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20-08-2011, 06:27 AM
Big talk - this guy obviously hasn't gotten "burnt" badly yet from his borrowing!
The Straits Times
Aug 20, 2011
financial crisis
Why this investor chooses to borrow when times are bad
By Melissa Tan
RIGHT after the markets crashed in late July Mr Vincent Hee went to his bank to borrow nearly $50,000.
It was not because he was in dire straits - quite the opposite, in fact.
Mr Hee, 43, a project development executive, is one investor who has managed to make money amid a sea of red.
He told The Straits Times that he has made a return of about 20 per cent - that is, $10,000 for every $50,000 borrowed - by putting the borrowed money into the stock market every time he thinks that the market is 'in favour'.
Apart from the loan, he uses a bit of his own capital as well.
'I actually like to borrow money, because if you have money, you like to spend it but when you owe money, you tend to save more.
'Also, as a borrower you have some bargaining power because banks want you to borrow.'
He says he has been doing this every three to six months since the 2008 market crash, and prefers to invest in stocks as they are easier to sell than property.
'I can do this also because I don't have kids to feed,' he quips.
Since then Mr Hee, who says he earns a salary 'coming to five digits', has made more than enough to cover the cost of the BMW he bought in April 2007. He declined to disclose the exact amount.
He has been investing in transportation-related stocks, for example, since 'oil prices drop when the market drops'.
'The best time is exactly when the market is no good; I only invest when the price is dropping,' Mr Hee says, adding that he was using borrowed capital mainly to take advantage of low bank interest rates.
'Banks set a low interest rate because they want to encourage people to borrow, so why not go for it? It's better to use someone else's money to earn money instead of your own. Just take it first and wait for a good time to dump it into the market,' he says.
According to Mr Hee, the interest rate his bank has offered him is slightly below 2 per cent, excluding a processing fee, though he noted that it was partly because of his 'good track record'.
'I don't prolong the period of repayment because if I pay back early or on time, my bank is more willing to offer a promotional rate for future loans,' he explained.
Mr Hee says he is confident that he 'can recoup the bank interest rates in long run. Once shares drop, there's a limit. It's only a matter of time before they'll rebound because people still need to eat,' he adds.
But he cautions that investors seeking to follow his example 'must understand how long you can hold the stock'.
At the same time, try to maintain happy thoughts, since there's nothing you can do to prevent share prices falling, Mr Hee said.
The Straits Times
Aug 20, 2011
financial crisis
Why this investor chooses to borrow when times are bad
By Melissa Tan
RIGHT after the markets crashed in late July Mr Vincent Hee went to his bank to borrow nearly $50,000.
It was not because he was in dire straits - quite the opposite, in fact.
Mr Hee, 43, a project development executive, is one investor who has managed to make money amid a sea of red.
He told The Straits Times that he has made a return of about 20 per cent - that is, $10,000 for every $50,000 borrowed - by putting the borrowed money into the stock market every time he thinks that the market is 'in favour'.
Apart from the loan, he uses a bit of his own capital as well.
'I actually like to borrow money, because if you have money, you like to spend it but when you owe money, you tend to save more.
'Also, as a borrower you have some bargaining power because banks want you to borrow.'
He says he has been doing this every three to six months since the 2008 market crash, and prefers to invest in stocks as they are easier to sell than property.
'I can do this also because I don't have kids to feed,' he quips.
Since then Mr Hee, who says he earns a salary 'coming to five digits', has made more than enough to cover the cost of the BMW he bought in April 2007. He declined to disclose the exact amount.
He has been investing in transportation-related stocks, for example, since 'oil prices drop when the market drops'.
'The best time is exactly when the market is no good; I only invest when the price is dropping,' Mr Hee says, adding that he was using borrowed capital mainly to take advantage of low bank interest rates.
'Banks set a low interest rate because they want to encourage people to borrow, so why not go for it? It's better to use someone else's money to earn money instead of your own. Just take it first and wait for a good time to dump it into the market,' he says.
According to Mr Hee, the interest rate his bank has offered him is slightly below 2 per cent, excluding a processing fee, though he noted that it was partly because of his 'good track record'.
'I don't prolong the period of repayment because if I pay back early or on time, my bank is more willing to offer a promotional rate for future loans,' he explained.
Mr Hee says he is confident that he 'can recoup the bank interest rates in long run. Once shares drop, there's a limit. It's only a matter of time before they'll rebound because people still need to eat,' he adds.
But he cautions that investors seeking to follow his example 'must understand how long you can hold the stock'.
At the same time, try to maintain happy thoughts, since there's nothing you can do to prevent share prices falling, Mr Hee said.
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