Me & My Money Series (Sunday Times)

[yeokiwi]

The moral of this interview is that it is easier to accumulate wealth by doing well in your day job. Putting in too much effort in investing and thus neglecting the day job is going to be detrimental to the networth.

I think many people get rich by doing very well in their job or businesses and subsquently become richer by investing sensibly.

[Musicwhiz]

The moral of this interview is that it is easier to accumulate wealth by doing well in your day job. Putting in too much effort in investing and thus neglecting the day job is going to be detrimental to the networth.

I think many people get rich by doing very well in their job or businesses and subsquently become richer by investing sensibly.

I've cut out the posts on ROE and selecting companies into a separate thread in "Discussions on Value Investing" forum under "Selecting Good Companies".

Regarding what yeokiwi said, I think one has to devote higher amounts of energy to your job when younger; and when older, you can afford to focus more time on generating passive income as you would want your life to "slow down". Enjoy the fruits of your labour, so to speak!

[Musicwhiz]

Actually, I think her target return of 5% per annum is a little low, going by the fact that she is a very experienced Fund Manager and that she is supposed to know a lot about investing and investments.....

Oct 17, 2010
me & my money
Spa partner loves fussing over figures
Ex-fund manager used to crunch numbers but now panders to the human form
By Lorna Tan, Senior Correspondent

After 22 years of crunching numbers in the corporate world, fund manager Lydia Kew decided to join her younger sister Lily, 39, to run spa services provider Glow Aesthetics.

Ms Kew, 46, had started out as a sleeping partner when she pumped in half of the $100,000 used to kick-start the firm in 2004. She became an active co-owner four years later.

'I was confident that the investment would turn out well because I saw how determined my sister was when she developed a flawless complexion from her own acne-marked skin by studying all about beauty in Europe, Canada and America,' she said.

She added that she joined Glow to complement her sister as the latter is right-brained whereas she is left-brained. Her sister is the creative one with a flair for design, whereas Ms Kew loves number crunching.

A savvy investor, she currently handles both her personal stock portfolio as well as her sister's. She was voted Astute Bond Investor by The Asset magazine in 2006.

Ms Kew graduated from the National University of Singapore (NUS) in 1986 with a degree in business administration. She worked as a money broker for a year before she joined Deutsche Bank as a senior officer in fixed income trading and sales in 1987. A year later, she was posted to Deutsche Bank Capital Markets in Hong Kong. She remained there till 1994.

That was when she started to trade actively in stocks. She put in one year at SG Warburg before her five-year stint as vice-president, fixed income division, at ABN Amro Bank until 2000.

After that, she crossed over to German bank Landesbank Baden Wuerttemberg as a portfolio manager of treasury and capital markets. In 2008, she joined Glow.

Along the way, she took time off to pursue her studies. In 2001, she obtained a Master of Science degree in applied finance from NUS and completed her chartered financial analyst certification.

She is married to businessman Philip Whang, 49, and they have a daughter, Samantha, 18.

Q Are you a spender or saver?

I am more of a saver, but I believe and always tell people around me to spend when necessary and save whenever they can. Honestly, I don't keep track of my spending. I spend on things which I deem necessary but which are within my means. I save the rest. When I was an employee, I was saving at least half of my monthly income and all my bonuses.

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

I charge about $5,000 to my credit cards every month. I own credit cards of most banks but use mainly two. I pay off the bills in full every month.

Q What financial planning have you done for yourself?

I consider myself financially independent. I have passive rental income, dividends from stocks and a regular premium investment- linked insurance policy which invests in Asian equities. The sum assured is $750,000 and the premium is about $6,000 a year. I also have a whole life plan and a 21-year endowment plan.

My stock portfolio is worth about $400,000 and I own shares in Kingsmen, BreadTalk and Singapore Press Holdings. When selecting stocks, I look at dividend yield, business model, management team, financial ratios like the debt equity ratio and the cash flow. I'm happy if I can achieve my target returns of 5 per cent per annum.

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

I have five siblings and I'm the second child. My mum was a housewife and my father worked as a fireman, tailor and taxi driver at different times. We lived in a three-room HDB flat in Marine Parade. Our parents were prudent and taught us the importance of money management. I had to give tuition since I was in secondary school to earn extra pocket money.

