A reflection of 2018

To err is human…” – Alexander Pope 

To be frank, my investments, this year, is something left a lot to be desired. The majority of my investments, in equity, are in the red. However, bonds and peer-to-peer lending are in a much better position.

As i usher in the new year, I reflect on the decisions that I’ve made this year regardless of whether they are inadequate or satisfactory.

Photo by Keegan Houser from Pexels
WE CANNOT PREDICT THE FUTURE

Though, very obvious, it’s fallacious of men to assert that we are capable of predicting the future. 

My share portfolio is a victim of such fallacy. It was constructed on the premise that all the goodness that occurred in 2017 would transitioned seamlessly into 2018. And because because of that, I forgo re-balancing, or preparing my share portfolio for the worst.

Though the ramifications for my misapprehensions were kept to a minimal, I note that all of the gains made in 2017, were no longer preserved, to my disappointment.

LACK OF DIVERSIFICATION

Because we cannot predict that a government, once rooted in the very fabric of our lives, can be democratically removed, or the rising tension between two superpowers, our portfolio must be malleable and risk-averse, in order for it to be “all-weather”. The thought of not putting all of your eggs in one basket means your portfolio can withstand a downward market trend and therefore, be more resilient.

If you are stock picking, your portfolio must encompass a variety of well-established and profitable companies from an array of different sectors and industries. 

Also, to achieve a balanced and diversified portfolio, consideration must be had of other types of investments or asset classes such as unit trusts, bonds, REIT, ETF, ETBS, commodities, and even peer-to-peer lending. 

If you’re equity-heavy, like me, then its time to re-balance.

POLITICOS ARE BAD HOMBRES

Look, I try to keep politics out of my writings but sometimes the fallout from a changing political landscape is so atrocious that I’m forced to talk about it albeit in passing. 

Because of the way things are run in Malaysia, a lot of  companies and businesses are, to a certain degree, reliant on the government. More so especially when the government, through its investment arm, takes up a substantial shareholding in a company.

Having only been ruled by the one and only coalition party for more than 60 years, Malaysians are simply unable to comprehend that governments do come and go. Ideally, businesses must be free from political subversion and should never cosy up to a government for favours. 

Tony, the reluctant idiot.

However, seeing how things have unfolded since the May 2018 general election, it would be prudent to invest in businesses that would not be profoundly affected by a change in the political landscape of the country. This is especially true if your investment horizon is long (more than 10 years) as elections are generally held once every 4-5 years. 

DIVIDENDS

If it hadn’t been for dividends, my share portfolio would have been absolutely hammered. Dividends are very precious when the markets acts like a headless chicken. They act like a cushion that minimises any impact from a downward market trend. I’m grateful that I, at least, got this going for me.

Generally, you should consider companies that are, in the past, consistently paying out dividends, at an attractive yield. If you’re unsure about dividends, note that I’ve made a case for dividends in my past writing: Dividend stocks or not? That is the question. 

LOOK OUT FOR NEW THINGS

Investing can be monumentally frustrating especially where you are clueless about what to investment. I was in that situation, before taking initiatives to understand the concept of investments. The trade-off of investing without professional help is that I consumed many hours of reading and research.

If ever you find conventional investments inapplicable to you for whatever reason,  there are other types of investments which are worthy of consideration such as peer-to-peer lending or robo advisors. Both, although alien concepts a few years ago, are now licensed to operate in Malaysia. Just remember to start small until you get the hang of it.

NEVER LOSE MONEY

I think Warren Buffet has said this over a million times. Having most of my shareholdings in the red, I have a profound appreciation of those words.

Once you lose money, it’s harder gain them back.

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P2P Lending: 17 months in

A lot has changed since I last updated my P2P lending endeavour (See: P2P Lending: 13 months in)

For one,  Funding Societies Malaysia has revamped the user interface of its mobile app on Android platform. The new interface gives more clarity and transparency regarding all facets of your P2P investments. And, it’s hard to deny that it looks splendid too.

At a glance, I can easily ascertain the performance of my P2P lending investment which, at the time of writing, is 11.93% per annum. This is a mild increase from the 11.84% since my last update in August 2018.

From the above screenshot (on the left), the dashboard of my account now clearly states “Total Income” which constitutes interest, late interest and bonus due to referrals.

From there, it is easy to determine that I’ve profited a total of RM440.48 of interest (inclusive of late interest). By comparing that to the interest received (including late interest), in August 2018, in the amount of RM271.81 (See:  P2P Lending: 13 months in), my returns increased by RM168.67 or a whopping 62%. This is achieved by consistently reinvesting all of the interest which I have earned since the onset of my investment in P2P lending through Funding Societies Malaysia. This exponential increase, to me, is a sound indication of the workings of compound interest.

In selecting a loan/note in which to invest, I either self-pick or use autobot. Autobot is a feature by Funding Societies Malaysia wherein you set your investment perimeters and your funds will be automatically invested in any loan/note that matches your perimeters. It is very helpful feature where time is constraint. On the other hand, when self-picking, I usually review the fact sheet of each loan/note and apply a number of considerations to ascertain whether the loan/note under consideration is viable for investment. See: P2P Financing Tips

And if you can’t already tell from the eye-catching information, which can be easily noticed from the left screenshot of the dashboard above, there are no defaults on my principal.

Spurred by much success from P2P Lending, through Funding Societies Malaysia, I did not hesitate to deposit additional RM2,000.00 into my account on 1 December 2018. As it stands, I’ve deposited a total of RM5,000.00 and intend to invest more, next year.

Until then, happy investing! Merry Christmas and a happy new year!

REFERRAL PROGRAM

If you are new to P2P lending, or would like to add some diversity to your investment portfolio to include P2P lending, you’d be delighted to know that Funding Societies Malaysia has a referral program where they will top up an additional RM50.00, FOR FREE, into your account, once you have deposited and invested a minimum of RM1,000.00.

To participate in this promotion, please register an account via this LINK (be careful not refresh the link before completing the registration as it will affect the promotion code), or alternatively, use the promotion code: j1mzpcw5 when registering through Funding Societies Malaysia.

 HELPFUL LINKS

Click the link if you would like to know more about investing in P2P lending with Funding Societies Malaysia.

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If you are keen on reading all things P2P lending, click on this LINK.