How will patience gets you rich??? – 3 examples

Sometimes the power of now can really kill you?? can it???

As discussed earlier on(Singtel)….let see how patience fare.

You have saved up $2,900 to purchase Singtel stock.. How should I purchase?

(Dividend calculation are not included to simplify calculation)

  1. “LIMPEI want to do something now” Scenarioslide1

    • Notice Singtel price soaring and thinking about how much you would have made if you bought it during 2007
      • Decided to purchase it at 2008 at the price of $2.9
      • Went through the crazy emotional cycle when price drop to $1.4 at 2009 all the way to 2013 (5 years of emotional trauma)
      • To only gain $0.10 capital gain
    • Math:
      • Purchase 1000 units ($2,900) worth of stock at 2008
      • Stock value at 2009 ($1,400)Half of your initial purchase value when you’ve just bought it
        • WOULD YOU SELL IT IMMEDIATELY?? or could you hold on or would you even know what to do?
      • Value of stock at 2013 ($3,000)
      • Gain of only $100 [1,000 units x $0.1] Average earning of $20 a year (5 years)
  2. “I’ll wait for the golden egg” Scenarioslide2

    • Learn the art of patience and saw value in the stock at 2009
      • Purchase it at a price of $1.4
      • Held it easily for the whole 4 years
      • Capital gain of $1.6 per share
    • Math:
      • Purchase 2,071 units ($2,900) at 2009 
      • Gain of $3,314 [2,071 units x $1.6 x]  – Average earning $828.57 for a year  (4 years)
  3. “lazy to think and bother” Scenario ( Dollar cost averaging)slide3

    • Learn a new technique called Dollar Cost Averaging
      • Decided to purchase Singtel stock every year with a fixed amount of $362.5
      • When price is high, I purchase lesser units with $362.5
      • When price is low, I purchase more units with $362.5
      • Not so emotionally affected
      • Sold at the price of $3 (for easier comparison) – Capital gain of .55
    • Math:
      • Decided to purchase for 8 years with – $362.5 a year ($2,900/8)
      • At the end of 8 years I would have purchase the stock at an average price of $2.45 
      • Capital gain of $651.02 [1,183 units x $2.45 ]  Average earning of 81.40 a year (8 years)
        • Units : $2,900 / $2.45 (average price) = 1,183 units

In summary,

  1. Wait for the golden egg (Patience) – So when is the best time to buy????? Thats the million dollar question
  2. Lazy to think and bother (Dollar cost averaging) – You still have to research and do basic identification and understand of what is a good company… so technically you cant be lazy unless you do go for index investing 🙂
  3. LIMPEI wanna do something now (Impatient/aggressive/greedy)

Obviously patience does get you somewhere richer faster…. so what happen??? why do we always want something now? Do you realise the increase in our need for immediate physical gratification??

“1 Knowledge point”

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