Me & My Money Series (Sunday Times)

[momoeagle]

"I also own a three-bedroom house in New York's Rochester city which is giving me a monthly rental income of US$750 (S$925). I bought it in November last year at US$36,500. After expenses and taxes, the return is around 15 per cent and, at worst, 10 per cent. It was paid for in full.

In April, I bought seven more homes, this time in San Antonio. They ranged from US$40,000 to US$66,000 each. "

36.5k + 50k*7 is nearly $400k USD... Working 5 years can generate this amount of cash?
Let me count.
$400k / 5 = $80k a year = $6.15k a month on average taking into account 13mth (and assume no bonus).

I do think it's possible for a uni grad with 1st class honours in the army. Bear in mind he rented out his flat while probably staying at his parents' place. That's an extra $1650 a month.



I have only two points...
1) Properties are depreciating assets. 10% yield did not take into account depreciation and possible future maintenance required. In addition, you are assuming that tenants are always available.
2) USD has been depreciating. His cost of purchase in SGD has actually gone up.
So the question is, is his 10~15% yield really 10~15%? I don't think so...

[EnSabahNur]

I do think it's possible for a uni grad with 1st class honours in the army. Bear in mind he rented out his flat while probably staying at his parents' place. That's an extra $1650 a month.

.

I own a 1,518 sq ft HDB executive flat in Sengkang. I bought it in 2005 for $321,000. It is worth about $550,000 now. I rented it out for $1,650 a month till early this year when my family decided to move in.

he bought hsi flat in 2005 and rented it out for 1650 a month until this year.
but i think legally you cant do that for a certain number of years once you bought it..

[Musicwhiz]

The last 5-6 years have been quite "unusual" due to the foreigner influx and super-low interest rates. These have all had the effect of pushing property prices into the outer limits.....beyond the Milky Way!

Let's see these people try to repeat that feat again in the next 5-6 years.

[Satchmo]

I wonder who is minding and maintaining the US houses for him. Did he factor in the maintenance & repair costs?

And on what basis are his property/rental investments 'low risk'? And beefing up to 60%? A sizable portion. Hope he did ample research heh.

Wonder how they go about finding candidates for this section. Word of mouth? Or the ST ads? Hehe.

[Ben]

he bought hsi flat in 2005 and rented it out for 1650 a month until this year.
but i think legally you cant do that for a certain number of years once you bought it..

I think he did not rent out the whole flat, maybe keep one room to himself. Rental rate for executive flat is definitely more than $2K a month. If lock one room, than it is not subject to the MOP, am I right?

[d.o.g.]

If lock one room, than it is not subject to the MOP, am I right?

The Minimum Occupancy Period (MOP) has nothing to do with whether you lock up one room or not. MOP means just that - you have to LIVE in the unit.

Owners who lock up one room do so in order to pretend that they are still living in the unit and thus not technically renting out the whole unit. In other words they are actively breaking the HDB rules. If HDB finds out, expect to be fined, and if you are recalcitrant expect to lose your flat (it's been taken away before).

[Musicwhiz]

Jul 3, 2011
me & my money
Early schooling in the art of business
Ademco Security boss used to help dad in his work and made $1,000 selling T-shirts to peers
By Lorna Tan, Senior Correspondent

Mr Toby Koh had an early start learning how to run a business. He was just seven when, outside school hours, he accompanied his father to work. The latter was heading security and central monitoring firm Ademco Security then.

Mr Koh also helped his father out at industry and home decor exhibitions, in which Ademco would participate to display its range of security and fire systems. 'My mission was to hand out brochures as fast as I could to as many people as possible,' he recalled.

Ademco was a wholly owned subsidiary of Ademco US until 1985, when Mr Koh's father bought out the Singapore business for $1 million.

Mr Koh, now 40, graduated from the University of San Francisco in 1990 with a bachelor's degree in business administration. He returned to Singapore to serve his national service, and then became a corporate banker at Maybank in 1993. He joined Ademco in 1995 as a sales executive and became its executive director in 2002. He was named managing director in 2005.

