What return do you aim for?

[ENP]

What is your yearly goal for your investments?

Is it a certain percentage return on your portfolio, to make x amount of dollars or something else?

Can you share a bit about your desired return, why you chose this particular yard stick and what sort of situation you are in?

e.g. for me I want a 14% return, I chose this because it will double by investment in 5 years time. I'm in my early 20's and in my initial stages of building a portfolio. I'm also looking to purchase a house before I'm 30.

[KJ]

Hi ENP-I have in mind 20% plus.I am retired & concentrate largely on quality shares with high div yields. This way I figure that the divs will get me half the way there before any capital gain.Also buying for div yield means that any gain,if you do happen to sell, is not taxable.I often read that shares with high div will not produce reasonable capital gains.I do not believe this to be correct.

[fungus pudding]

What is your yearly goal for your investments?

Is it a certain percentage return on your portfolio, to make x amount of dollars or something else?

Can you share a bit about your desired return, why you chose this particular yard stick and what sort of situation you are in?

e.g. for me I want a 14% return, I chose this because it will double by investment in 5 years time. I'm in my early 20's and in my initial stages of building a portfolio. I'm also looking to purchase a house before I'm 30.

I only hold shares for income and only PIES. They give me a steady income of a nit's nat under 6% - tax paid, which is the equivalent of 9%. No doubt they'll gain in value over time. They haven't done too well in that regard over the last 5 or 6 years, initially falling with the GFC but well and truly recovered now. Capital gain is a bvonus, and as I don't sell things, it doesn't worry me. Motto: Just keep stacking income and it's hard to go wrong.

[JBmurc]

What is your yearly goal for your investments?

Is it a certain percentage return on your portfolio, to make x amount of dollars or something else?

Can you share a bit about your desired return, why you chose this particular yard stick and what sort of situation you are in?

e.g. for me I want a 14% return, I chose this because it will double by investment in 5 years time. I'm in my early 20's and in my initial stages of building a portfolio. I'm also looking to purchase a house before I'm 30.

-Goal is always 100%+ p.a done it twice in the last several years(think my av. comes in the mid 20%) but with target growth that high means I'm a trader so pay tax and also deal with many high risk Micro-caps and never really even look at shares over billion market-cap ...if you took my average Mktcap of my holdings currently it would come in round the 200mill mark ...

[elZorro]

I am also looking for high capital gains, I'm prepared to take a punt. My main investment is in my own business, and I've paid off two properties. I've only been investing for a few years, have not done well yet, but I'm not heavily invested. You are entering the market at a tricky time, so you should be much more careful than I am. Your first property is the most important thing to get sorted. A bank will understand that risk, but not that of a new business, or a share portfolio.

Think about trading from home with your own sideline business for a few years, that can help a lot with interest costs. These days it can be as simple as selling imported gear on Trademe. But you might need the house first. Just think about what might happen if your savings are lost on the sharemarket. Houses might drop a bit, but there is no limit with shares.

Just my 2c worth.

[Stranger_Danger]

It may be unconventional, but I don't aim for anything in a pre-determined way.

With my listed investments, I try and beat the benchmark, but, I'm even fuzzy about what the benchmark is! Is it an index, when its very common for most of my listed investments to have market caps under 100mil, often well under, on various exchanges? Which index? etc etc

I think aiming for a set number (ie 20% per year) is very dangerous as there will be times when 20% is a bad result and other times when it is outstanding.

I more look at the bigger picture and, in a really undefined fuzzy way, try and beat what would seem to be fair or average.

Example - July 2007 - March 2009 (which proved be the low) my net worth essentially went nowhere. I never dropped toooo much below my July 2007 number, and at the low point at March 2009, I was a little over it.

Now, measured in percentages, these were not good years! However, they are years I am most happy about!

Why? Because from that point, I got to buy at March 2009 prices with July 2007's (which I regard as the peak of the boom) net worth!

Sometimes, preserving your wealth or growing it slowly is the key, other times (such as March 2009 until ???? ) it is more fertile soil.

Either way, I wouldn't want to delude myself with 20% when any old idiot could achieve that, or, tell myself off for going nowhere at a time when others are going backwards/broke.

