The Investor's Dilemma (Part II)

Question: If you have a $6,000 investment portfolio and it compounds at 12% annually for the next 40 years. What is the value of your portfolio in 40 years??? (juz give a wild guess, ans at the end of the post)


Following my previous post on different difficulties investors face in investing in unit trusts, what can a individual investor do?


If you look at unit trust available in Singapore, the bulk of them churn their portfolio like crazy, normally holding the stocks in the portfolio for less than 2 years and in the meantime racking in fees for the investors and income for their brokerage house, which the parent company owns (not-so) coincidentally.


I believe that for the majority of us, holding a diverse portfolio of stocks and bonds is the best way to go. So looking at local unit trusts available, a good combi could be a combination of a low cost index fund, and a bond fund that invests only in Singapore bonds (thus reducing foreign exchange risk).


Example 1

Infinity Global Stock Index (80%)
LIONGLOBAL SPORE FIXED INC-A (20%)


or if you are really lazy, a balanced fund would do for you. A balanced fund holds a combi of stocks a bonds. It does allocation for you. So if there's only one fund you own, just own a low cost balanced fund.

Example 2
Lion Capital target return Fund/First State Bridge (70%) + Infinity Global Stock Index (30%)

The reason for including the global stock index in is that both the target return fund and first state bridge invests only in Asia (exld Japan) stocks. To achieve geographical diversification, it is prudent to also invest in the global stock market.

However, if you are REALLY really REALLY lazy, just set up a regular savings plan and invests monthly into 1 balanced fund and pray hard that the global economy for the next 30 years will be dominated by Asian states.

Alternatively, you can invest in individual companies that exhibits competitive strengths, superior managerial ability and purchased at a sound price...and the final result should be very satisfactory. Easier said than done!

ANS: $558,306, over time and decent rate of return, many of us in our twenties has the future potential to be worth half a million TODAY!

GET STARTED!!!

This post is prepared solely for information purposes and is not an offer or solicitation for the purchase or sales of the securities/investments herein.