Is annualised yield of 20% achievable? - Seedly
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Anonymous

Asked on 30 Nov 2019

Is annualised yield of 20% achievable?

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Jonathan Ang
Jonathan Ang
Level 7. Grand Master
Answered on 06 Dec 2019

For sure.

Look at:

Warren Buffett

Terry Smith

Or.. if you just held the SP 500 from Dec last year, you should be up more than 20% by investing in an index (no brainer)

Or.. google sual from motley fool US.He is investing into high growth SaaS companies and have been doing 20% for many years.

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Bibiana
Bibiana
Level 7. Grand Master
Answered on 06 Dec 2019

It will not be easy but looking at track record of Peter Lynch and Warren Buffett, how about thinking about 15% first? Would it help to make it more realistic?

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Yes it is achievable, but not easy.

Immense work has to be done on researching companies and you must have the conviction to average down whenever dips and holding it for the long haul.

Wealth is compounded when you handpick quality stocks and hold them long term. Like what Ser Jing has shown, great investors from the past invest for a long time period and that is where you compound your wealth.

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Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 04 Dec 2019

Ask me 1 year ago? I would say even getting 20% on 1 year is impossible. Right now, I am so confident that it is way possible. But of course the road to this is not an easy one.. So many renowned investors only got so closed to there. But what matter is your mindset and your knowledge, knowing that it is possible. And of course, there must be certain level of risks undertaken, which you have to be aware of. Focus on great businesses, valuation, stay patient, don't be greedy, and that time will come eventually, somehow ;)

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Kelvin Seetoh
Kelvin Seetoh, Founder at Kelvestor.com
Level 6. Master
Answered on 02 Dec 2019

Hey there! Are you referring to returns or yield?

When I was growing up, if someone were to tell me this is possible, I'd outright think it is a scam. I was hoping to build a better quality of my life and that got me into the world of investing into businesses.

I fell in love with it.

At the same time, I had no mentor and I struggled in my first two years alone. Thankfully, later part of my years, I had some of the most incredible mentors who guided me.

I chose stocks that were smaller in their revenues, creating unique products, operate in large addressable markets, backed by a growth-minded management. I also started to move out of Singapore because I am looking for multi-baggers. Companies whose value are able to 10X in 7 - 8 years.

I will recommend you a book called 100 Baggers. Take a look at it, you will be amazed to know it is possible.

I like what Ser Jing has posted. I like to see people succeed because it shows that it is possible to achieve 20% gains. It will not be easy, but it will be worth it.

Find a mentor who has done it consistantly and learn from her/him.

Here are some encouragement I have:

My small portfolio that I started this year: https://www.facebook.com/watch/?v=1571855179606009

My gains on Hypebeast: https://kelvestor.com/blog/how-did-hypebeastsehk0150-performed/

My gains on Auric Pacific: https://kelvestor.com/blog/how-i-made-money-on-auric-pacific/

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If you are talking about dividend yield, I'd run away from a 20% yield. Unless you are using leverage, most reasonable yields top out at around 7%-8%.

If you are talking about 20% returns, then it is doable, but not easy. Some of the best investors have achieved this, as Ser Jing has mentioned, but for mortals like us, we can achieve it in one year, but probably not the next (again, this is without considering leverage)

I would rather take care of my downside and let the market take care of the upside. To take on excessive risk just to squeeze out a couple more percentage points in terms of return doesn't seem worth it.

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Wallace Chai
Wallace Chai
Level 9. God of Wisdom
Answered on 05 Dec 2019

At 1st i thought it is impossible for people like me because i do not have financial accounting knowledge at all!

But surprisingly, you do not need to become an accountant to be good in investing.

With proper knowledge and skillset, it is achievable.

To achieve it, mix around with light minded people. Mix with those people who had achieved it and with a track record. Not a one hit pony.

And yes, i managed to achieve it this year! Just by putting my money into a high quality company and do nothing.

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Having the chance of achieving 20% yield is one thing, the likelihood of that and the likelihood of negative returns is another. I think if you understand the inverse correlation between risk and returns then you will understand that a 20% annualised yield will naturally come with considerable amount of risk.

The decision to target what percentage of annualised returns should be a reflection of how much risk you're willing to undertake. That will be a more meaningful metric to consider when it comes to achieving your desired annualised yield, rather than simply is X% annualised yield achievable.​​​

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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 05 Dec 2019

To me, its a no over a long term. It is very a difficult hurdle rate to achieve. Many funds are only able to achieve 7-8%.

Furthermore a 20 years , annualised yield of 20% means it will grow 20 times from its intial capital. Such an investment will have grown enough for everyone to notice. But till now, not many such funds exist

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Junus Eu
Junus Eu
Level 9. God of Wisdom
Answered on 02 Dec 2019

Yes - and these are the multi-baggers in your investment portfolio.

