Me & My Money (Mock Interview)

Me & My Money has always been one of my favourite section of Sunday Times Invest for a long while, perhaps even before I started investing. Recently, Sunday Times had been interviewing some youths about their investing journeys. I sure hope I have a chance to be interviewed for that column, but without any outstanding positions in investment-related CCAs, I doubt I'll have the chance. So, in this little heaven of mine, let's do a buaypaiseh mock session of Me & MyMoney!

Courtesy shot of Me!

While many NSFs were sleeping in bunks or surfing the web during their downtime, the Unabashed Writer (UW) here was busy reading on investing books like The Intelligent Investor by Benjamin Graham or Winning the Loser's Game by Charles D. Ellis. It was a habit picked up from one of his platoon mate who was constantly being ridiculed by others for being a bookworm.

UW recalled, "My platoon mates were always asking if the books he was reading were even useful and said it was a waste of time. After realising that if I chose to read investing books, I might be picking up useful skills and be productive in the 2 years of army."

Looking back, the years in army did actually give him a headstart in the world of investment. Picking up his first stock in 2011, he rode the bull run that came after the Lehman Brothers collapse and the European sovereign debt crisis. For the first three years of his investment journey, he managed to achieve a compounded annual growth rate of 9.25%, beating out inflation and bank interest rates.

After the years of investing, he increasingly realised that investing or personal finance are skills that everyone should have some knowledge of.

UW, who studies Chemical Engineering at National University of Singapore laments, "After almost 4 years of investing, I realise not many of my friends know the value of it. They see it as gambling or think it is risky. Many of my female friends who are working do not even save regularly. This is where I think personal finance comes into play. Know that inflation eats your money away when you deposit them into banks. The only way to beat inflation is to put a comfortable level of cash into higher-yielding assets like stocks or bonds. I always direct my friends to my anonymous blog in order to gain some insights on investing."

The avid investor proposes that personal finance courses should be introduced at university level. SGX can be roped in to conduct these courses and at the same time, reap rewards such as increased investor participation rate in the local stock market.

Asked about his end goal of investing, UW replied, "At the end of the day, I hope to amass a portfolio of stocks that generates sufficient passive income for me to be financially independent. That does not mean I will retire. It just means I will have less stress about job security or just simply means I have the luxury to decide what I want to do for a living. It has always been my secret ambition to sell takoyaki at shopping mall."


Q Moneywise, what were your growing-up years like?
A I am a middle child born to two hawker parents. My parents were hardworking and consequently, I never had a moment where I could not get what I needed. I also learnt the value of money from young as I helped out at my parents' stall since Primary 3, starting with cashiering and counting of money at the end of the day. I got desensitised to big sums of money early as the cash at the end of the day was in thousands. (low end, in case you are thinking I'm rich)

Every cent counts!

My grandma taught me to save. Excess pocket money, angbao money and Edusave scholarships were all saved up in my POSB bankbook without question. Besides all these, my grandma also had the foresight to "force" my parents to cough up $100 every month and deposit it into my bank account. Every drop of water makes an ocean. By the time my grandma let me have free rein of my finances (which is around my army period), she had already helped me accumulate almost $20k in the account.

Q How did you get interested in investing?
A I knew the existence of the stock market when I was in primary school. Back then I thought it was this magical place that would send cheques to my mother and we will have a good treat after that. Sometimes my mother will call me and my siblings to use Teletext and read stock prices to her.

I only formally got interested in investing during NS days where I decided to pick up useful skills during downtime. Investing books were the only books I picked up because I wanted to know how investing actually works; what was Buy, Sell and Vol. It turned out that investing was an universe of its own and trading was only a small part of it. I was particularly intrigued by the concept of compounding interest and also of passive income.

Q Describe your investing strategy.
A My investing strategy follows what Benjamin Graham and Warren Buffet advocated. Seek out fundamentally stable companies that is undervalued and whose prices provide a sufficient margin of safety ie. low enough such that downside is limited. In a long run, the true value will be recognised by the market. As such, I believe in an insufficient market that holds hidden gems, and their values will be realised in the long run.

To find these undervalued stocks, I regularly use the stock screener in Google Finance. In the stock screener, there are many criteria that can be used to filter stocks that are to your liking. Personally, I require the company to pay out dividend, P/B less than 1, P/E less than 20 and positive 10 year EPS growth rate. After that, I will individually assess the companies to see why is it undervalued despite the attractive financial metrics. Sometimes it might be because they recorded one-off gains, but were stuck in unfavourable market conditions. Many a times, it was because the companies are in unpopular industries like local chemical or construction industries.