To me, its not about absolute numbers. It is about having a gut feel for what you should be getting, what others are getting, what risks you are taking to get it, and whether or not you actually get what you thought you were going to get.

The numbers themselves change, as they should.

[Sauce]

I will be very happy if I can do 10pc + rate of inflation, annualized, averaged over my lifetime

cheers

Sauce

[slimwin]

Me too sauce. I'd add that that's after tax too.

[CJ]

My aim is to beat the market (NZX50) or the bank deposit rate, which ever is higher. If I am not doing that, I may as well choose an index fund.

[CJ]

My aim is a ROC of circa 20% after expenses (margin interest) and after tax and excluding capital gains (or losses) .. Do you mean unrealised gains/losses? I assume you count realised gains if you are buying under priced stocks. If this is the case, how do you measure as there may be big periods of time when your return is zero (ie. when you dont realise any gains during that period (ignoring dividends of course))

[Sauce]

AA - yes that's true, but its only your long term average compound return that matters - not returns from individual trades. The point is that if you don't beat a certain hurdle, you shouldn't be in the game. And CJ quite rightly points out that market returns, index returns, are the most rational benchmark.

So while it's not a yearly 'target' it is critical to have a long term benchmark - because if you don't beat the market you are destroying wealth not creating it (once opportunity cost is factored).

Regards,

Sauce

[Sauce]

but yes I get your point, I think one should aim to achieve returns better than they could achieve by investing their money elsewhere when weighing up the risks in given investments.

Yes well said :)

And regarding your previous post; it's not about having an annual target in absolute terms, its about having a long term benchmark. In other words, you need to make sure your not the patsy.

Cheers

Sauce

[Sauce]

Another random point for ENP; I wouldn't listen to anyone on this site who claims they can make annualised returns of 20%pa, on average, consistently. There only a small number of people in the world who have skills like that and they certainly wouldn't bother posting on sharetrader.

To give you an idea why this is a rediculous claim, consider this:

500k compounded over 40 years at 20% becomes $734,885,784

As nice as it would be, that's just not a likely scenario for any of us.

Regards,

Sauce

[Sauce]

True, I just think the learning curve is steep for most new players to the share market and Id hate to think that they just give up after a few years of trying if they failed to bet a certain benchmark, this is where I feel this approach could be potentially damaging to the potential wealth of individuals.

Exactly half of ALL investors will not beat the market over their lifetimes. And a much higher percentage of retail investors will not beat the market over their lifetimes because they don't have an edge on professionals.

The truth is it is a smarter move to buy the index for most people. Its just not nearly as fun.

Cheers

Sauce

[CJ]

The truth is it is a smarter move to buy the index for most people. Its just not nearly as fun.I am working my way through "the Intelligent Investor" at the moment so that may have influenced my answer. But you cant argue with the fact that if you cant beat the market, you should just join it (with an index). It just isn't the kiwi way though - the WINZ fund has closed down due to lack of funds. I wonder if they offered it to NZX/Smartshares to take over or if they will create a new one in its place. Or does anyone with serious oney who wants an index fund just buy an iShare or similar on the ASX or US exchanges?

AA - You should risk adjust your returns if comparing to the NZX50. If you are using CFD's etc, you would want a much higher return to justify the extra risk you are taking on.

I have a long term portfolio of predominately NZX50 shares so it is my natural benchmark - Ideally I would be holding the ones that make it go up and not the ones that make it go down, therefore beating the index significantly.

The one area that I am looking to improve is to start taking profits, or stopping losses where a share max's out or the market looks to take a dive, hence my comment that I also want to beat the term deposit rate. As they say a rising tide raises all boats, its when markets aren't doing that well that you have the opportunity to make more than most (even if that is just being out of the market).

Sauce - agree with your comments re a 20%+ return. If the market goes up 40% in a year, 20% doesn't look good at all but if the market goes down 15%, you would have to take a lot of risk to earn 20%. It may be a fine goal over a long period of time (say 10 years) but comparing to a (risk adjusted) index is a far more timely indicator of how you are doing.