Historical Rolling Returns - DCA into STI

[T H I N K]

Total return = Capital gain + Dividend yield

What I am calculating is just the 1st half of the equation.

So can u explain how to calculate or how u derive 5%? What's the formula?

 

[Asphodeli]

Wow popcorn thread!

Honestly though, good work on the OP's part. Stability of fund price and good dividend yield ensures that it returns what the market can give to the investor.

Sent from Sony E6533 using GAGT

 

[Mecisteus]

So can u explain how to calculate or how u derive 5%? What's the formula?

Dividend yield already mentioned in the post. That is the easiest to find out.

For better accuracy, you need to grab from Bloomberg. Find the average yield for the past many years. I don't have Bloomberg.

 

[leoch037]

actually the logic is simple
one must have confidence in the long term future of STI then u do DCA on it
DCA is not going to transform what u deem as a plain jane into a beautiful princess

 

[T H I N K]

MikeDirnt78 wrote:


"" Returns are calculated on a rolling basis. As an example, you will achieve 0.96% pa (based on price) if you held STI for exactly 20 years and sold at the start of the year 2016 (bolded in table).

Transaction costs are not included. Returns DO NOT include dividends. You can expect an additional 3-4% returns from dividends based on historical data.

Some of the findings are:
1) Sad to say this, we should stop expecting an annualized returns of 8%. A realistic return to expect for Singapore market would be 5% pa. ""



How do you calculate or get the 5% pa u posted above (highlighted in red)?

Your table is based on buy and hold STI for 20 years to get 0.96%, where is your results for DCA?

 

[Mecisteus]

I think many guys dont really understand what it means by rolling.

http://www.investopedia.com/terms/r/rollingreturns.asp

Once I get the rolling returns for all the periods, I did an average of these returns. The 1st table shows the average annualized price return is 1.94% for ANY 20 years period in the past.

Add 1.94% with expected dividend yield to obtain total returns.

 

[Mecisteus]

actually the logic is simple
one must have confidence in the long term future of STI then u do DCA on it
DCA is not going to transform what u deem as a plain jane into a beautiful princess

Yes that is right.

1) Key are to have confidence AND discipline to execute

2) Decent returns can be achieved for a simple method

3) In order to achive higher returns, there must be an element of timing

 

[Mecisteus]

To add on, the table #2 is not complete with all data. I am hiding some of the irrelevant data like prices.

Table #2 is the historical price returns if you DCA into STI for 5, 10, 15 or 20 years.

 

[Mecisteus]

http://fifthperson.com/2-reasons-why-i-wont-be-buying-the-straits-times-index-etf-anytime-soon/

good read for believers of STI ETF.

Self pawned post. Copy and paste from another thread.

http://fifthperson.com/2-reasons-why-i-wont-be-buying-the-straits-times-index-etf-anytime-soon/

good read for all!

As usual, you don't try to understand the article or explanation carefully.

He don't suggest doing a lump sum investing into STI ETF now but he suggested to DCA instead.

Ajith, you are correct. This is an ideal time to continue your Monthly Investment Plan (MIP) to take advantage of Dollar Cost Averaging (DCA). That is exactly what I am doing. In fact, I am doing more than that; I make an additional investment mid-month if the STI ETF price is below my average purchase price. I would advise all monthly investors to consider the same strategy.

 

[OngHuatHuat]

I said it is a good read.

But did I draw any conclusion?

My conclusion is based on your 5 years dca result of negative without taking into account commission charges.

Self pawned post. Copy and paste from another thread.



As usual, you don't try to understand the article or explanation carefully.

He don't suggest doing a lump sum investing into STI ETF now but he suggested to DCA instead.

 

[OngHuatHuat]

He just wanted people to think the return is 5 %, but actual return is much lower.

I initially thought it can win cpf oa at 2.5 % at least, but it seems cannot even beat cpf oa of 2.5 %.

MikeDirnt78 wrote:


"" Returns are calculated on a rolling basis. As an example, you will achieve 0.96% pa (based on price) if you held STI for exactly 20 years and sold at the start of the year 2016 (bolded in table).

Transaction costs are not included. Returns DO NOT include dividends. You can expect an additional 3-4% returns from dividends based on historical data.

Some of the findings are:
1) Sad to say this, we should stop expecting an annualized returns of 8%. A realistic return to expect for Singapore market would be 5% pa. ""



How do you calculate or get the 5% pa u posted above (highlighted in red)?

Your table is based on buy and hold STI for 20 years to get 0.96%, where is your results for DCA?

 

[OngHuatHuat]

Agree with 1 and 3 but don't agree with 2.
Simple dca will result in capital loss, do it is not decent at all using sti etf.

Yes that is right.

1) Key are to have confidence AND discipline to execute

2) Decent returns can be achieved for a simple method

3) In order to achive higher returns, there must be an element of timing

 

[Asphodeli]

Ok la, lets discount it to 4% if we include a very conservative estimate for transactions fees.

Since it is the market, it's a moderately riskly investment, don't have to mess around with rights issues, consolidation, etc. sounds good enough for me

 

[Mecisteus]

Agree with 1 and 3 but don't agree with 2.
Simple dca will result in capital loss, do it is not decent at all using sti etf.

You got 3 options.

1) Let insurance/finance companies handle your money.
2) Pick own stocks. But don't end up picking Ezra, Osim, Noble or Creative. These are stocks from various sectors FYI.
3) I know you would include CPF. I am neutral to this because this option is open to everyone.

 

[Asphodeli]

You got 3 options.

1) Let insurance/finance companies handle your money.
2) Pick own stocks. But don't end up picking Ezra, Osim, Noble or Creative. These are stocks from various sectors FYI.
3) I know you would include CPF. I am neutral to this because this option is open to everyone.

CPF option to a certain group of people is considered risk-free and "liquid", because they're not a citizen here...

 

[OngHuatHuat]

It is -0.3x % without commission charge for 5 years, comes with 2-3 % of dividend yield. The current figure if including all the commission charge should be around mid 2.x % only. Definitely not as high as 4 %

Ok la, lets discount it to 4% if we include a very conservative estimate for transactions fees.

Since it is the market, it's a moderately riskly investment, don't have to mess around with rights issues, consolidation, etc. sounds good enough for me

 

[wahkao3]

DCA simulation results by mikedink78

 

[OngHuatHuat]

Your chart doesn 't make sense

DCA simulation results by mikedink78

 

[OngHuatHuat]

I feel bad if I take stock market risk but return lose to cpf oa without additional 1%

CPF option to a certain group of people is considered risk-free and "liquid", because they're not a citizen here...

 

[wahkao3]

Now we know the returns, i am really curious about risks as well.

I measure risk not as standard deviation, but as maximum equity drawdown.
I am hoping someone can also do such studies