Don't go too far with mental accounting

[corydorus]

Why would you want to get everything out at 62 even if you can ? Ok. Let's assume you can, but i would envision we may have to leave similar or even more amount in banks drawing little interests rate anyway.

[specuvestor]

Because it gives you a CHOICE. You can choose to take the money and migrate to a low cost country. Or if you are "lucky" to encounter a bust, buy 10% yielding safe instruments. Or even structure a pseudo CPF type of life annuity. From a government policy maker perspective, they restrict the choice because they are afraid of wrong individual choices becomes public liability.

That's why cash flow is important to value investors. Which do you prefer: a stock that pays 2.5% dividend consistent with 10% ROE or a stock that pays 10% dividend consistent?

[corydorus]

"10% yielding safe instruments" - Sounds like a Dream. How can i find one ?

[Temperament]

"10% yielding safe instruments" - Sounds like a Dream. How can i find one ?

Ha! Ha!
Plenty 10% or even higher but for how long before you return it almost all and then some with your invested capital. Better buy some snake oil and roadside medicine. Caveat emptor!

[corydorus]

Yeah .. if someone tell me SAFE on 10%. I will open EYEs BIG BIG.

[snowcap]

One thing I am very clear about, is that making less profits =/= making a loss. When I sell out and "take profit" early, friends may laugh because the prices still go higher. They say "you missed out" on making another $xxx. They will say opportunity cost is that you "lost" $xxx.

But I know that if I had held on when the market is bubbly, the additional $xxx come at a risk, that I lose not only that $xxx, but also the profits I made earlier, and even my initial capital (ie. make a loss). My answer is: Am I better off than when I first made the investment? If yes, then it is a gain. We must learn how to be content. If we always see the glass as half empty, we will be greedyand never satisfied. Poor people will look at millionaires with envy. Millionaires will look at billionaires with envy. Billionaires may look at poor people and wish their life was simpler (and their children were not fighting over their assets). Yes money helps solve a lot of problems, but the most important problems money cannot solve. Things like filial piety, respect for fellow human beings, compassion.

So I don't care if it's mental accounting or not. It serves me because it keeps me from being too greedy, when prices overshoot the fundamentals.

[specuvestor]

Yeah .. if someone tell me SAFE on 10%. I will open EYEs BIG BIG.

Try 1998 and 2008. Capitaland bonds before it was recapped. As recently as last year when Venture was trading at almost 10% yield as it is no longer institutional.

Just make sure your heart is as open as your eyes.