Post by oldman on Oct 19, 2013 8:11:04 GMT 7
Someone asked me recently what my investment returns were and he was shocked when I told him that I never bothered to check as this is of little value to me. I am not starting an investment fund and I am investing for the sheer joy of investing. Moreover, any past performance is certainly no indication for the future. Hence, I don't see any point in digging up these numbers..... except maybe to satisfy a curiosity crave.
I then tried to dig these numbers out but then I realised that this is not possible as I never tracked these. All I tracked were my transactions rather than what my net worth was at the beginning of each year. If I look at just my completed transactions.... ie those in which I have bought and totally sold off all the shares over the past 4 years, my average return is well over 15% per year. Why 4 years?.... this is because I never even bothered to keep a complete record of all my transactions before then!
As a long term investor, when my exit targets are reached, I will usually sell off all the shares and move on to the next investment. Yes, many of my current investments are also showing gains but I have decided not to include these as I think that this is like counting chickens before they are hatched. I am aware that this is how most funds calculate their investment return but as stated, I don't see myself as a fund and to me, an investment return is the gain or loss that one gets when one sells his shares. The percentage investment return is then based on the profits of these completed transactions compared to one's total investments in the stock market.
If the shares are not sold, I cannot consider this as a return as this will then be just an illusionary number. it is like setting up a shop and saying that your inventory is worth so much profit when you measure your cost price with the current retail price of your goods. All of us will kick up a fuss if shops calculate their returns based on this concept.
The truth is that an investment return is the profit that one makes only when one has sold his investments. If the investment is not sold, you cannot have a return on it. Yes, as I am doing this exercise for the fun of it, I have also not considered any dividends that I received during this 4 year period.
This quick exercise has ended my curiosity crave as frankly, the joy in investing is in getting it right rather than meeting or exceeding certain targets. When you get it right, your investment returns will look after themselves.
I then tried to dig these numbers out but then I realised that this is not possible as I never tracked these. All I tracked were my transactions rather than what my net worth was at the beginning of each year. If I look at just my completed transactions.... ie those in which I have bought and totally sold off all the shares over the past 4 years, my average return is well over 15% per year. Why 4 years?.... this is because I never even bothered to keep a complete record of all my transactions before then!
As a long term investor, when my exit targets are reached, I will usually sell off all the shares and move on to the next investment. Yes, many of my current investments are also showing gains but I have decided not to include these as I think that this is like counting chickens before they are hatched. I am aware that this is how most funds calculate their investment return but as stated, I don't see myself as a fund and to me, an investment return is the gain or loss that one gets when one sells his shares. The percentage investment return is then based on the profits of these completed transactions compared to one's total investments in the stock market.
If the shares are not sold, I cannot consider this as a return as this will then be just an illusionary number. it is like setting up a shop and saying that your inventory is worth so much profit when you measure your cost price with the current retail price of your goods. All of us will kick up a fuss if shops calculate their returns based on this concept.
The truth is that an investment return is the profit that one makes only when one has sold his investments. If the investment is not sold, you cannot have a return on it. Yes, as I am doing this exercise for the fun of it, I have also not considered any dividends that I received during this 4 year period.
This quick exercise has ended my curiosity crave as frankly, the joy in investing is in getting it right rather than meeting or exceeding certain targets. When you get it right, your investment returns will look after themselves.