Tuesday, April 1, 2014

[XMM STI ETF Investing] The Very First Post! Background Information

It's just past midnight, and today is the 1st of April 2014, and it is a very historical day!

Just yesterday, my sister decided to give me basically her entire life savings to be under my custodian care, to help her look after it and to invest it for her.

Therefore, to help me with being prudent, cool-minded and clear with my decision thinking and thought process, I will be chronicling my entire journey as my sister's very own hedge fund manager. Personally, I have vested interests as well. Firstly, I want to prove to my sister, family and all my friends that long term investing can be simple, easy, low maintenance as well as rewarding. Secondly, this is also an avenue for me to put my mettle to the task handling OTHER people's money. I must admit, that there are many times that I take excessive risks with my own money and investments at time. Blogging my journey will make sure that I am fully accountable of my actions and aware of what I'm doing.

As I go along this journey, every post regarding this will start with [XMM STI ETF Investing] so that I will be able to search for my own posts easier, and also for anyone out there who wants to take a look back at previous posts. Every post will also be tagged with a label on the side bar if I can remember.

So first question, who is my sister? My sister is turning 19 this year, about to enter University. All her life, she's been a very careful saver. Add this along to the fact that my relatives dote on her and give her ang baos after her exams, she has quite a tidy little baby egg. My parents have been strong proponents of saving all along too, so it also helped when we were younger than my parents always gave us the offer to double our Chinese New Year's money if we put it in the bank instead of spending it whichever way we want. My sister is also a shrewd businesswoman, and she has been making a rather significant amount of extra pocket money selling her JC notes! Who would've known that it can be such a lucrative business? I would think in the past month she has made more than $1000 in this business of hers! My dad has also been the custodian of her money for the past few years, growing in very safe investments. Low yielding, but definitely still better than nothing.

All of these factors added together and it gives her a $10,000 seed investment money! Honestly, that is a lot of money for a girl of just 19 years old. We must count our lucky stars for the hand dealt to us in life. However, we cannot just rest of what has been, we also play a part in determining our own future. That is why my sister has decided to pass me her money to help her invest.

Of course, investing for my sister and investing for myself is not the same. Some people would say, why not just add her money to my current funds for investing, then give her a proportionate share of my returns? The answer comes from the simple reasoning that because we are different people, her investment goals and my investment goals are vastly different.

My goal is to grow my cash with a reasonable rate of return without taking too much risk, with a very short time horizon of just 2 years. As you know, I want to purchase my own house and move out of home. My sister's goal is much more broad and vague. She wants just about what every investor wants, she wants me to just not lose too much money, and do my best to help her make more than just letting it sit in the bank, over a period of about 4 years. Why 4 years? Well, 4 years is the time that my sister will graduate from university. However, being the very practical person that my sister is, she said that even if whatever investments that I have undertaken from her are not doing well at that point of time, she can always continue waiting for it to recover.

So, at least 4 years, maybe more. What am I expecting? I am expecting a global recession by 2016, followed by a slow and grinding steady recovering. As such, I will loosely invest based on that thesis. Of course, this is just the undertones of my investment outlook at forecast. I will try not to be too chicken, and I will also try not to be so hero. I shall be a good custodian of my sisters money!

Hopefully in the future, my sister will come and read this blog post and all the subsequent posts and finally be interested in managing her own finances and the realize the benefits of long term investing!

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