How do you guys invest?

Thank you, very interesting. I did not hear about it before. With elections coming up, I am really curious if this will happen.
It is a "redenomination" which literary mean cutting the .000 (three zeros) at the end for simplification. It is not as bad as "sanering" the dutch word for cutting/reducing the value of your money. The "sanering" word is not much in use in the monetary system nowadays apart from the use in the past by the Indonesian financial Authority.

But typically even with Redenomination it will still have a temporary impact on the currency and inflation.
 
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I personally do not like to invest in Bonds. In the long run equity will always outperform bonds. If you see the proven billionaires investors such as Warren Buffet, Peter Lynch, Carl Icahn. They dislike Bonds. Bond for them is just for temporary parking.
OTOH Bogle's three-fund portfolio seems to do quite well:


I'm personally in between. I hold some bonds, but my primary holding is stock indices (I don't go all in on total market indices either, I like holding some narrower ETFs in sectors I think have a promising future - or for certain ethical reasons - as well as some individual stocks)
 
If you see the proven billionaires investors such as Warren Buffet, Peter Lynch, Carl Icahn. They dislike Bonds. Bond for them is just for temporary parking.
It's quite telling that Buffett is buying bonds right now, and bond income boosted Berkshire Hathaway's latest earnings. He might not rate it as a long term investment (idk, haven't read enough about his position on that) but seems like it's a good time to park on bonds now, at least if you are invested in the US market

Berkshire Hathaway reported operating profits of $10bn in the second quarter of 2023, up from $9.4bn a year before. Higher interest rates boosted the conglomerate’s earnings; Berkshire owns $120bn-worth of short-term Treasury bills. On Thursday Warren Buffett, Berkshire’s boss, said he would buy yet more Treasuries, despite a recent downgrade of American debt by Fitch, a ratings agency.
... esp since that downgrade is hammering stocks more, just like the previous downgrade several years ago. Had to happen before my next stock grant, sigh.


Catch up: Imran Khan sentenced; plans for a military intervention in Niger
from The Economist Espresso http://espresso.economist.com/d1d6e4e428da3798f5d662cb3c8cd74f
 
It's quite telling that Buffett is buying bonds right now, and bond income boosted Berkshire Hathaway's latest earnings. He might not rate it as a long term investment (idk, haven't read enough about his position on that) but seems like it's a good time to park on bonds now, at least if you are invested in the US market


... esp since that downgrade is hammering stocks more, just like the previous downgrade several years ago. Had to happen before my next stock grant, sigh.


Catch up: Imran Khan sentenced; plans for a military intervention in Niger
from The Economist Espresso http://espresso.economist.com/d1d6e4e428da3798f5d662cb3c8cd74f
Fitch Ratings - London - 01 Aug 2023: Fitch, credit rating agency, has downgraded the United States of America's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'AA+' from 'AAA'.

In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years.

 
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I don‘t care much about the ratings of Fitch and the others. Did they see the housing bubble before the worldwide financial crisis coming? Did they see the problems of those US banks coming which needed to be rescued or bought by other banks (some months ago) coming?

And anyway, those arguments why they downgraded the US now could have been used to downgrade the US many years before already. I mean for how long is it common practice already to just increase the limit of debt higher and higher? This has been done for many, many years already...so, what’s the news? They noticed just now that this seems to be going on forever?

In my view, this downgrade has a short-term effect. But investors will not focus on that for long. The markets (S&P) went up too far in my view and some investors just realize some stocks‘ price gains now that there is a little news that sounds bad and that increases the bond yields.

To me, bonds are also quite attractive since the stock market is a little overpriced at the moment, in my opinion. If inflation pops up again a little, we could see lower levels. In contrast, the up-side is limited since we are already priced on high multiples.

Just my opinion.
 
S&P ario.JPG
shiller.JPG


the S&P P/E Ratio is reasonably high, nd above the mean / median. But it still far below the all the time high (ATH). This is due to the recent rally in the mega cap stocks. Keep in mind S&P are dominated by the mega caps stock.
 
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It is true that the S&P is dominated by the mega Tech stocks. But still, it is overpriced in general at the moment in my opinion. If you look at the P/E ratio, Shiller P/E ratio or any other ratio, it is above the mean and median. Also if you compare it to the last 10-20 years. And we should also keep in mind that the bond yields are much higher than in the last years / decade. A higher bond yield should lead to a lower ratio of the stock market since the opportunity (bonds) gets more attractive the higher the bond yields are.

