$6k Investment ideas.

[NeverTooLate]

because the shares were not $3.50/share 10 years ago

Hi,

So does that means I have to expect the ETF to grow in order to increase my annual yield increase? (I know it sounds quite stupid. )

In conclusion, I can't just park my money into the ETFs, re-invest dividends every year, and expect the annual yield to grow?

Thanks all once again!

 

[peterchan75]

If I am not wrong, the return is the dividend payout.

http://www.spdrs.com.sg/doc/STI Dividend.pdf

 

[NeverTooLate]

If I am not wrong, the return is the dividend payout.

Then ultimately, it's impossible to increase the annual returns yield to 5%-9% without a larger dividend payout declared, increasing the investment capital, share price rising.

Even if I re-invest the dividends every year, the IRR of every year will be constant if we were to take share price & dividends declared to be constant as well. Which is not true as we know it fluctuates within a range.

But the point I'm trying to make is that, our annual returns will only hover around 2.5% and not increase to 5%-9% (as claimed by many here) if we were to just re-invest dividends and not investing in more capital.

 

[havetheveryfun]

Hi,

So does that means I have to expect the ETF to grow in order to increase my annual yield increase? (I know it sounds quite stupid. )

In conclusion, I can't just park my money into the ETFs, re-invest dividends every year, and expect the annual yield to grow?

Thanks all once again!

yes ofc you have to expect the ETF to rise in price in order to get that 9% annualized returns.

But I would say 8-9% is too much of an exaggeration, because some of them use the price of the STI ETF during the economic crisis in 2008 to tabulate this.

A reasonable amount to expect would probably be 4-6% including both growth and dividends.

 

[peterchan75]

My average is $1.95. Sold some at 2.8+ and some at 3. If I keep all ... I would have gain a few % more. BUT who knows... Another storm might bring it back to 1.6+...

 

[Newbiekopipeng]

With 6k.. Just loot as many golden Agri as u can.. Sell @0.52 then buy back 0.45 .. Keep repeat

 

[wahkao3]

Hi everybody again!

I was trying out to list out the annual yield of STI ETF and the results are as shown from the attached image link. (I can't post the image here because not enough postcounts. )

Please go imgur.com and add in this image code, ghvnb97.

Sorry for the trouble.

The data are based on a start-up capital of $10,000, share price of $3.50/share, dividends to be $0.04/share (paid twice per year, which is why the amount shown is x2.), and the dividends are re-invested into next year's capital every year. But as you guys can see, the IRR of every year is 2.29% constantly.

Above figures & percentages are assumed to be constant throughout the 10 years.

So I'm curious to see how everybody calculate the annual growth of 5%-9%.

Thanks all for reading through this lengthy post!

 

[wahkao3]

With 6k.. Just loot as many golden Agri as u can.. Sell @0.52 then buy back 0.45 .. Keep repeat

golden argi good?

 

[Shiny Things]

Even if I re-invest the dividends every year, the IRR of every year will be constant if we were to take share price & dividends declared to be constant as well.

In the immortal words of Adam Savage: "well, there's your problem".

If you're assuming a 2.5%-ish stream of div yields and no share price appreciation, then frankly I'd be surprised if your IRR wasn't 2.5%.

But the point I'm trying to make is that, our annual returns will only hover around 2.5% and not increase to 5%-9% (as claimed by many here) if we were to just re-invest dividends and not investing in more capital.

The thing you've missed is that, on average and over the long term, stocks go up. If you don't believe me, have a look at the chart of the Dow since 1900, or the STI since inception. It's gone up and to the right, with lots of ups and downs on the way, but generally up and to the right.

You can't assume zero capital gains for stocks. The old rule of thumb of "stocks return about 5% over inflation in total" (which is more accurate than an absolute "7%" or "9%" or whatever) combines capital gains and dividends.

 

[Shiny Things]

In conclusion, I can't just park my money into the ETFs, re-invest dividends every year, and expect the annual yield to grow?

Wait, what? Yes you can, you totally can do this. You'll just get capital gains as well.