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Friday, 30 September 2016

From the frying pan to the fire - Unit Trust to ETF



For those of you who have actual investing experience with unit trusts, and I mean 5 to 10 or more years worth of personal track record, there are 2 main reasons why you lost money.

See if you can identify with them.



1.  You were sold to...

When listening to people who complained about their bad experiences with unit trusts, its like listening to how they were sold "bad" insurance policies...

They most probably also bought these unit trusts from a tight skirt with chiffon blouse sitting pretty in a bank; and paying the max 5% sales load! 

Of course you have no clue they could have bought the same exact unit trust from an online unit trust distributor for 2% sales load or less.

In English, snake-oils call such customers "blue-eyed Swedes"; and in Singlish, we say "bei kambings" (little white lambs).

We spin our sales talk, customer swallow hook, line, and sinker. No challenge, no objections, no verifications, no nothing!!!

You make a good, better, best customer! We love you!



2.  You wished you had sold...

Be honest now.

Unless you were so unlucky the first day you bought your unit trust until now you have always been under water, the reality is that at some time or another, your unit trust got make money right?

Remember BRIC? Brazil, Russia, India, China?

How about that time when the India stock exchange was on a bull run and almost every other bank were recommending India focused unit trusts?

Commodity and gold unit trusts were also quite popular during 2009 to 2011... We almost had a commodity guy running our sovereign wealth fund remember?

Got made paper profits right?

And that's despite the 5% sales load and the annual management fees of 2% or more!

I don't recall hearing you complain about "costs" then...



Doing the same thing; expecting a different result...

Now that low cost ETFs are "fashionable", you are now switching out from your unit trusts to ETFs.

Question:

1.  Other people buy you buy. How is it any different from being sold to?

Again you never do your own homework...


2.  Have you ever thought of when to sell your ETFs? 

Want to bet history will repeat itself?


3.  If you had based your thesis on statistics - majority of active fund managers underperform their benchmark indices - why didn't you follow the CPIS statistics that majority of retail investors can't even beat the CPF 2.5% hurdle rate?

CPF not charging us any annual fees. No fees versus low cost... Some more no capital loss. Zilch! You still not biting?

See? You are being selective in your usage of statistics! That's not passive... Wink!

And we know what they say about statistics....


 





28 comments:

  1. Hi SMOL,
    Till now many countries like to park their wealth in Singapore.
    Especially our closer neighbours.

    After many years, why our $ is still so strong?
    Will the day comes when capital flight happens to Singapore?

    i have some FDs in MYR for many years.
    The higher interest rates of Malaysia Banks can not compensate for loss in the exchange rate.
    Imagine from 1MYR to 3MYR for 1 Sing $ now

    Only invested once in Sime Darby.
    Sold and never invested in Malaysia again.
    Somehow i never trust Malaysia under the MAMATIA.
    He was giving Singapore a lot of problems.
    So escaped the "CLOB SAGA".

    ReplyDelete
    Replies
    1. temperament,

      Singapore's track record is clear for all to see - and high net-worth individuals/families have voted with their money and feet to Singapore.


      Long term investing is not easy.

      Can we say we have done well for the past 30 years we will automatically do well for the next 30 years?

      Singapore today is like Apple without Steve Jobs.

      Will we become like Sony without the leadership of its founding fathers; or will we become like Coca-Cola - still solid after many generational passing of batons?

      Who can tell the future?

      Can one of our local banks turn out to be like Deutsche Bank?

      Who expected the insurance giant AIG to face collapse during 2008 Lehman crisis?


      Make a wild guess I took up Conversational Malay recently? Free under Skills Future Credit :)

      You never know! I could end up in Malaysia or Indonesia one day ;)




      Delete
  2. "tight skirt with chiffon blouse"

    That's why I avoid eye contact with insurance ladies around MRTs.....tell me about it, lol. Workplace/school also have. Aspiring researcher mei mei needs participants in their research. Hmmm

    ReplyDelete
    Replies
    1. Unintelligent Nerd,

      Smoke but don't inhale ;)

      Got free time can chit-chat with them. But must pretend to be "bei kambing".

      The moment they realised you financially literate, see how fast they drop you as a "potential"...

      LOL!

      Delete
  3. SMOL,

    It's natural instinct and it has been proven that tight skirt and chiffon blouse shut off men's brain. The cases involving the ex-SCDF and ex-CNB head honchos are still very recent. I have seen some "key" salesperson and "private" banker. Oh my, they look like models than anything else. I guess it's difficult to say no with that sweet smiling face huh? I heard China now ban the nudity by the sales promotion girl during the car show event.

    ReplyDelete
    Replies
    1. Yaruzi,

      I remember during a visit to my broker to handle some paper work quite a few years ago, a pretty young thing tried to seduce me into buying India focused unit trusts.

      I got time so I chatted her up.

      She was personally vested and is sitting on good paper profits of 30% plus. And she can't wait to share the good news to everyone...

      A bit like newbie retail investors who just made money. No? LOL!

      I asked her where she got her thesis from. She blurted out her sales manager bought; she bought.

      Ah! Then she has no idea WHEN to get out, I thought to myself.

      I gave her my trading account and when she saw it, she stopped "advising" me and started asking me loads of investing questions!

      She saw I trade unit trusts.

      LOL!




