Investment Expert

[Owen_fan]

Hi, I'm taking a course on investment & was given an assignment to compare the return & risk profile of stock & bond based on their histroical data (see attach). I have to make an recommendations (with supporting points & data from the attachment) which investment I should consider keeping, which to sell off base on my time horizon & risk profile (i.e I'm game to take calculated risk & will be happy if I can earn at least 10% pa. Hopefully will have a tidy sum for my children education in 6 years' time. My investment portfolio have an approximate market value of $100,000 split between bonds (80%) & shares (20%))

 

I have done up the calculation on return & risk for both, but do not know how to make use of the results to make my decision. Appreciate if any expert would be able to advise. Thank you.

Bond___Share.xls

[Owen_fan]

Hi,

 

Any expert here would be able to advise

 

I'm taking this course just for the basic of understanding of investment based on one time horizon & risk profile.

[Little_prince]

highly unlikely bond able to generate 10%PA

 

and fyi... 10% PA is very high... you'd probably have to undertake substantial risks...

[Owen_fan]

Based on the historical data in the excel file, am I correct to say that the average annual return for bond is only 3.88%, & shares are much higher at 34.9%? However, the risk of investing in shares are much higher at 67.87% compared to bond which is at 2.24%. So only shares will be able to get 10% ROR, but not bond?

[Alantyc]

High risk = high profit or loss. Low risk = low profit or loss. :)

[Owen_fan]

Thanks

 

Am trying to make use of the data I have to understand the concept of return vs risk. Would be much appreciate if experts here can relate any comments, guides based on the case.

 

[Little_prince]

just remember this.

 

in general over 20 year time frame stocks generally outperform bonds 90% of the time. assuming you just buy and keep and forget abt it and not churning them

 

http://www.investopedia.com/articles/basic...performance.asp

 

http://www.investopedia.com/articles/stock...-number-one.asp

[Owen_fan]

So, am I correct to say that if one only prepared to take calculated risk, than he should not be invested too much in shares? in the example, the current investment is 80% bonds & 20% shares will be able to provide him a combine ROR of 10%. It is not recommended to sell off the bond & just invest in shares (but shares alone will be able to provide 10% ROR pa) unless he is game for a higher risk.

[Freestylers09]

2-3% cant even cover inflation..how to invest..

 

higher risk higher return..no doubt

 

if so,park inside trust is sure earn..lol

 

[Ben5266]

Based on the historical data in the excel file, am I correct to say that the average annual return for bond is only 3.88%, & shares are much higher at 34.9%? However, the risk of investing in shares are much higher at 67.87% compared to bond which is at 2.24%. So only shares will be able to get 10% ROR, but not bond?

100% Stock -> 35% return with 68% risk.

30% Stock + 70% bond -> 10.5%+2.7% = 13.2% with 22% risk.

20% Stock + 80% bond -> 7%+3.1% =10.1% with 15% risk.

100% bond -> 3.88% with 2.24% risk.

So, you should invest $20-30k in stock and the remaining in bond.

Layman calculation. Not sure if it make sense to investment guru.

 

[Little_prince]

So, am I correct to say that if one only prepared to take calculated risk, than he should not be invested too much in shares? in the example, the current investment is 80% bonds & 20% shares will be able to provide him a combine ROR of 10%. It is not recommended to sell off the bond & just invest in shares (but shares alone will be able to provide 10% ROR pa) unless he is game for a higher risk.

 

invest in share if you are able to hold for long term... to minimise risk

 

long term = 10-20 yrs or more

[Ben5266]

invest in share if you are able to hold for long term... to minimise risk

 

long term = 10-20 yrs or more

But... it is more fun to buy sell buy sell.

[Tedlhw]

Based on the historical data in the excel file, am I correct to say that the average annual return for bond is only 3.88%, & shares are much higher at 34.9%? However, the risk of investing in shares are much higher at 67.87% compared to bond which is at 2.24%. So only shares will be able to get 10% ROR, but not bond?

 

Bro Looked thru your spread sheet.

You sure your 2011 SGS gets a yield of 3+ %?

Your price is not updated.

[Good-Carbuyer]

Hi, I'm taking a course on investment & was given an assignment to compare the return & risk profile of stock & bond based on their histroical data (see attach). I have to make an recommendations (with supporting points & data from the attachment) which investment I should consider keeping, which to sell off base on my time horizon & risk profile (i.e I'm game to take calculated risk & will be happy if I can earn at least 10% pa. Hopefully will have a tidy sum for my children education in 6 years' time. My investment portfolio have an approximate market value of $100,000 split between bonds (80%) & shares (20%))

 

I have done up the calculation on return & risk for both, but do not know how to make use of the results to make my decision. Appreciate if any expert would be able to advise. Thank you.

Can share with us a list of the banks offering more competitive dual currency product/currency options?

[Tedlhw]

Apologies, I realised you used current bond yield, not YTM

[Tedlhw]

Can share with us a list of the banks offering more competitive dual currency product/currency options?

 

Bro, this really depends on your trade size and how greedy your RM is...

You should get pretty decent prices if your size is above USD 300K per trade.

[Owen_fan]

The price in the spread sheet only an example for me to do the study based on the case given, not actual price The price for the shares also not the real share price.

[Little_prince]

if not then ETF lor