A comparison of P/E ratio of different times makes only sense if we compare times with similar bond yields. And if we compare the ratio with other times with bond yields of 4-5%, we are priced quite highly, I think. In order to ignore the dominance by some Tech companys, it probably makes sense to look at the S&P equal weight index and compare to other times frames with bond yields between 4 and 5%.
 
It is true that the S&P is dominated by the mega Tech stocks. But still, it is overpriced in general at the moment in my opinion. If you look at the P/E ratio, Shiller P/E ratio or any other ratio, it is above the mean and median. Also if you compare it to the last 10-20 years. And we should also keep in mind that the bond yields are much higher than in the last years / decade. A higher bond yield should lead to a lower ratio of the stock market since the opportunity (bonds) gets more attractive the higher the bond yields are.

A comparison of P/E ratio of different times makes only sense if we compare times with similar bond yields. And if we compare the ratio with other times with bond yields of 4-5%, we are priced quite highly, I think. In order to ignore the dominance by some Tech companys, it probably makes sense to look at the S&P equal weight index and compare to other times frames with bond yields between 4 and 5%.
In common sense investing, it is always sensible to compare it with a risk free alternative.
Why a sensible person would want take a risk and pay a premium for it if there is still a risk free alternative out there available in the market.

If you invest in bonds issued by the governments, treasury bonds, gilts, etc it will only be a risk free if you hold it until maturity. Also if the duration is too long there is an inflationary risk where your return might be lower than the inflation.

With bond funds you could not do this as there are a mix in durations, countries, ratings, etc. It reminds me the end of year 2021 and 2022 bear market where there are a lot of people get their finger burnt investing in bond funds thinking that bond is a safe heaven. At that time bond performance were even worse than equity performance, which it should not be.

For those reason some argue if you have decided to invest in bonds hand pick the individual bonds, not bond funds. Doing this you could adjust the risk. Also every one must mead cash or cash alike instrument that you could easily get it when needed.

To me I prefer a high Interest easy access savings (e.g. saving bonds) as I could still get the saving paying interest of 6%+ daily compounded. But I keep doing DCA to index fund anticipating the return for the long run.

Currently the inflation is coming down, which will result the interest rate to come down. In the long run equity always beat bonds.
 
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Not tech stocks, they are mostly in NASDAQ. Just the other large corporations
I think he means mega cap tech stocks e.g. FAANG stocks. NASDAQ just did rebalance bearing the recent rally from FAANG stocks and other tech stocks such as AMD.
 
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I think he means mega cap tech stocks e.g. FAANG stocks. NASDAQ just did rebalance bearing the recent rally from FAANG stocks and other tech stocks such as AMD.
Ah, I forgot S&P tracked both NYSE and NASDAQ, sorry
 
Wake up call for banks in Belgium, 30 aug 2023.

In six days, almost 12.5 billion euros was converted from savings accounts into government bonds with interest of 2,81 procent.

Rich people in Belgium are in complete agreement on one thing: at the bank you don't get enough for your savings. The interest on savings accounts in Belgium averages just over 0.5 percent. And that while the European Central Bank (ECB) has rapidly raised interest rates to 3.75 percent.
 
Sometimes I am really confused about investment decisions here. From a developer in our area we heard that he is building a few ruko now. He said the price for a ruko in this area is around 800 million IDR - and we heard that a ruko (if you rent it) is around 25 million IDR per year.

So, if these numbers are correct, then it seems to be a very poor business decision to buy a ruko in this area. Even if you found a person who rents it the whole year and who is always solvent to pay the rent, it would be a yield of only around 3% p.a. - there are plenty of banks that are willing to pay more interest if you put 800 million IDR into a bank account. And compared to that, a ruko is quite risky (earthquakes, finding a reliable tenant, costs for repairs, etc.). Also you have much higher acquisition costs and you are not as flexible if you need the money later short-term.

I really wonder why someone thinks about buying a ruko in this area, and I suppose the expected return in other areas of this beautiful country is not much different. Maybe they speculate that the rental prices increase in the next years or so. But still, if it were me and I had to choose between putting it into a deposito or a ruko, I would not need much time for that decision. (not to mention that there are of course other, even more attractive alternatives like bonds, stocks, and so on...).
 