Of course, everyone would love to have every stock in their investment portfolio to be multi-baggers, but even the best paid investment professionals in the world don't always achieve that. ​​​

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 8. Wizard
Answered on 02 Dec 2019

Very possible. I'm achieving this and more using an options portfolio. Can be done but I'll suggest you find a trainer to guide you if you are keen to explore options as an investment vehicle. This is due to the higher risk involved and your account may blow up if you are not careful.

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Hello! A 20% annualised return is achievable, but not easy. You can look at the track records of great stock market investors for some idea on what's reasonable to achieve.

John Neff - 13.7% annualised, 1964 to 1995

Walter Schloss - 15.3% annualised, 1956 to 2000

Sir John Templeton - 16% annualised, 1954 to 1992

Benjamin Graham - 17% annualised, 1934 to 1956

Warren Buffett - 19% annualised, 1965 to today

Shelby Davis - 23% annualised, 1947 to 1994

Peter Lynch - 29% annualised, 1977 to 1990

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Achievable yes. But not without significant risk, knowledge, or skill.

An options portfolio, trading CFDs on forex or stocks or commodities, leveraged ETFs, are just some possible strategies to allow you to achieve such a high return.

I also see you asking on typical investor returns. If you research the Dalbar study, it showed that while the S&P 500 did almost 10% annualized, investors who bought the index fund, only achieved an average of 5%.

This is because people are irrational and both fearful and greedy. They aren't disciplined and chase return by buying high and panicking and exiting too early by selling low. Exactly the opposite of what you should do.

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Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered on 30 Nov 2019

Possible, but low/mid probabililty of doing in consistently + whether you had the guts to throw all your money behind it when these sporadic opportunites arise

Examples:

  1. Buy a growth stock & hopefully it will-skyrocket thereafter, See IPO of Haidilao

  2. Buy a heavily discounted/unfavored stock at/near the bottom with dividend yield at 6%-10% & hopefully it will rebound off from years-low, capital appreciation of 10-15%. Then total stock return of 20%

  3. Trade a stock in and out consistently, aim for 2% monthly return.

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Fang Fang
Fang Fang
Level 4. Prodigy
Answered on 30 Nov 2019

Yes,

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Question Poster

30 Nov 2019

Care to elaborate?
Yixiong Chang
Yixiong Chang
Level 7. Grand Master
Answered on 30 Nov 2019

Definitely achievable. Even 100% or multiples of that is achievable if u picked the right assest at the right time - like buying lottery. Smilarly with lottery, u dont win often and even is expected to lose over the longer timeframe.

Higher returns are expected with higher risk. So do bear that in mind.

You asked " What is the typical return for investors? ", that will depends what kind of investors u refering to. You need to use the appropriate benchmark to measure. For example if u only buy singapore stocks, you might want to look at what is the average return of STI over the last 10years etc.

For reference, The nikko AM STI etf has a 10-year performance of about 4.3%. Temasek holdings has a 10yr of 9%. But an average person would not be able to invest like temasek, but just for reference.

Non traditional/alternative assets will likely to be able to achieve higher returns over the longer term due to their higher risk involved.

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Tan Wee Sin

30 Nov 2019

You mean annualised yield 20% or you mean the yield in total when you hold the investment?
Yixiong Chang
Yixiong Chang

30 Nov 2019

I assumed compound average return, total return of the asset. If u want to be technical, the OP mentioned 20% yield, it will actually mean income of 20% (annualized). It is almost impossible to find such investment assets, unless u are a loanshark, or creditcard company.

Depends on the asset that you invest in, the risk that you are undertaking, as well as the time period. Definitely possible.

Here is everything about me and what I do best.

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Question Poster

30 Nov 2019

What's the typical returns for investors?

If you could do that on a consistent basis then congrats - you are one of the top tier of stock pickers out there. Through your hard work and market insights, you perform head and shoulders above the thousands, perhaps millions, who are putting their energy in the pursuit of above market returns.

Note the _sustained. _So it is possible to pull off 20% by taking risky position or gambling on a concentrated portfolio of a few stocks hoping for a big winner. But if you want 20% over a long period of time then relying on luck is not enough

Note the hard work and market insights. So if you are just working off the research of others then a sustained 20% is unlikely. You need to be investigating companies yourself for an edge or having skill/experience in trading to achieve a strong return.

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Question Poster

30 Nov 2019

What is the typical return for investors?
Kelly Trinh
Kelly Trinh

30 Nov 2019

Not trying to be difficult - but it is very hard to pin down a number as the question has a lot of nuances that aren't easily captured in a few words. Happy to discuss further if you like. However, cutting to chase, if you are doing some planning then I suggest doing a couple of scenarios with returns in the 5 - 10% range