Monday, May 25, 2015

Journey To Retirement (CPFIS) Part 1.1 -- STI ETF

Divested at a price of $3.4988 on 22nd May 2015 earning a capital gain of 12.33% and dividend return of 17.09%, giving a total return of 29.42%.  For the 7 years of investing (since 2008), this gives the following annualized returns :-

1. Capital Annualized Return = 1.68%
2. Dividend Annualized Return = 2.28%
3. Total Annualized Return = 3.75%

Technically the total annualized return was not very impressive but managed to beat the CPF interest of 2.5% pa.  In another word, the initial investment in STI ETF was not a total failure.

The reason for divestment was not purely due to believing there is no more upside to Singapore stock market (STI) but rather on a more strategic perspective.  As mentioned earlier, the investment in STI ETF made up bulk of my CPF capital (53%) and hence releasing the fund will enable me to have more options to gather more return (via other investments).  It was a calculated move as the opportunity cost of missing in investing in other stocks weighed much higher than if I continue to invest in STI ETF and wait for the peak.  As nobody know what is the time frame for STI to peak and where is the peak, the so-called missed out return could easily achieve via other investments.

To be exact, I already made the first move in April of my strategic investment using the balance of the CPF money and with the release of the STI ETF capital, I could enlarge my strategic investment in the months ahead. 

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