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JUST ASK: 'Why doesn't ghchua track his investment returns?'
Written by The NextInsight Team
Saturday, 06 March 2010
In this weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert (or experts) to provide answers. Below is a set of questions from a reader after we published last Saturday's topic "Is it silly to just buy and hold, instead of trading?"
The reader was intrigued about some investment details of ghchua, who is well-known among some investing websites. 'ghchua's' investment holding period is unusually long (for retail investors). If you missed last Saturday's article, please click on the URL at the bottom of this page. Read on!
Why does 'ghchua' invest in unit trusts?
Last Saturday, I read the interesting answers given by 'ghchua' and I seek to learn more from his investment mindset.
a) 'ghchua' doesnt seem to track the returns on his investments & his portfolio. Is that the case?
If not, what is the return on his stock portfolio to justify a buy-and-hold strategy? Would he mind revealing the size of his portfolio?
b) Why does 'ghchua' invest in unit trusts when he has the capability and experience to pick stocks? Unit trusts have too high a sales fee and an annual management fee, in my view.
c) What is the return on his investments in unit trusts?
ghchua's avatar
Dear reader:
a) Yeap. I don't track my portfolio returns. But I do receive statements from CDP every month and I roughly know how well I am doing. But I do have a rough idea of the dividend yield of my portfolio, which is currently around 4%pa.
As long as your investment strategy is consistent and focused on the process itself, the returns will come automatically. That is what I believed even after years of investing in the stock market, which is why my focus is mainly on building my portfolio rather than tracking returns.
Investment is not only about return, but it is also about enjoying the process, having fun and be more knowledgeable as time goes by. The knowledge gained in investment is useful for life, not like job skills which can be obsolete
Size of my portfolio is near $1 m, if you include CPF funds as well.
After about 5 years of investment experience, I've realised that nobody cares about your own financial future except yourself.
Therefore, I've decided to take a more active role in my own investment portfolio management. My funds are mostly invested in shares as I felt that the long-term return of direct shares investment is still the best bet.
ghchua's unit trust portfolio recently had a value exceeding $100,000 and a profit of about 15%.
The compounded return of dividends being re-invested is one of the best things in stock investment.
Furthermore, one can enjoy potential gains from bonus shares where companies issue more shares to you if you hold them for long term.
I am a DIY guy with a focused aim of prudent investing for retirement planning. I do not have any financial advisor currently and I intend to rely on myself and do my own research. I bought funds from online portals like FSM as they are cheaper and more cost-effective. For shares investment, I use online portals from brokerages as they offer lower commision charges.
b) I invest in unit trusts using my CPF funds currently, which some of it cannot be invested in stocks directly due to CPF stock investment limit. I started with unit trust investing and cultivated this long term buy and hold investing mindset.
c) My unit trust portfolio can be viewed at Fundsupermart page here.
ghchua, B.Eng(EEE)(Hons), Dip(Elect & Comm) works as a Senior Test Development Engineer in a Computer Software MNC. An Electrical Engineer by training, he is a self-learned private investor managing his own personal investment portfolio for more than 8 years. He contributes regularly at an independent online financial portal, www.sgfunds.com as a moderator. He also likes to write regularly on investment matters at his own personal blog, ghchua.blogspot.com.
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