As I was the eldest girl, I had hands-on practice managing money from an early age. When I was six, I was assigned the role of marketing for the household and would go to the wet market to buy meat, fish and vegetables because my mother was pregnant then and had to look after the younger ones as well. It became my responsibility after that.

Our parents also taught us that education was the key to a better quality of life. So I studied hard.

Q How did you get interested in investing?

I'm born left-brained and I have loved mathematics and numbers since I was young. My first glimpse into the world of equity was through the buzz and excitement of the stock exchange and stockbroking during my junior college days.

My dad has been investing in stocks since the 1970s and in those days, stock certificates were in a physical form. When I was in junior college and later NUS, I used to run errands on his behalf to deliver or take delivery of stock certificates from the stockbroking company at Collyer Quay on my way home.

My first glimpse into property investment was when I was 23, when I got married and we rented our first apartment at Bayshore Park. Our landlord was nice and shared with us his views and advice on property investments. That opened our minds to another investment vehicle.

Q What property do you own?

I own a freehold 1,722 sq ft three-room condominium unit in the East Coast. I paid about $500,000 for it in 1990. The current value is at least $1.6 million. Based on the current monthly rental of $4,000 a month, the gross rental yield is 9.6 per cent.

I own another freehold 1,636 sq ft three-bedroom apartment in Tanjong Rhu. I bought it for $960,000 in 1993 and the current value is about $2 million. The monthly rental is about $4,800.

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

I bought a $13,000 diamond solitaire ring with my bonus during my banking days in 1997 as a reward to myself. Yes, I regret it because I hardly wear it.

Q What's your retirement plan?

I doubt that I'll go into full retirement. In my later years, I see myself still spending time developing Glow, reading, observing and understanding what's happening in the world, staying healthy and enjoying time with family and friends.

To me, money and age are just numbers. Financial independence is when we have the freedom of choice - to do, eat and drink whatever we feel like, and go wherever we want.

I consider myself financially independent. I will need about $100,000 a year. I'm happy eating simple food, although I enjoy fine dining as well.

Q Home is now....

A 2,000 sq ft four-bedroom condo unit in the East Coast. I paid $1 million for it 10 years ago. The current value is about $2 million.

Q I drive....

A salsa-red New Beetle which I bought in April this year.

lorna@sph.com.sg
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WORST AND BEST BETS

Q What's your worst investment to date?

It was around 2000 and 2002, during the time of the dotcom fever and Internet stocks were a 'must-have'. I knew they were absurdly expensive from a valuation point of view so I did not invest in any till AsiaOne had its IPO in 2000. I invested about $60,000 and it was delisted in 2002 at half of the subscription price.

It was owned by SPH, so I thought it would not go bust with such a strong parent. But I really didn't expect it to delist. I guess I was blinded by the herd mentality and greed.

Q And your best investment to date?

My best investment to date is definitely our current business, Glow, which believes in investing in state-of-the-art technology in beauty care. Business is stable and growing at 25-30 per cent per annum. The firm's turnover is just above $1 million. We have about 12 staff. We are now exploring franchise inquiries that we have received.

[Musicwhiz]

It's not often a man admits his wife is his best investment! Haha!

Oct 24, 2010
me & my money
Entrepreneur scores with learning method
Author is behind Scores on the Board method that teaches efficient skills learning
By Lorna Tan, Senior Correspondent

Having successfully managed an Internet business for three years which he sold in 2002, entrepreneur and author Bill Lang's mission since then has been to teach people how to improve their businesses. His training and consultancy firm, Bill Lang International, was set up in 2003.

A master's graduate of Harvard Business School, the 47-year-old Australian is behind the Scores on the Board method which helps business owners and executives learn skills more efficiently.

In 2007, he was appointed president of Singaporean firm Training Edge International. He now travels here four times a year to meet clients and conduct seminars.

When it comes to personal finance, he relies on his wife Fiona Targett, 43, a former private banker and financial planner. She is currently chief financial officer of Bill Lang International.

After he graduated from the University of Melbourne in 1986 with an honours degree in commerce and law, Mr Lang joined McKinsey as a business analyst. In 1989, he left for the United States to pursue a master's in business administration at Harvard Business School on a scholarship.

