It is easy to blame the company, the CEO, the macroeconomic conditions, or the analysts for your investment outcomes. Or maybe we should quit playing the victim and to be aware that it is in fact normal for sectors like REITs to experience cycles and reasonable drawdowns from time to time. (Likewise for the Singapore banks which most investors are very bullish on still) As investors, we have to do our own due diligence, not just in assessing the companies but also the market conditions and we make our own calls. Ultimately we are the ones that decide which stock to buy and at what price. Take responsibility for our own decisions.
Videos that caution income investors or discuss managing downside risks often get lesser views, while those boasting about six-figure dividends a year get many more. Most people are interested in the potential gains but not in learning how to achieve them sustainably, which will eventually backfire one day.
Often, some income investors focus solely on dividends, disregarding the capital at risk. As long as they receive high-yield dividends year after year, they don’t mind if their principal suffers losses. Many of these investors neglect fundamental and technical analysis, relying solely on high yields as their criterion.
This approach might work for some, but it may not suit everyone, including us. We believe a more sustainable strategy for income investing also involves achieving long-term growth while maintaining a healthy yield, i.e. looking at total returns. Not everyone has the luxury of starting with a large amount of money or a high-paying job, and we don’t think we would take that approach even if we did. At some point, you may need to liquidate some holdings, and you’ll want your principal to have grown meaningfully.