(23-01-2014, 12:35 PM)opmi Wrote: [ -> ] (22-01-2014, 09:17 PM)ghchua Wrote: [ -> ]The "net amount withdrawn for investments" is one thing. I always don't understand the cost of my stock investment in CPF Investment Account. Companies pay dividends, capital reduction etc but the cost had not been reduced. Which means, technically, you are still sitting on losses if a company did a RTO and paid out most of the proceeds from selling the business!
I have this problem on Eng Wah. After Transcu was injected and most of the proceeds from selling Eng Wah was paid out, my cost is still the previous cost from buying Eng Wah.
Similar for Elite KSB. They have given out so much dividends plus capital reductions but my cost is still 31cts! Like that how to make a profit?
If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?
OPMI is correct... except when you had huge negative "Net Amt Withdraw..", then Regross OA much smaller than actual OA balance until you sell everything, including ETFs.
Direct Stock limit is = [ (35% * Regross OA ) - Cost of Stock Invmnt ]
so Cost of Stock Invmnt is 3 times more painful !! coz it is deducted ONLY after 35% is apply to Regross OA !!
Example A:
so if you have buy 2000 shrs in Creative at $50 during dotcom days, and kept till now with mkt price @$2.00
==> your Cost of Stk Invmnt is still $100k, while mkt value is closer to $4k for donkey years.
assuming your CPF Regross OA is $300k => then 35% of Regross OA = $105k,
but after deducting the $100k (Hist Cost of Stk Invmnt for 2000 Creative), you're left only $5k for direct stk invmnt !!!
==> if you sell off Creative and recalc ==> your Direct Stk limit become 35% * $204k = $70K ==> buy 2 lots of Creative for $4k, and you'll still have $66k left for other direct stk invmnt
Example B:
you buy 10,000 ABC shrs @$1 each, and ABC give spdiv for 90c pershr => XD, ABC price adjust to $0.10 => your Cost of Invmnt for ABC remains forever at 10,000*$1=$10k but mktvalue now closer to $1k
you buy 10,000 XYZ shrs @$2 each, XYZ do bonus wrts that resulted in XB price adjusting to says $0.20 => your Cost of Invmnt for XYZ remains forever at 10,000*$2=$20k but mktvalue now closer to $2k
IN ALL of the above examples, the ONLY way to reset is SELL off that counter completely,
.if you must retain explosure to it...its better to wait for a recalc before repurchasing it back again..