Friday, November 20, 2009

Investment Experience


I assessed my modest investments in stocks, Exchange Traded Funds (ETF) and unit trusts today. Mainly to see if I have enough to pay for my kids college education. The results are mixed; roughly break-even considering those that increased and those that decreased at this nascent phase of the market recovery. It’s roughly an even performance because of the diversification from unit trust to stocks. But I am slightly positive mainly because of the company stock that I bought at an employee discount. This meager investment kept me positive considering all the losses. Only my Malaysia country fund is doing well compared to my other investments.

On the other hand, my real estate investments have done well. My small property in the Philippines is being rented and I was able to pay my loan about 3 years ago. I sold my tiny Singapore flat last August and gained about 67%. Of course, after paying off the loan and returning the money I borrowed from the provident fund, I gained about 25% in my investment. So compared to my investments in the stock market, my property venture was the more rewarding encounter. But I am still keen in investing in the US stock market because of all the books that I have read. Of course I had one significant success way back in the Philippines when I bought Ayala corporation stock. It was my first investment success, my first stock market venture which earned more than 100%.

Of course, the market is still down from its heights although it’s on the road to recovery. But with the last economic crisis, will the market still rise in the way it did in the past? Past performance is never an indication of the future so one wonders if it will recover. If one decides to proceed, the best instrument is index funds or ETFs invested for the long term. I just finished listening to John Bogle’s book ‘The Common Sense Investing Guide’ which I should have read long ago. It will reduce all the time I wasted reading all those investment guides from different authors. I guess the best way is to invest in ETFs or index funds (preferably Vanguard) with the lowest expense ratio and lowest P/E ratio.

Even at today’s levels, some stock prices may still be overvalued although some have good prices. I have always read that the stock market is the best way to grow wealth following Warren Buffet’s example. But real estate has done me well so I guess I need to find a balance for both. Perhaps renting out my present townhouse and investing in another home with the current low prices maybe a good way. I think it will be a buyers market until the end of next year or possibly into 2011 even. This feels like a good investment strategy to have both modest property investments plus ETFs invested in the US market. I think I would like to invest as well my provident fund in the Singapore stock market to get the benefit of an improving economy by 2010.

The key to this success is to have enough cash to handle any problem. For instance, failure to rent the townhouse will require me to have funds to pay the monthly mortgage until someone can rent it. This maybe risky considering my father’s experience when his tenant declared bankruptcy. But I can mitigate this risk by working with rental specialists. Nevertheless, I should have access to another source of income other than my monthly salary. The strategy here is to have a separate career as a writer or speaker. Hopefully this will be a success or otherwise my wife and kids can look for work or I can have another job during the weekend. All these plans are possible I think only here in this country and no where else.

Sometimes I envy people like Warren Buffet or John Bogle or even Frank Frazetta, the artist. I envy them not because of their wealth or their talent but their ability to focus only on the one thing that gives them their bliss. They have devoted their lives on a singular pursuit and have achieved enormous success. On the other hand, I have a lot of interests that I am cultivating. I don’t have any focus except working here as an employee in the same company for nearly 15 years, my journal writing for about 15 to 20 years (though sporadically) and my constant reading. I am familiar with a lot of things but I am a master of none. As an investor, perhaps I have had modest success but not really enough to satisfy me or be proud of.

But what is good for me is that I have kept at it for so long that I have achieved a modest level of expertise. As an investor, I have had actual experience and have kept up my readings and studies on stocks as well as real estate. As a writer, I have had my journal writings and book readings as well. As an employee working as a project manager or functional analyst, I also have significant experience. Hence, I am neither a novice nor an expert but I am well-above average perhaps a so-called talented veteran. I guess keeping at it for more years will actually make me better. It’s just staying the course will achieve dreams. Perhaps if I had focused on one area, without distractions, I would have reached my goal much faster. But I guess I wanted to experience everything.

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