Every year, I do a report card of sorts on my stock portfolio. This is based on the annual statement from the Singapore Exchange of the shares I hold.
The statement details the dividends I received in the past year. Dividing the dividends by the market value of my portfolio gives a back-of-the-envelope gauge of the portfolio's returns.
(For example, $5,000 of dividends divided by an investment portfolio of $100,000 indicates a 5 per cent return.) It's not the most rigorous method and does not take into account the shares I may have bought or sold or capital gains made.
This approach also ignores instances where I may have ploughed some of the dividends back into buying more of the same shares instead.
And if I had bought growth stocks where the share price is rising but no dividends are being paid out, that would understate my return.
As for how my portfolio performed last year, the returns were decent but certainly not in the region of handsome double-digit figures.
While my performance can be improved, the challenge for retail investors and even large investors like pension funds is to find ways to generate a decent level of returns consistently.
While the global economy is growing, the pace is hardly sprightly.
The US economy grew around 0.2 per cent in the first quarter, while the euro zone's growth was around 0.4 per cent.
Be it due to a lack of productivity growth or an ageing population, slower growth eventually weighs on companies and their dividends. As they generate less business, they will pay out less.
Even the real estate investment trusts which have found favour with investors for their regular returns may not be as resilient.
Can their distributions be sustained when people shop less or companies export less? Tenants will want to pay less rent and take up less space.
The trends of slowing growth will eventually manifest in my portfolio.
Take a portfolio of, say, $100,000. Even if I achieved a return of 8 per cent - an impressive result these days - that would give me $8,000 a year, hardly a substantial income if I am a retiree.
But if the returns fall to 4 per cent, that means an even worse proposition of $4,000.
In other words, I would have to find some investment that works twice as hard as my current investment or I will have to work even longer.
While this may be a daunting prospect, equities - if one picks the right ones - still offer higher rates of return than fixed deposits and bonds.
If I can save enough to double or even triple my portfolio, my return, even at 4 per cent, will come in at $12,000 a year. With the power of compounding, hard work and research, that $12,000 can be ploughed back to grow even more.
The annual Sunday Times Invest Seminar presented by DBS is held on May 30.
Topics such as how you can invest in equities and foreign currencies and do retirement planning will be tackled. Find out more at www.regonline.sg/sutinvest2015