He returned to Australia in 1991 and joined insurer AXA as head of strategic marketing for Australasia. From 1994 till 1999, he ran his own management consulting firm, Ford Lang & Associates, before it was sold off at a profit. With a friend, he subsequently set up an Internet firm, Sharinga Networks, which was valued at A$200million at the end of 2002. He declined to say how much it was sold for.

He has written four books and his latest book, Scores On The Board - The 5 Part System For Building Skills, has sold several thousand copies since it was published in September last year.

The couple have a daughter Naomi, 17, and two sons, Harrison, 14, and Mitchell, 12.

Q: Are you a spender or saver?

When I was an employee, I used to save 20per cent of my income. When I was in my late 20s, I had to pay off my study loan to fund my MBA studies and then buy a house. I'm most definitely a spender in the areas of learning.

To keep on top of the latest breakthroughs, I constantly travel the world, interview the leading experts and scientists and translate what I have learnt into approaches that everyday people can quickly learn and use. I spend easily A$2,000 (S$2,500) on books and another A$15,000 to A$20,000 on conference fees every year.

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

I use two credit cards, one for business and another for personal expenses. My credit card expenses amount to A$100,000 a year and I pay in full every month. I make cash withdrawals once a fortnight. The amount is between A$200 and A$300 each time.

Q: What financial planning have you done for yourself?

My wife is a former banker and financial planner. Together we determine our business and family financial goals and risk tolerance. We then work closely with a financial planner on portfolio selection.

Investments include index funds, direct property investment and private equity investments in technology, services and manufacturing start-up companies. At present, the private equity includes investments in a software firm and a surfboard technology firm. We channel funds into investments on an annual basis.

For start-ups, I need the management to be honest and have the ability to learn quickly. There must be first-mover opportunity and the ability to build a loyal customer base as well as a reasonable return of 50per cent within five years.

I also have life, medical and income protection insurance.

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

I'm the eldest child in a family of six. My dad started his car cleaning business in a backyard. My mum had her own dry-cleaning business and she held Tupperware parties.

During my teenage years, I delivered newspapers at 5.30am on a bicycle, made chips in a fish and chip shop and was a part-time cleaner at a factory. At the University of Melbourne, I cleaned toilets, delivered wine and started a hot dog vending business with two classmates.

Q: How did you get interested in investing?

As a commerce student, I started to learn about accounting and finance. During summer vacations I worked with auditing firm KPMG and became more interested...

My focus was always on building the value of businesses and this led to an interest in investing in them. But it wasn't until my early 30s when my university debts were repaid that I had investable dollars.

Q: What property do you own?

I own four residential properties and one commercial property.

I have a two-storey, four-bedroom house in Melbourne which was built in the 1930s and modelled after the Southern plantation home Tara in the film Gone With The Wind. It is located 10km from the business district. The land size is 22,000 sq ft. I bought it in 2005 and it was in excess of A$1million. It has probably doubled in value.

Over the last decade, I've bought three other residential properties in Queensland and Victoria. Their annual rental yields are about 5per cent. I also bought a three-storey office building in Melbourne in 2007. Its value has appreciated in the last three years. I prefer to keep the price confidential.

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

It was a trip with my son Harrison to Tanna Island in the Pacific Ocean in 2007. The one-week trip cost me A$6,000. We had to take a small plane and fly across a jungle for six hours. We visited Mount Yasur, an active volcano on the island. It erupts every 10 minutes.

Q: What's your retirement plan?

I am not planning to retire. Our goal is to stay healthy, to keep learning and keep teaching...I reckon Fiona and I would need A$6,000 a month when we do retire. I consider myself financially independent.

Q: Home is now...

My home in Melbourne.

Q: I drive...

A silver Mercedes ML 350.

lorna@sph.com.sg

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WORST AND BEST BETS

Q: What's your worst investment to date?

It was my first property - a one-bedroom, 500 sq ft apartment that I had bought in 1987 for $80,000. Interest on the mortgage was 15.5 per cent. Several years later, I sold it for $90,000. When adjusted to account for inflation and interest payments, it was a highly negative investment.

Q: And your best?

Persuading my wife to marry me. A former private banker and financial planner with solid saving and investing values, she is by far the best investment I have made. She often tells me I am the biggest mortgage she has ever had to manage!

