourself into difficulaty of pulling the trigger to make a purchase; since the amount to invest is now bigger...

- Remember that the IRR (the effective rate of returns) actually begins the moment you get your salary. If you put the extra savings into FD for months or years before withdrawing it and investing it into UT... the IRR will take on the characteristic of the FD and it will take a much longer time for the UT fund to pull up the IRR.

(Furthermore, you are wasting time and being less efficient on investing your money... and missing the compounding growth on the UT fund.)

- Take on more risk when you (the investor) have the time to do so.

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In a post a few pages back, I wasted some minutes and data download reading that poorly written article on the so-call myth of youths taking on more risks than necessary... which try to muddle up things even more, trying to create more confusion on the uninitiated reader and then in the last para, recommended the reader to invest into "managed portfolios".

If not mistaken, the minimal entry levels:
Managed portfolios = 10k
UT fund = 1k
RSP (regular savings plan) = 0.1k

- Don't waste time and wait and wait to time your entry.

Just wnt to ask the sifus here, what you think of going into Ponzi 1 now. Affin hwang select asia (ex japan) quantum fund?