When I first started using this method in 2013, I found hidden gems like Straco and Nordic. Increasingly, it is hard to find these companies anymore as they becomes fully valued in a bull market.

Q What do you invest in?
A I mainly hold Singapore equities because one needs to be familiar with the business before buying a stake in the company. I usually hold mid-cap stocks for affordability in contrast to blue chips and avoids penny stocks because of their speculative nature.

I had invested in foreign companies that I was confident in. They were few in numbers such that I can list them here from memory. They were Bank of America, Apple Inc and Bank of Ireland. Forex adds to the risk of buying stocks thus I generally avoids foreign stocks.

Q What does money mean to you?
A Many says money cannot buy happiness but I think it is the precursor to happiness. You can make your money work for you and generate passive income through stock dividends, bond interests etc. Up to a critical mass of passive income, you will have enough money to further your pursuit of happiness.

Q What's the most extravagant thing you have done?
A It was the exchange program I did recently, where I travel to Sweden to study for a semester. Since I was at Europe, I took the opportunity to travel to most parts of the continent. In the 6 months period, I spent a total of $20k. It was a worthy trade for the experience as there will never be any chance to travel for such an extended period of time once I start working.

Viewing Northern Lights in Iceland

Besides the travel experience, I had also learnt many soft skills during the exchange. One of the most notable skill I picked up was crisis management. This came after I went through many unfortunate incidents including theft, card phishing and flight cancellation. Each time I managed to handle them with quick judgement and allowed me to recover my loss as much as possible. For theft, I recovered half of my loss through insurance. For card phishing, I managed to block the transaction by contacting the seller directly after getting information from the bank. In the case of the flight cancellation, I managed to turn the crisis into fortune by claiming substantial insurance even though we did not lose out much in terms of accommodations or itinerary changes.

I am very fortunate to be given the chance and study in a foreign country. Despite the extravagance, I feel that it was very justified for the cost and the experience is something I will hold dear for the rest of my life.

Q What is one of your biggest regrets when it comes to investing
A One of my biggest, biggest regret was not picking it up earlier to guide my mother. My mother uses the stock market to feed her gambling habits. As she does not follow economic news, her trading were as good as throwing darts blindfolded. It did not help that her broker was giving her recommendations based on volumes and "insider news".

I vaguely remembered my mother requiring a "bailout" of $100k from my father because of the CLOB saga. Adding salt to wound, her mood fluctuated according to the stock market. My relatives would always joke about how they can tell the market was up or down based on her mood.

Recently I took a copy of her SGX statement and calculated her date-to-current gain/loss. With a portfolio approximately $200k two months ago, she had already incurred a loss of $68k. She also did not keep track of the buy price which made tracking of gain/loss difficult.

All these investing atrocities were happening since I was in Primary School. One can imagine how much she had lost over the years. One can imagine how much life will be easier for her if she invested prudently. This is the result why I regret not picking up investing earlier. Currently, I am trying to convince her to hand over the remaining portfolio for me to handle. However, I am facing resistance as she hopes the stocks will recover to their former glories. It is really saddening how she works long hours at the hawker centre only to flush the money down the drain that is the stock market.

Best and Worst Bets
Q What has been your biggest investing mistake?
A In all truthfulness, it was actually "lending" money to my friend. By "lending", it actually giving money to my friend in promise of decent returns, 5-7%. According to him, it was to used to buy into some gold trading scheme. I had asked for reports or documentation about his investment but he repeatedly played on the word, "trust". He even said he will guarantee my investment with his day job pay.

Regrettably, payment started getting delayed and eventually stopped coming in. The promise of guaranteed returns with his salary turned out to be false. He would say to give him more time but it has been 6 months since last payment. In total, this friend owes me $4600, an amount neither large nor small. I would definitely hope the money will be returned one day, never mind the interest. However, I see this sum of money as payment for a valuable lesson learnt. Never trust anyone with your money, not even close friends or relatives. At the end of the day, it is their well-being they are concerned about, not yours. If you are well-versed in personal finance, you do not need to rely on others to manage your money.

Q And what has been your best investment move?
A My best investment was buying Singpost at $0.98 on March 2012. At $1.92, it represents a 95.3% over three years. It had also gave out $890 of dividend since purchase. (22% of my buy-in) At my purchase price, Singpost gives out 7% dividend yield with the recent hike of dividend to 7 cents a year.

I went to my first AGM for Singpost and its CEO, Wolfgang Baier presented himself excellently and shown leadership on the future prospect of Singpost. I will be holding this stock for a very long time and hope for better years to come.