The STI has started out well but fizzled out yesterday. Nonetheless, it’s a positive start on the first week of the year! It definitely feels good to see a near 5-figure increase in portfolio value in a week. My amygdala is going “wow…if this goes on…what a year it is going to be”. Fortunately, my frontal lobe reminded me not to get carried away, “the 5-figure increase could have been a 5-figure decrease!”
Yes, investing in the stock market continues to carry risk. So focus on the goal and keep to the strategies to improve the chance of doing well in the market.
The goal set in 2015 was to achieve at least a 8% CAGR at the end of a 5-year period. The stretched goal was at least 12% CAGR. With strong performance over the past 2 years, I have exceeded the stretched goal by the end of third year. However, it is not for certain that I can say the same by the end of 2019. Using the Premier League as an analogy, Manchester City had a good lead half-way through the season but will it become champion at the end of the season? Highly likely but not definite?
To protect or increase my lead, I will aim for a 10% return (including dividend) this year, using similar strategies.
- Keep to my asset allocation of 30% cash and 70% stock (reviewed quarterly)
- Keep to my stock portfolio allocation of 40% growth (<10% punt) and 60% income (<30% REIT)
- Maximum exposure to a single counter 15% of portfolio
- Monitor the business of counters, focusing on its long term prospect.
- Continue to explore the US market and keeping maximum exposure to 15%.
- [New] Start thinking about investing in other less accessible markets through ETFs or unit trusts.
That’s what I have in mind on this Saturday morning.
Wishing all a “huat” 2018!