Two years later, the business was sold to British firm Rentokil Initial for an eight-digit figure, but he remained as Ademco's managing director for Singapore. In January last year, he bought back the business. He is now the group managing director of Ademco Security Group.

Besides Ademco, Mr Koh's investment portfolio includes a seven-digit sum invested in blue chips. He is a strong believer in health insurance as his mother was diagnosed with lymphoma cancer in 1997 and they have spent over half a million dollars on medical bills.

He is married to housewife Joyce Heng, 40, and they have two daughters, Tania, 12, and Heather, 10, and a son, Cody, seven.

Q: Are you a spender or saver?

I believe I am pretty balanced. I spend 60 per cent of my income on family and personal expenses. The other 40 per cent is saved and invested. My big splurge would be on food and family holidays. My children love Japanese and Chinese cuisine and we eat out weekly. Travelling with my children is one of the pleasures that I treasure, so two to three trips a year is common.

Q: How much do you charge to your credit cards every month?

I use only four credit cards actively based largely on their merchant promotions. I charge between $5,000 and $10,000 monthly. Payments are always settled fully. Credit card interest rates can cause car-diac arrest. I withdraw about $500 weekly from the ATM.

Q: What financial planning have you done for yourself?

I think I am pretty well covered with over $4 million worth of critical illness and life insurance policies, so that my wife and kids can continue with current living standards if something happens to me.

My investment portfolio comprises stocks and my business. I have a seven-digit sum invested in blue chips like OCBC, DBS and Singapore Press Holdings. I do not believe in actively managing my portfolio, so I feel that blue chips are a no-brainer. Just let them run with the market. For stock selection, I do some homework first, like reading analysts' reports. My target returns are about 5 per cent a year. I do not invest in unit trusts as the fees are high. I keep about six months of cash reserves in case of an emergency. My biggest investment is in my business, Ademco Security.

Q: Moneywise, what were your growing-up years like?

I grew up in a three-room HDB flat in Queenstown with my parents and an elder sister. My neighbourhood friends were from modest backgrounds and I first saw how financial problems affected families. I had friends who did not even have pocket money, which led me to really appreciate my 30 cents or 40 cents of daily allowance.

My father joined Ademco as a salesman when I was seven in 1977. As a child, simply from observing my father's work attitude, the concept of hard work was drilled into me. My mum is a housewife. She taught me not to waste from a very young age. We turned off the lights when they were not in use, took quick showers and any leftover food was kept for the next meal. When I was in university, I held at least one part-time job at all times. We moved to a walk-up flat in St Thomas Walk when I was 13.

Q: How did you get interested in investing?

My first real investment was when I was in Anglo-Chinese Secondary. I realised that other than the school's tanktop for physical exercise lessons, there was no other selection of school T-shirts available. Along with a schoolmate, I decided to get into the garment business.

The plan was to design and print T-shirts for sale. We found a company that was willing to accept a small deposit of $200 and gave us 30-day terms. We managed to sell the T-shirts to students for a $5 profit each and made $1,000. That taught me that investing in a business was really the way to go.

Q: What property do you own?

I do not have any property investment at the moment, apart from my home, a semi-detached house in the east. It was bought for $2.1 million in 2003 and is probably worth around $4 million now.

In 2007, I bought a 1,800 sq ft unit at St Thomas Suites in District 9 for $2.9 million. I sold it in 2009 for $3.3 million.

Q: What's the most extravagant thing you have bought?

Watches for my family. After selling the business in 2007, I bought a Franck Muller each for my father and my wife, and a Jaeger LeCoultre for my mother. Each watch cost approximately $40,000.

Q: What's your retirement plan?

I am having too much fun running and investing in businesses to ever truly retire. In my later years, I would like to spend more time contributing to my country and society. I like to think I am financially independent right now. About $15,000 a month would be enough for my wife and me to enjoy a very comfortable lifestyle, I believe.