Sometimes I am really confused about investment decisions here. From a developer in our area we heard that he is building a few ruko now. He said the price for a ruko in this area is around 800 million IDR - and we heard that a ruko (if you rent it) is around 25 million IDR per year.

So, if these numbers are correct, then it seems to be a very poor business decision to buy a ruko in this area. Even if you found a person who rents it the whole year and who is always solvent to pay the rent, it would be a yield of only around 3% p.a. - there are plenty of banks that are willing to pay more interest if you put 800 million IDR into a bank account. And compared to that, a ruko is quite risky (earthquakes, finding a reliable tenant, costs for repairs, etc.). Also you have much higher acquisition costs and you are not as flexible if you need the money later short-term.

I really wonder why someone thinks about buying a ruko in this area, and I suppose the expected return in other areas of this beautiful country is not much different. Maybe they speculate that the rental prices increase in the next years or so. But still, if it were me and I had to choose between putting it into a deposito or a ruko, I would not need much time for that decision. (not to mention that there are of course other, even more attractive alternatives like bonds, stocks, and so on...).
The logic is that the land will appriciate. Income rentals in Jakarta for example can be pretty low (1.5-2%).

The logic is flawed (altough sometimes works in hot market and good locations), as selling property is pretty hard if not on prime locations with high demand, and very costly (up to 20% to enter and exit from the transaction, highest in SEA).
 
The logic is that the land will appriciate. Income rentals in Jakarta for example can be pretty low (1.5-2%).

The logic is flawed (altough sometimes works in hot market and good locations), as selling property is pretty hard if not on prime locations with high demand, and very costly (up to 20% to enter and exit from the transaction, highest in SEA).
If one has "insiders information" regarding future development of the area, then .... why not take some risk with "buying low and try selling high".
 
Sometimes I am really confused about investment decisions here. From a developer in our area we heard that he is building a few ruko now. He said the price for a ruko in this area is around 800 million IDR - and we heard that a ruko (if you rent it) is around 25 million IDR per year.

So, if these numbers are correct, then it seems to be a very poor business decision to buy a ruko in this area. Even if you found a person who rents it the whole year and who is always solvent to pay the rent, it would be a yield of only around 3% p.a. - there are plenty of banks that are willing to pay more interest if you put 800 million IDR into a bank account. And compared to that, a ruko is quite risky (earthquakes, finding a reliable tenant, costs for repairs, etc.). Also you have much higher acquisition costs and you are not as flexible if you need the money later short-term.

I really wonder why someone thinks about buying a ruko in this area, and I suppose the expected return in other areas of this beautiful country is not much different. Maybe they speculate that the rental prices increase in the next years or so. But still, if it were me and I had to choose between putting it into a deposito or a ruko, I would not need much time for that decision. (not to mention that there are of course other, even more attractive alternatives like bonds, stocks, and so on...).
When it comes to property, it is illogical to compare it with savings; or to be more specific, Treasury bonds, gilts, corporate bonds, savings. They are different asset classes.

In bonds and savings, your only gain comes from yields and the interest rate. The original value, purchasing power of your money is actually depreciating due to inflation. With property, you can gain both from renting, which could be converted to yield, and asset appreciation. Not to mention, the rent will keep creeping up to match inflation.

Just look at the people who have inherited property from their parents, grandparents in the golden triangle of Jakarta a few decades ago. It is frequently mentioned in the news that they have become sudden millionaires when their property (land) is acquired as part of the central business district development.

However, the disadvantage of property, compared to short-term bonds and easily accessible savings, is that it is not easy to sell. Also, short-term bonds especially if it is T-Bonds, gilts are generally considered as risk free.

The general consensus is to have a mix of different asset classes such as property, stocks, shares, bonds, or other asset classes as long as you understand the fundamentals of that asset to make money. This is what is so called assets diversification. Billionaires investors are doing a 'small' degree of diversification but most of their assets are in equity or own their own business.

Treasury bonds, savings, and gilts might be suitable for short-term needs for money you will need to access in the near future, while property and equity are better suited for the long term.
 
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For property it's rental plus capital appreciation of the land and building

Rent it for 5 years and sell it for x2 in 5 years. That's the theory.
Depends on the location and future plans for the area
 
If one is under 40 and has 10.000 USD spare, buy some piece of land near a beach in not yet developped areas like LaBajo in Flores or similar.

In 10 / 15 / 20 years it will probably be worth MUCH more.
 

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