Monday, November 12, 2012

When investment does not turn out as planned

I remember one reader asked me about unit trust. I can only say I am sorry if my sole experience turned out to be not a sweet one. Although I have not thought of this investment (in fact sometimes I forgot about it), I did not have the chance to close it after intending to do that 6 years ago.

And since my brother is in town this week, I have decided to close my single and not so successful unit trust investment in my lifetime as his name is in the fund as well. Back in 1995, after a bad 1994 experience in the stocks, I decided to park some of the cash from my savings into a fund. I thought that since I did not make money from investing myself, why not letting professionals do it for me. Professionals, hmmm.... may not perform better than any layman on the streets though despite they continuing to charge you fees.

Despite being just RM1,500, that decision to put this savings into one of the local unit trust fund is not a beneficial one, although it is a lesson learned. How did it performed?

After 17 years or exactly 6,355 days, I made an amazing 7.5%, closing at an earned profit of RM110.32. How nice.

I am going to celebrate by going for a nice dinner tonight!


Bn911 said...

Hard to believe, but currently i am stil satisy with my p.small cap fund, buying china select fund at very low price stil earn a bit also so far.

K C said...

Hahaha felicity, you return of investment for the seventeen years is less than 1% a year. KLCI returns from the same period is about 4% only including dividends (about 1300 to 1600 plus estimated 2.6% dividend yield). Your unit trust actually has a negative real return of 3%! Hahaha, trusted your money with the professionals? Well when you give them 1500 to invest, upfront they take 6.5%, or about RM100. Then every year management expense, transaction costs, cash drag, soft dollar cost etc amounts to another say 3% plus. That is why the poor performance. Hahaha. Oh shit, I was in the same boat too when I invest much much more than you in BHLB funds in 2000 with my epf money.

K C said...

The reality is few investor really know what is their compounded annual rate of return from the money their put at risk with unit trusts, which is often less than what you get from putting the money in the bank. I can bet with you my last dollar about it. We trust the "professionals" mah! Let me tell you the truth, and nothing but the truth. They ain't "professionals", but >90% are snake oil salesmen. I dare to say that because I was one too. Good that I did not get immersed in this "profession".

cykoay said...

Felicity, now you are successful in stock investment, how did u make it and how long did you take to be that level?

felicity said...

Hi cykoay

i would not call myself successful but rather the tendency to make good calls is getting stronger.
I do not know how long it took me, but it started when I decided to look at businesses rather than purely valuation.
I guess that realisation is very strong especially when we are putting our bet on strong and tested management and business model.

khengsiong said...

At least you know your investment plan didn't work out. Some investors refuse to believe that they have picked the wrong stocks, and thereby hold on to the 'losers'.