Q: Home is now...

The semi-detached house.

Q: I drive...

A black Audi A4.

lorna@sph.com.sg

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WORST AND BEST BETS

Q: What has been your worst investment to date?

My father and I invested in a joint venture with a Chinese partner in Shanghai in 1996. Its core business was in central monitoring systems. The business was doing well and it looked extremely promising. But we lost $500,000 when the Chinese partner ran off with the money in 1998. I learnt that I should have a deeper understanding of my business partners before venturing into business together.

Q: What has been your best?

My best investment is in Ademco Security Group. My father and I sold the business in 2007 but we bought it back in January last year when the new owner Rentokil had a strategic change in direction and wanted to exit the business.

In 2007, we operated from a Singapore office even though we handled projects across the Asia Pacific region. Now, we have six offices across the region providing security solutions to government, MNC, commercial, industrial and retail customers and intend to continue to grow further. Some of our recent projects are the Pinnacle at Duxton and Resorts World at Sentosa. Ademco's revenue this year will be in excess of $20 million.

[Musicwhiz]

Jul 10, 2011
me & my money
Glad rags for former kampung kid
Tough childhood spurs chief exec of fashion social network to make good
By Lorna Tan, Senior Correspondent

It is difficult to associate entrepreneur Roger Yuen, 53, with his recently started business Clozette, a fashion social network for women.

He set up his own business consulting firm Kryan Resources in 1993 with just $10,000. It was renamed Katz Asia in 2005. Prior to venturing out on his own, he worked with a few companies, such as semiconductor packaging firm Microelectronics Packaging as a regional sales manager and disk drive maker Tandon as its managing director for the Asia-Pacific till 1993.

He ran Katz for two years before joining Softbank, followed by work stints at CNet Networks and NEC till June last year.

At Clozette, where he is the chief executive, he is the only man among the five founders. It was set up in August last year. They invested a total of $300,000, of which $120,000 came from Mr Yuen.

With bonuses and money from stock options from his work stints at various multinational companies (MNCs), Mr Yuen has built a diverse investment portfolio of equities, bonds and foreign currencies like the Australian dollar and the British pound.

He graduated with a diploma in electrical engineering from the Singapore Polytechnic in 1978. In 1985, he obtained a diploma in management studies from the Singapore Institute of Management.

He is married to housewife Katherine Wong, 50, and they have two sons, Andrew, 19, and Alan, 15.

Q: Are you a spender or saver?

I have been a saver from a young age. Generally, I would save about 10 per cent of my income for liquidity needs, channel about 60 per cent into various investments and spend the remaining 30 per cent.

My major indulgences are holidays and trying out new restaurants with my family. For instance, my family of four spent more than $40,000 on a three-week private tour of Turkey and Egypt in December last year.

Q: How much do you charge to your credit cards every month?

I primarily use two credit cards and I am fanatical about making payments when they are due. My credit card bills average about $5,000 a month. My wife is my ATM. She withdraws about $5,000 a month and I withdraw cash from her wallet.

Q: What financial planning have you done for yourself?

I believe in long-term investment in properties. I also own four insurance plans, two of which are health policies. My life cover is about $150,000.

My financial investments comprise 45per cent in equities, 25per cent in bonds, 20per cent in currency-linked investments and 10per cent in foreign currency deposits. My wife focuses on our long-term investments in Singapore stocks, which comprise blue chips like Singapore Press Holdings, SingTel, Keppel Corp, OCBC and DBS, while I focus on US stocks like Citibank and Bank of America.

I believe in investing in technology ventures. For example, in 2009, I invested $300,000 in a home-grown start-up online and brand intelligence firm Brandtology. I expect that investment to yield a return of four to five times my investment or $1.5 million. And of course I have invested in my own firm Clozette with the dream that it could be worth $300million within the next five years.

Q: Moneywise, what were your growing up years like?

