Portfolio’s Rate of Return

 

 

Out of curiosity, I spent some time today to tabulate the returns of a stock portfolio I guided two friends to set up some time last September.

Although it has not been a full year yet but by some calculations, I was pleasantly surprised to find out that the average annualised return hovers at about 9% for the time being. There were a couple of stocks that are in the red but overall, it was still positive.

 

I consider this to be a pretty good return, considering the average annualised return I got myself when I first started out was only a miserable 1%. It does appear that my portfolio has improved since then, as my current portfolio average annualised return is also hovering at about 9% and I didn’t really managed it very actively.

 

Anyways, I’m just glad that both friends got a positive return on their portfolios. I’m even more glad that they decided to listened to my advice and had took action and started to create their own portfolios. I know they had trusted me a lot in order to switch from simply relying on others to manage their own portfolio to doing it themselves instead.

 

But what’s the best thing about this?

It’s that while we were busy working (and we work really hard at our full-time jobs), our money is not idling away.

Think about this – my friends spared about $20,000 each for their startup portfolio. And they use their CPF monies. The interest in CPF OA currently is 2.5%. Their average annualised return of 9% has given them about 3.5 times more interest.

In other words, just by taking action, and proceeded to set up their portfolio, what they had done effectively, was that they had given themselves a 0.5 to 1 month bonus depending, without having to go through the agony of performance appraisal. Is this good or good?

 

My point is, it’s important to get started. 

 

It’s even important to get started while we still have the ability to.

While we still have a steady income to be able to squirrel some money aside for our investment portfolio; while we still have the luxury of time for compounding to work its wonders.

 

Sometimes, life takes us away from our priorities. I was really very busy with work last month and couldn’t spend as much time as I would like to whether it’s for stocks monitoring, learning and trying out new techniques or just checking out new investments. I tried and could read up on articles when I can, but I knew I was very much overwhelmed last month. Therefore, I was glad that my portfolio was on good tracks because I’ve built its foundation when I had the time previously for me to be still able to reap the benefits.

 

 

 

The above are examples of my two friends. A true and good story.

 

But the truth is, there are more people unlike my two friends.

I have more friends who have not started doing anything at all. Some may have genuine constrains. For some, fear, laziness and procrastination delayed them. And I have a close friend whom I love and respect a lot, but is also one who never fails to be skeptical of everything I say and do. And naturally, until today, has not taken action. I recalled in one of our last conversation, I mentioned how I shortlisted a stock (having monitored it for some time and that it falls within the criteria I’ve set out for a long term portfolio). My friend disagreed, mentioning about the importance of stocks having growth potential which the particular stock I had shortlisted does not possess at all. Today, I’m happy to say that this stock generated an approximate return of about 24%.

To speak the truth, the nice run up did took me by surprise because it came pretty fast and furious. But when I thought about it, this happens all the time in stocks investing. And that’s why it’s important to start staying invested to catch nice little run ups like these.

 

Sometimes, we may catch it, sometimes we don’t. I mentioned about taking action earlier. I know for many, there exist this fear – what if I take action and I lose? Therefore, the action needs to be paired with the correct knowledge. If you think you need a little bit of help on how to get started, feel free to email me.

About Gwen

Business Owner, Investor. Financial Guru, Educator. My passion is in business management, financial matters and education. Combining these favourites, I manage this blog to share the importance of money protection and growth. Today, I invest in business, stocks, forex and properties. Collectively, I own two overseas properties, a commercial and an industrial property in Singapore. Update: I've since sold my industrial property for a small profit. Have a question? Email me at gwenkok@moremorecash.com
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