      You know what they say in China:

      Mountain high; Emperor far...

      The top got policy; the bottom got counter-measures...

      LOL!

      Delete
  4. I m not wearing tight skirt but I have a beer on my hand. Can I see your trading account? LOL....

    Trading Unit Trust, that I must learn from you. I guess as long as there are buy and sell prices, everything can be tradable.

    ReplyDelete
    Replies
    1. Blursotong King,

      Your sentence reminds me of my younger days...

      "I'll show you mine if you show me yours first..."

      LOL!


      Trading unit trusts is like having ankle weights on your legs.

      Its similar to seniors in our community who are able to make money and contra individual stocks with 1% brokerage fees before the liberalisation of fees and commissions. Round trip would cost at least 2% in brokerage fees!

      If we can make money with chain and ball tied to our feet, once we take off the ankle weights, we feel so much lighter!!!

      LOL!


      For unit trusts, my shortest holding period is around 3 months. Most would average 3 years - just nice to catch the cyclical move ;)

      Delete
  5. SMOL

    I show you mine in private, too small compare to yours. So shy lah. LOL...

    Thanks for sharing how to trade unit trust.

    I am more interested to understand your philosophy of life. I always finds your replies intriguing. If you are looking for a disciple, let me know. I will be the first in the queue.


    ReplyDelete
    Replies
    1. Blursotong King,

      LOL!

      My "I'll show you mine if you show me yours first..." has a RA connotation to it ;)

      Ah, that is one interesting girl...




      That's easy!

      I'm an open book. My philosophy of life is:

      Why stand when you can sit? And why sit when you can lie down? 醉生梦死


      Its a mixture of Zen and Taoism :)

      There is a reason why Management By Objective and Confucianism are well received by the ruling and landed class...

      I guess I would fit in well in bohemian circles ;)

      Delete
    2. SMOL,

      I know. Which is why I say private... LOL...
      But I guess you will not be interested. It's all the same isn't it... LOL!

      Doing the easy thing is sometimes the hardest. It's because we don't live in isolation.

      Delete
    3. Blur Sotong king

      Oi, why you want cut queue ? Hehe kidding.
      It's not about the queue, it's about kopi :)

      Delete
    4. SMOL can collecting coffee vouchers if no time to lim kopi.

      Delete
    5. Blursotong King,

      Glad we got it out of the way!

      Although I'm in touch with my feminine side, I'm still pretty much a wine, woman, and song kind of guy :)


      You missed some of my earlier philosophical posts. Maybe you would like this:

      The River Story if you don't like Up Mountain; Down Mountain  

      I write voodoo stuffs under the label of "Metaphysics".

      Delete
    6. Small Time Investor,

      Thanks for helping me out!

      No kopi; no honey ;)

      I'm cheaper than Desker Road; I'll do anything for a drink!

      Delete
    7. CW,

      A person who cannot sit down and have a leisurely cup of kopi with me shows that he/she is still ruled by the clock.

      No, I have all the time in the world; just as long its not weekends ;)

      Delete
    8. Eh? You accepting disciples? I can apply or not?

      Delete
    9. Unintelligent Nerd,

      If you look at the right side column all the way down, there's a reason why I changed the default "followers" label to "journey companions".

      I'm more a jazz player in a jazz band; not the conductor in an orchestra ;)


      If you free during weekdays or evenings, just drop me an email at the "jio me for coffee" at the bottom of my blog :)

      Delete
    10. Sounds good! I go compile my questions to ask you first! :)

      Delete
    11. Unintelligent Nerd,

      Don't be too happy.

      Maybe you should read my contribution in this ebook:

      http://www.bigscribe.com/investing-your-first-20000/


      I tend to ask questions more than give answers ;)


      Delete
  6. UN

    Don't cut queue. Stand behind ok. I am already holding a glass of wine here with a card that says 1.

    SMOL

    Read the river and mountain story. Could not understand... free form, do nothing get nothing, let it go or find an ikigai...


    ReplyDelete
    Replies
    1. Blursotong King,

      That you are, no.1; but you never press the "jio me for coffee" ticketing counter... LOL!


      Fantastic!

      Glad you could not understand the river and mountain stories. I'm known as the cryptic blogger when I started out.

      Was worried am I losing my touch?

      Phew!

      If my philosophical voodoo stuffs easy to understand, what's the point again?

      Delete
  7. SMOL

    Just did that. Go check.

    I am trying to figure life.

    ReplyDelete
    Replies
    1. Blursotong King,

      That was fast!

      Keep expectations low.

      I'm the idiot, full of sound and fury, signifying nothing...

      Delete
  8. Nice song for sharing
    http://goodyfeed.com/okay-its-official-theres-a-bojio-song-and-you-can-use-it-on-your-friends-who-always-bojio/

    ReplyDelete
    Replies
    1. Can anyone spare two cups of kopi? Bo jio?

      Delete
    2. CW,

      Message received.

      I know what to do ;)


      Hmm, maybe I can start a talent management agency to represent financial bloggers? You be my first client?

      I can arrange free drink gigs, speaking engagements, and meet your readers sessions for you all?

      I upgrade from man-whore to papa-san!

      Delete
    3. Blursotong King,

      Thanks!

      I heard it last year. This one got lyrics version: https://www.youtube.com/watch?v=pRIEDfbJEV8

      Delete

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