You will assemble your workbook, memo and rulebook into one investment file and make an evidence-based decision.
This is where the course ends and the decision starts. You've measured your returns and risk, read and modelled a company, valued it, written a memo, set risk rules and counted your costs. This project brings it all into one investment file and asks you to decide, on the evidence, how you'll run your money next year. Marcus's file is the worked example, with the made-up figures used throughout the course.
Allow about ninety minutes, most of it on the cost and benchmark tab and the decision page. The decision may be the shortest document in the file, and it's the one you'll reread next January.
Open your workbook and add a Contents tab at the front. List every tab with the lesson that built it and the date it was last updated. Marcus's runs: Returns from lesson 1.8; Risk from 2.8; Macro from 3.8; Scenario from 4.8; Trade costs from 5.8; Reading log from 6.8; Inputs and the three statements from 7.7 and 7.8; Valuation from 8.8; Comps from 9.8; Backtest from 10.8; Stress from 11.8; and the new Costs tab below.
Keep the two written pieces beside it: the two-page memo from lesson 9.8, Build a comps table and write an investment memo, and the one-page rulebook from lesson 11.8, Write your risk rulebook and stress test your portfolio, now including the rebalancing rule from lesson 12.2, Rebalance a mix of ETFs and single stocks to a written rule. Update any tab whose figures are more than a quarter old, starting with returns and holdings.
Build a tab called Costs. The top half lists every money cost from lesson 12.3, The full cost stack: commissions, spreads, FX, custody and withholding tax, each with its source and date. Below it, your hours from lesson 12.5, Price your hours: what your research time costs, with the rate you chose and why.
Total it twice, in SGD and as a percentage of your portfolio. Marcus's money costs came to about S$949, or 0.47%. His 156 hours at S$36 came to about S$5,616, or 2.78%. All in, about S$6,565 a year, or 3.25% of S$202,000.
On the same tab, set your result beside your managed alternative and a plain index version of your own benchmark, on the basis from lesson 12.6, Benchmark your results against a managed fund, like for like: time-weighted, net of all money costs, in SGD, over the same years. Then show what the same deposits would have become in each.
Marcus's comparison over five years: his own portfolio about 5.58% a year, ending at about S$202,185; the managed portfolio about 4.64%, ending at about S$197,445; a plain index version of his benchmark at a made-up 0.25% cost about 5.17%, ending at about S$201,670. He was S$4,740 ahead of the managed portfolio and S$515 ahead of the index version before counting time. Counting his hours, at the full rate he was behind both.
Add one line on luck. A five-year lead of under a point a year is too short to tell from chance, as lesson 12.6 showed, so the comparison is a measurement, not a verdict on skill.
The decision page is one page with four parts: what you'll do, why, what result would change it, and when you'll check.
Choose among four options. Keep picking at your current size. Shrink the satellite. Go fully passive, holding only index funds to your allocation. Or hand the money to a managed fund or robo-advisor. Each is a reasonable answer for someone. The point is that the evidence in your file chooses, not your mood after a good or bad year.
Marcus's decision read: "Next year I will shrink my satellite. My stocks have not shown an edge: over five years I beat my benchmark by about 0.15 points a year before my time, and trailed it on risk-adjusted terms. I'll sell the chip designer and the bank at my January review, because both are large, heavily researched companies that my world and STI ETFs already hold, which is where lesson 12.7 says I have no advantage. I'll keep Larkspur and the S-REIT at their targets, a satellite of 9%, with the rest added to the world ETF so shares stay at 80%. I'll cap my investing time at 40 hours a year, about S$1,440, and check prices weekly. I'm not handing money to a manager, because a plain index portfolio did better than the robo for less cost and about 12 hours a year. If after three years my time-weighted return trails my benchmark after money costs, I'll go fully passive. I review this decision every January."
A workbook with a Contents tab and every tab dated, including returns, risk, macro, model, valuation, comps, risk rules with the stress test, and costs. The two-page memo and the one-page rulebook with its rebalancing section. A Costs tab with every money cost sourced and dated, hours valued at a stated rate, an all-in total in SGD and percent, and a comparison with a managed alternative and an index version of your benchmark, time-weighted, net of costs and in SGD. And a one-page decision naming one of the four options, the evidence behind it, the result that would change it and the date you'll review it.
If your decision is to keep picking at a larger size, read your Costs tab once more and check that the edge you'd need to cover your hours is one your record supports.
None of this course tells you what to buy, and this page doesn't either. It records what you've measured and what you've chosen, so next year you can check one against the other. Now complete your Costs tab and write your decision.
Complete the cost and benchmark tab, then write a one-page decision on how you will run your money next year and why.
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