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How To Treble Your Money In Two Years

3Imagine what it must be like to watch one of your investment triple in value in just two years. It doesn’t happen very often – over the last two years, only half a dozen companies can claim to have done it.

Since September 2011, the Singapore market has produced just six three-baggers. They include mid-cap oil rig outfit Ezion Holdings (SGX: 5ME) and small cap property developer Blumont Group (SGX: A33). Other small caps that belong to this special group include Innopac Holdings (SGX: I26), GSH Corporation (SGX: J16) and Asiasons Capital (SGX: 5ET).

To put the gains of these companies into context, the Straits Times Index (SGX: ^STI) has only risen 10% in the last 24 months. So even with the benefit of a healthy dividend kicker, the total return from the benchmark index is a mere 16% over the last two years. By comparison, shares in Blumont have surged 11-fold; Innopac shares have increased 22 times and GSH Corporation is up by over 900%.

It is little wonder that many investors enjoy fishing around the big pond that we call the stock market for shares that can deliver whopping gains.

However, for every Blumont waiting to be snapped up, there is also an Oceanus Group lingering and waiting to catch investors off-guard. Shares in the abalone processor have fallen by more than 80% since September 2011.

From a statistical point of view, the median gain for Singapore shares over the last 24 months is a modest, though not insignificant 18%. Interestingly, one in five stocks has delivered gains of around 20%. However, fewer than 9 in 200 stocks have trebled in value. In other words you are five time more likely to find a stock that delivers an above-average return than trying to pick one that trebles in value.

That might be why Warren Buffett once quipped: “I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.

Stepping over one-foot bars may not be as exciting as hurdling over seven-foot poles. But sensible investing is about putting the odds in your favour. You may not treble your money in two years, but achieving inflation-beating returns would be a good way to protect your nest egg.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.