On a weekly basis, the Straits Times will conduct interviews of prominent people who made the news due to their large amounts of money, be it in their account or they manage it, or they had a great career. While it is great to read these stories, the stories does not apply to many...especially to the middle-class majority. Most of us do not have $1M Pokemon cards, work as director or C-suite executive (CEO, CFO, CTO), or from rich families, or entrepeneurs who made it big and are now earning the big bucks.
So here is my take from a typical middle-class person living in Singapore.
1. What do you invest in, and why?
The core investment principle most strongly supported by Nobel laureate economists, investments gurus and well-known wealth managers is diversification and rebalancing. Obviously, we all want to be a stock-picker in the likes of Warren Buffet or Peter Lynch, but it is very difficult to do so across decades, especially with the VUCA environment we are living in. Every now and then, I still get into constant debate with folks that tell me that the only way to invest is by buying individual stocks in the US because that is where there are opportuntities to get 3X or 5X. While this is true, it is hard to be consistent year after year and decade after decade.
Having said that, I invest in ETFs and unit trusts in various classes such as bonds, country equities (USA, Europe, Japan, China, and Singapore), tech, gold, and even a bit in the major crypto-currencies.
2. What is your approach when it comes to growing your money?
It's pretty boring: I follow what the experts recommend, that we remain in our current jobs and live within our means. Another recommendation is to invest certain amounts, at least 10% of our income on a constant basis. As the crystal ball is seldom accurate and we cannot depend solely on luck, we must diversify and perform re-balancing on a consistent basis.
3. What has been your best financial decision?
My best financial (and parental) decision is to focus on the kids' education and upbringing.
Like most parents in Singapore, we wanted our kids to be successful so we set up a plan to expose them to many pre-school activities, and then academic tuition which enable them to be successful in school. Through hard work plus a little bit of luck, both were selected for the Gifted Education Program and then to Raffles Institution. This helped them to achieve good results for their A-levels. This plus their co-curricular activities enabled them to apply for various scholarships from government agencies and private companies.
Both went to overseas universities and the cost saved from tuition fees plus overseas living expenses is over $0.5M.
3. What has been your biggest financial mistake?
During my initial investment journey, I invested a considerable amount in specific funds and stocks. During downturns (and there has been a few), the money invested dropped by more than 50%. Once that happens, the same funds will have to appeciate over 100% to get back to the original invested amount.
I learnt my lesson that there is no such thing as a "sure thing". It may be good for a while, but this is seldom sustainable in the long run. So now, the only way forward, at least for me, is to diversify through multiple unit trusts and ETFs, and consistent rebalancing.
4. Moneywise, what were your growing up years like? How did it shape your outlook on personal finance and investing?
I grew up in a typical middle-classs family which solely depended on my dad's wages. We were not poor but not rich either. I recall the only family trip we went on was one to Bangkok and Pattaya in my teens...very different compared to most families these days who may have one overseas holiday, further than just within the ASEAN region, each year.
While my father talked quite a bit of his investments in certain stocks, but the outcome was not great. He has some wins but for the most part, the earnings are quite flat.
With that in mind, I switched my investment philosophy to relying on experts to manage my money versus picking stocks. Yes, this includes having a reputable financial advisor with a projection of 5-8% annual upside. So far, this has proved to be working and I am projecting that I will be ahead of my target retirement amount by a few years. Of course, then it will be a question if I still enjoy my work...so far, the going is still good so it looks like I will be working a little longer.
5. Where's home for you?
The mantra is to "live within our means" so my first home was a 3-room HDB. We upgraded to a 5-room HDB when the kids are in their late teens and they wanted a room of their own. My current property price has since appreciated over 50%, and yes, I live in a HDB that is worth above $1M. While there has been opportunities to upgrade to a private condominium, there is no strong push to do this especially when most new 3-room condos cost over $1.5M for an apartment just slightly larger than my first 3-room HDB. It does not make sense to me to "upgrade" to a higher-price home with a smaller footprint in the same area.
6. What do you drive?
The same mantra applies for my car, ie. "to drive witin our means". My first car was a Toyota Vios which I drove for about 14 years. Right now, my car is a Toyota Corolla, which I will renew the COE when it expires in 2028 for another 5 years.
7. What would your perfect day be like?
I would start the morning at Delta Sports Centre (swim or gym session). Alternatively, it is a hike at Labrador Park from Vivocity, or a hike at Bukit Timah or Rifle Range, followed by breakfast at the food court. It would be great if the weather is around 25 degrees with a breeze.
This is then followed by reading the daily newspaper and then light lunch from nearby Ghim Moh Market. I would love to take an afternoon nap and then a little time scrolling on social media. Then I will start preparing to attend the weekend church service at FCBC.
8. What would you do if you had a windfall of millions?
After my children has gotten the scholarships, the burden of paying for university fees has reduced significantly. While it is not a windfall of millions, the original set of funds saved for their education is sufficient for travels to Japan, China and South Korea...several times a year.
If I really do get a windfall of millions, I suppose that I would park some of the money aside for charity, plus some for savings for both me and my children. I will change the destinations from Asia to Europe...
9. If you suddenly only had $100 to your name, what would you do with it?
I make sure that I start with prayer...to remember God's promise that He has a plan for me, to prosper and not to harm, with a hope for the future. Then I would go to work assuming that only the money is lost but I will still have the ability to work and earn some wages.
Investment-wise, I will start from the beginning by purchasing various ETFs and unit trusts, and rebalance consistently.