I started managing my family portfolio in May 2014. Right now it's close to three years. It is appropriate to show you my performance.
I have been delaying consolidating my funds for a long time but have finally done it, one of the reasons being most of my funds are held in Etrade as I invest in the U.S. stock market. Etrade is closing its Singapore office, which is why I could no longer invest with it.
Hence, I needed to find another broker in which to invest these shares. During this period, I thought it would be good to see where I stand. After all, whatever gets measured gets managed.
I have two different ways I invest my money.
U.S. aggressive fund
It is in the U.S. concentrated fund. This fund is extremely aggressive and pays little to no dividends at all.
One of the reasons why I invest in stocks that pay close to no dividends in the U.S. is to take advantage of the tax rate. As a Singapore citizen, if I receive dividends, I am subject to the U.S. income tax. If, on the other hand, I invest for the sole purpose of capital gains, the U.S. government will not tax my profits. I would only have to pay the brokerage fee.
This is not to say that I only invest in companies that pay no dividends. I do invest in companies that pay dividends; however the amount is negligible.
I invest in few stocks with about two of my holdings consisting of up to 80% of my entire U.S. portfolio. I have a very strong conviction that this group of stocks has the ability to achieve high rates of return. I do not intend to touch this portfolio as the holdings in this group consist of compounders.
I would only sell this group of stocks if they become overvalued compared to historical valuations. Currently, they are of reasonable valuation.
Over the long run, they will compound capital at double-digit rates. After all, Albert Einstein said that compounding is the eighth wonder of the world, and I wouldn't want to ruin that compounding effect by selling it early.
These are the results of my Aggressive Fund. I compared it to the Standard & Poor's 500 because my fund is invested in the American market. The S&P 500 has returned almost 8% as you can see from the bottom right of the picture.
Now take a look at my fund.
It has returned close to 18%.That is more than double what the market traded.
Singapore Value Fund
The other is the Singapore Value Fund. I buy shares in Singapore companies I believe are cheap. These are the typical Walter Schloss companies. I buy assets at 50 cents with the belief that they are worth $1 and hope that they will rise to that price. I sell after holding the stock for one year. If I believe that the stock has a moat, I will hold it indefinitely until it becomes overvalued, after which I will sell.
I visited this investor who compounded his wealth at close to 15% CAGR. He manages close to $100 million now and retired at 40. I wrote an article about what he taught me.
He told me that, although Singapore blue chip stocks are decent, they do not have the advantage that many American companies possess. It is difficult for a country with 5 million people to produce the next Nike (NKE, Financial) or Hershey (HSY, Financial). I have to agree with him.
As you can see from the chart, The Singapore Straits Times Index Fund has returned a negative 14.24% if you bought in June 2015.
If you had invested in my fund during that same period, it would have returned close to 7.53%. This is excluding dividends. I consider myself decent if I am able to compound money at an amount higher than the STI. Currently, I am on target to reach that goal. It means that all that time spent investing in knowledge has paid dividends.
Do I think I am good at this? To be honest I have no clue. After all, I have been doing this for three years only. Time will tell whether I have the talent to continually beat the STI. Investing is not a sprint; it is a marathon. Those who sprint in a marathon will only tire themselves out. I don’t think that I am a talented sprinter. But I believe that I can last a marathon. Bit by bit, I will be able to get better.
Time is the friend of the wonderful company, the enemy of the mediocre. –Â Warren Buffett (Trades, Portfolio)
