Wednesday, 15 August 2012

My Investing Objective

My investing objective:  
To grow my whole portfolio by 15% per year over many years, that is, doubling the portfolio value every 5 years.

For every 5 stocks, expect 3 to do averagely, 1 to do exceptionally well and 1 to underperform.  Sell the underperformer and keep the winners.  By ensuring that you do not lose or lose small (not big), the modest gains from your stocks will translate into good gains for your overall portfolio.

For every 5 years in the stock market, expect 4 bull years and 1 bear year.  If you can avoid investing in a bubble market, you will often be safe with your carefully chosen and implemented philosophy and strategy.

There are many variables affecting the returns of your investing.

Choose a long term time horizon (>10 years) for your investing.  The reasoning is as below. 

You can see here why stocks are considered a good long-term investment, but a horrible short-term investment. This chart shows that for any 25-year period within 1950-2005, the very worst you would have done was +7.9% annually while the best was +17.2%. However, for a 1-year time horizon, the possible returns vary wildly.

1 comment:

bamboo investments said...

Hi: I wonder to what extent you would also expect the Malaysian Bourse to be affected by the crisis in the Eurozone? I just cannot see any stock market surviving a Euro meltdown:(