Ittikal -36%
PIBF -28%
PIEF -35%
We have been sharing with our prospects/investors that they should practise dollar-cost-averaging or invest more to average down if they have invested at higher prices. But we are getting objections in some cases like: What if the market drops some more? I will invest when the market is at the lowest.
Most of the funds have dropped an average of 40-50% from their peaks. This would mean that to get back to the peak values, the funds would have to make 67-100% gain.
Example:
Most of the funds have dropped an average of 40-50% from their peaks. This would mean that to get back to the peak values, the funds would have to make 67-100% gain.
Example:
IMPORTANT POINT 1: By making an additional investment, the % unrealized loss has reduced from 40% to 33%!
IMPORTANT POINT 2: With the additional investment, investor will break even when fund goes up 50% instead of 67% without additional investment! It is of course faster for a fund to make 50% than 67%!
A bigger additional investment will result in a lower % unrealized loss (27% compared to 33% above)!
& what happens when the value reaches back to the original investment amount?
& what happens when the value reaches back to the original investment amount?
IMPORTANT POINT 3: With a BIGGER additional investment, investor will break even when fund goes up 33% instead of 67% without additional investment or 50% with smaller additional investment! It is of course faster for a fund to make 36% than 50% or 67%
The current bear markets is a great example of why we must never over-promote or hard-sell our funds especially in a bull run. Always follow the 6 Golden Rules that I have been sharing with u over & over again.
1. Investor’s investment objective
2. Medium- to long-term investment time horizon (minimum 3-5 years)
3. Invest regularly for DCA
4. Investor’s risk profile – Aggressive, Moderate, Conservative
5. Expected returns - in % p.a. & RM
6. Review regularly & rebalance if/when objective/time horizon/risk profile change
2. Medium- to long-term investment time horizon (minimum 3-5 years)
3. Invest regularly for DCA
4. Investor’s risk profile – Aggressive, Moderate, Conservative
5. Expected returns - in % p.a. & RM
6. Review regularly & rebalance if/when objective/time horizon/risk profile change
Whatever method use, there will always be some investors who do not invest. Switching to bond/money market now will realize the loss. I suggest to leave it & wait for mkts to recover.
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