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A letter from a 24-year-old fresh grad.

Monday, January 14, 2013

About a month ago, I published a very bracing email from a 66 year old retiree. The email affirmed that I have done good with my blogging efforts and I felt very much encouraged.

Of course, there are people, including eminent bloggers, who have been quite outspoken that my emphasis on investing in S-REITs in the last few years is only suitable for people who are older because they probably require a consistent income stream as they near or are in retirement.

My own stand has been and still is that what we invest in depends on our motivations for being invested. There is certainly nothing wrong with the young investing for income if that should be their inclination.


Today, I received an email from a 24 year old who has freshly graduated from the university.  He gave permission for me to publish his email which shows how pleased he is to be investing for income.

Hi Ak,
 
I've been a really avid fan of your site. I'm a 24-yr old fresh grad, who started investing 3 years ago.
 
When i first started, I read your blog with much interest, but great apprehension, because I didn't know much about investing early on.
 
After building a core portfolio, centering on S-Reits, my investing journey has been nothing but awesome.
 
First REIT is my best performing investment, and I would not have even bothered to look at it, if it weren't for your perspective.
 
In fact, my 3 year annualised gains for my entire portfolio is 22.67% per year! (In most part, thanks to you!)
 
So from the bottom of my heart, I sincerely thank you for all the good work that you have done, and for all the time and effort for crafting such good analysis and entries. :)

Sincerely,
ZZ
 
There isn't a holy book that everyone has to follow to invest in the stock market as far as I am concerned. There is more than one road to Rome and because others walk a different path from us does not mean that they are walking through rubbish.
 
There is room for diversity in this world and if a road takes us to where we want to go, it is in the right direction. Of course, we must first be clear on where we want to go and that is something we have to decide for ourselves.
 
Related posts:
 

Achieving $1m in retirement funds: Epilogue.

Sunday, January 13, 2013

This is the final blog post which should be read together with the two I wrote this weekend to encourage young people to save and to invest in the stock market.

The aim of  "Retiring a millionaire is not a dream!" is to shake all negativity from the mindsets of the young who think that it is impossible for them to have S$1 million in cash (without counting the money in their CPF or selling their HDB flats) when they retire at age 65 in the distant future.



With the help of numbers provided by The Business Times, the companion blog post "What is S$1 million dollars at retirement? Peanuts?" aims to demonstrate how $1 million is enough for retirement expenses, given certain assumptions.

In this final blog post which would complete the trilogy of blogs, I am going to tell you that there is no need to constantly invest to achieve a 5% annual return on your investments. Then, why did I bother to say that in the first instance?

Simply because it was the easiest way to illustrate how being disciplined savers who invest our savings, we could make reality out of a dream.


You know what is the best way to make money from the stock market?

It is to buy at the depths of a bear market when even the best blue chips are bombed out. During the GFC, I bought many more units of First REIT at 42c and LMIR at 18.5c. During the deep correction at the end of 2011, I bought more AIMS AMP Capital Industrial REIT at 95c. There are many such examples.

However, without any money put aside, there is no way we would be able to take advantage of opportunities to buy on the cheap!

Indeed, we might not even have to wait for a bear market to buy bombed out stocks as mispricing by Mr. Market could happen anytime and my large purchase of units of Saizen REIT at under 13c per unit middle of last year is a good example.

So, once we have savings put aside for investment, we should hedge by investing some of it but we should not invest all of it because we must always have a war chest ready to take advantage of any mispricings by Mr. Market.

We want to buy low and sell high. This means to sell stocks which are overvalued and to buy stocks which are undervalued. The former usually takes place in times of great optimism while the latter usually happens in times of great pessimism. Doing this will make us quite a bit of money from the market. Add to this our monthly savings and any dividends received, we would do quite well.

Making financial projections with average rates of return is all fine and good in theory but, in practice, making money from the stock market requires a little more diligence on our part but it is definitely not rocket science.

With this, we end this weekend's trilogy of blog posts which hopefully have demonstrated to the 25 year old reader whose email started all of this that his scepticism could be put to rest. The ball is now in his court.

Related posts:
1. Retiring a millionaire is not a dream.
2. What is S$1 million at retirement? Peanuts?


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