(27-07-2023, 08:31 AM)i4value Wrote: [ -> ]If you come from the angle that you want to improve yourself, then I am not sure opportunity cost is a good benchmark. There are many investors who have shown that you can beat the index and that EMH is not really true. So the best benchmark (for improving yourself) is to look at the great investors and try to develop your skills to match them.
Would the aggregation of "Tuition fees paid and opportunity cost (ie. risk free rate)" be a better benchmark?
I come to realize that there are similarities between investing and getting into business. Unless one is naturally talented like WB or inherited a mature business, else things are never as linear as that of a salaried employee.
For most of us, investing or getting into business - is a case of "nothing happens for a long time....and then suddenly something everything happens exponentially". At least that is my experience in terms of investing so far. As you shared, you had similar experience.
But of course, another way to approach this...is that many of us still can't keep up (not even say outperform) the whichever benchmark we chosen. So if we are wise enough, we give up and index.
This is a good simple example of opportunity cost on AA. If you use OA or SA to invest through CPFIS then your opportunity cost is actually 2.5%/ 4%
Just as a reference GIC SGD CAGR return is about 5%+. And we know that most people lose money in CPFIS
(27-07-2023, 01:14 AM)Wildreamz Wrote: [ -> ]Agreed.
Everyone knows according to EMH, we are not favored to beat the index, long term.
We also know, the approximate index allocation that suit our risk appetite (be it CPF SA, dividend etf, STI, SPY, QQQ, VTI etc.).
Hence, "your opportunity cost", is probably the best benchmark.
(27-07-2023, 08:31 AM)i4value Wrote: [ -> ]If you come from the angle that you want to improve yourself, then I am not sure opportunity cost is a good benchmark. There are many investors who have shown that you can beat the index and that EMH is not really true. So the best benchmark (for improving yourself) is to look at the great investors and try to develop your skills to match them.
Could you share how long you have been investing and what is your portfolio returns on an annualized basis during this period of time?
(27-07-2023, 03:11 PM)Wildreamz Wrote: [ -> ] (27-07-2023, 11:46 AM)specuvestor Wrote: [ -> ]This is a good simple example of opportunity cost on AA. If you use OA or SA to invest through CPFIS then your opportunity cost is actually 2.5%/ 4%
Just as a reference GIC SGD CAGR return is about 5%+. And we know that most people lose money in CPFIS
They posted USD denominated 6.9% CAGR over 20 years and nominal real returns of 4-5% CAGR. Respectable, but probably below SPY (http://www.lazyportfolioetf.com/etf/spdr-sp-500-spy/).
https://www.gic.com.sg/newsroom/all/gic-...rtunities/
Those are decent returns considering the fund size and mandate (requires fixed income allocation, limited drawdowns). The more appropriate benchmark would be a combination of a global equity index and a global fixed income index.
Norway's SWF (NBIM) is also a good benchmark and they have shared some of their work on evaluating their returns with the public. See here:
Returns | Norges Bank Investment Management (nbim.no)
It's not apples-to-apples, since NBIM measures their returns in a basket of currencies but I suspect it would be very similar to results measured in USD. With that in mind, the returns of NBIM and GIC have been very similar.