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| Wednesday, September 10, 2008 |
| My new LONG-TERM investment plan. |
Have you ever blocked by any financial planners from banks, insurance companies, investment firms, which selling their products such as monthly saving plans; i.e. save a fixed amount of money every month with a certain lock-in period to enjoy a special given interest rate. With the same logic or strategy, I have planned a long term investment plan for myself. So what kind of investment? Well, it is by purchasing Singapore stocks. How? I shall give a simple explanation as below:
First, I would say, this simple plan would not make me rich, but as I say, this is only for a LONG TERM investment. By looking and searching around the Singapore stocks, I have found a few potential stocks that possibly working fine with this plan. For example, I will just name it as XXX. Well, long term investment, we are normally talking about low risk investment. So, meaning to say, stock XXX has to be a stable, not volatile and constant growth stocks or at least periodically paying a stable dividends.
Again, As i mentioned earlier, the logic and strategy is similar to the saving plan given by banks, etc; ie. every month, or every quarter, or even just every 6 months, depends on your own financial capability, taking part of the saving, and purchase the stock.
For example, every quarter, I am going to purchase one lot of stock XXX at current price at $2.00, in another words, every month, roughly I will take about $500 from my saving to purchase the stock in quarterly manner.
Looking at the historical info of the stock XXX, it's having a average increment (geometric mean)of 26% in the stock price; and most importantly, it's givng an average dividend (geometric mean) of 6% for the past 5 years. Let's take 5 years as a plan, and for "worsen" estimation; we ignore the appreciation of the stock price and assume the yearly dividend is 5%.
Through these, after 5 years, you haved dumb in 20X$2000 =$40,000. But with the returns of the dividends, you got already about $5,000, which is 12.5% increases in the absolute amount. Note that this is the return estimate from dividend, without consider the increase of the value of the stock, and of course you may not need to consider this, as long as you hold the stock even if the price is falling. Furthermore, imagine, after 5 years you have 20 lots of the stock XXX. every year it gives you 10 cents (5% of the price of $2.00), you will get $2,000 for dividends, (NOTE, This is a extra income, not much, but why not?) and if you continue with this strategy all the way till you retire, wow! I would expect it will become a pretty huge extra incomes.
Of course you may doubt on the RISKs of purchasing stock, yes, I could not say no for the risk is there; but personal opinions, there are some pretty stable and constant growing stocks there (or I would say low risk). For example, SMRT? Singtel? SBStransit? etc. Still have doubt, you may check out http://www.sgx.com/ and judge YOURSELF! |
posted by NOSNIM™ @ 1:04 PM  |
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