I come from a very humble background. My father was an electrician with Cathay Organisation, and my mother, a housewife. I am the oldest of four siblings. We grew up in a kampung in Tai Seng estate, renting a 200 sq ft room within a compound. We shared a common kitchen, bathroom and an outhouse toilet with several other tenants. The early years of hardship were a key driver in my pursuit of a better life for my parents and my family. I still have vivid memories of my childhood, including the daily 2km walk to school, sometimes getting rain-soaked. Pocket money for primary school was 10 cents a day, and it was hard deciding whether to spend it on a bowl of noodles or a drink. When I was in Primary6, we moved to a rented one-room flat in MacPherson Road.

Q: How did you get interested in investing?

My first investment was an HDB maisonette flat in Hougang, shortly after my wife and I got married in 1987. We bought it for $150,000 and sold it in 1992 with a profit of nearly $150,000, which helped finance the purchase of a 1,750 sq ft condominium in the Marymount area in the same year. The latter cost $500,000. It was an impulse buy; we were lured by the nice layout and attractive price. We eventually sold that apartment for nearly $900,000 in 2002 and used the profit to finance our current terrace house that year. That experience was the catalyst for our investment in properties.

Earlier, in 1994, I bought an apartment at Riverside Piazza for $650,000 and sold it for a profit of $257,000 in 2007.

With bonuses and money from stock options from my career with various multinationals, I gradually built a more diverse investment portfolio of bonds, bond funds, equities and foreign currencies.

Q: What property do you own?

My current home is a 3,400 sq ft, 99-year leasehold terrace house in Serangoon Gardens, bought in 2002 for $1.1 million. It is a three-storey house and the land size is 2,000 sq ft. It is worth about $2 million now. My sister and I co-own a 1,000 sq ft apartment at Kovan Melody which we bought for about $600,000 in 2005. It is worth about $1.1 million today. My sister and my mother occupy the apartment.

Q: What's the most extravagant thing you have bought?

Passing through Detroit airport in 1984 as a young sales engineer, I was enthralled by a beautiful BMW 7 series on display there. After that, it was a desire of mine to own one and I eventually could afford to buy one in 2004. I just replaced it with a new silver BMW730Li in May. The new car cost about $340,000. I love the car!

Q: What's your retirement plan?

To be honest, I have never thought about retirement. I take my inspiration from Mr Lee Kuan Yew and wish to work for as long as I am able, but at a less hectic pace than now. We do not lead an extravagant lifestyle and I figure that $10,000 a month will be adequate in our twilight years. The returns from our investments are more than sufficient to support us comfortably.

Q: Home is now...

The terrace house at Serangoon Gardens.

Q: I drive...

The silver BMW 730Li.

lorna@sph.com.sg

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WORST AND BEST BETS

Q: What has been your worst investment to date?

In 1985, I worked in the microelectronics sector where gold and silver were used in our products. That led me to dabble in silver trading. I lost 90 per cent of my investment of $5,000 within a year. It was a very painful experience. I learnt that the commodities market is very volatile and one must have holding power.

Q: And your best?

One is my wife, who helps me manage my investments.

The other has to be my new venture Clozette. It recently raised funds from Seed Venture IV, a $20 million venture fund under the Singapore National Research Foundation's Early Stage Venture Funding Scheme that is managed by Walden International.

The funding, to be used for international expansion, including setting up offices in Indonesia, the Philippines, Malaysia and China, valued Clozette at a two-digit multiple of its initial investment of $300,000. Of course, this takes into account the fact that my fellow founders and I are drawing a fraction of our salaries in our previous jobs.

[Drizzt]

see. why invest in stocks when everyone gets rich through property.

[Musicwhiz]

see. why invest in stocks when everyone gets rich through property.

Sorry, but everyone makes it sound way too easy. I guess I tend to be a skeptic.

For me so far, equities are a "slow but steady" method of getting rich. No complaints if you are not in a hurry.