We married in 1991.

[Musicwhiz]

Oct 31, 2010
Eat, drink, and make Friends happy
Owner of Friends Group food and wine business relishes role as an entrepreneur
By Lorna Tan, Senior Correspondent

Mr Thomas Chiam always knew he wanted to be an entrepreneur.

After working in the corporate sector for a decade in various IT firms such as Hewlett Packard, Mr Chiam, 41, hung up his business suit and became a chef-cum-business-owner in 2005. He set up food and wine firm Friends Group with wife Jane Giam, 35, with an initial investment of about $300,000.

The group now owns several food outlets as well as catering and wine businesses. It has a staff of 50.

'We know that the food business is a challenge, so we need multiple revenue streams. By having a central kitchen that can do catering, we now have three revenue streams... from our restaurants, catering business and as a wine merchant,' said Mr Chiam.

Not bad for someone who did not even know how to cook before he left Singapore to pursue his computer science degree at Acadia University in Nova Scotia, Canada. He picked up his culinary and baking skills from his host family. He also learnt from his friends at university when he was roped in as chief cook to prepare a 10-course Chinese dinner for 500 people as part of its annual fund-raising activity.

The Friends Group offers what it says are healthy food choices, such as chicken bred without growth hormones or antibiotics.

Mr Chiam takes on the role of group executive chef and executive director while his wife is the sales and marketing director. They have no children.

Q Are you a spender or a saver?

When I was an employee, I was more of a saver. I could save at least half of my income every month.

I have been quite prudent from a young age. I don't watch every cent now, but I know I don't go overboard on my spending.

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

I charge most of my expenses to two credit cards - Amex and Citibank Ultima. My average monthly bill is around $10,000, which I pay in full via Giro each month. I don't visit the ATM. I withdraw cash once a week from the banks.

Q What financial planning have you done for yourself?

Jane and I are not into unit trusts and shares. It takes time to monitor shares and that would distract me. We would rather focus on our business. I'm still holding on to HP shares which I accumulated during my employment there.

I invested $30,000 in a guaranteed capital product back in early 2000. I was supposed to receive a payout every quarter but it didn't materialise. Luckily, I got my principal back but my money was locked in for the whole period of three years. It taught us a lesson, which is to check the fine print.

I have some insurance coverage. My life cover is about $350,000 and I also have cover for critical illness, disability and hospitalisation. I have two investment-linked insurance policies.

As a business owner, I ensure that I have a total insurance solution for my business, so we're covered for fire and business interruption as well as a public liability cover of $5million, besides workmen compensation.

Q What property do you own?

We own only the property we live in - a three-bedroom 1,650-sq ft freehold condo in the East Coast, bought for $1.28million in 2003. It is on the 27th floor and we enjoy the sea and city views. It has nearly doubled in value.

We are looking for a 4,000 sq ft commercial space for our business needs. Currently, our central kitchen is in Clementi and our warehouse and office are in Ayer Rajah.

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

My late father was a supervisor with CK Tang for over 30 years, while my mother has always been a housewife. I'm the older child and I have a younger sister. My father died in 2008 from a stroke.

I grew up in a three-room HDB flat in Commonwealth Drive with a great unobstructed view of the Portsdown area. My late father trained us to be prudent. He did not believe in using borrowed money for luxury items; hence, he did not have any credit card, personal loan, or even home mortgage.

I learnt my money management skills when I went to Canada for my university education. I would get my whole year's allowance at the start of each year, and had to work for any extras, such as a holiday or a car.

Q How did you get interested in investing?

I'm an entrepreneur at heart. I have always had this desire to have my own business.

I learnt about shares from my father, who monitored his trades and did well. He retired at 55 with a large capital base for trading. During the 1997 Asian financial crisis, he liquidated his portfolio and kept only blue chips.

Q What's your retirement plan?

I'm a workaholic and I enjoy what I'm doing. I believe our health can deteriorate if we don't do anything. I'm on a constant lookout for like-minded franchisees to grow my business.

I believe in giving back to the community. Over the last few years, Friends Group has done some charity work. We support the Yellow Ribbon project and Club Rainbow, which help ex-prisoners and terminally ill children, respectively. We supply food and help out at their camps. I believe my wife and I will need about $6,000 a month when we retire, assuming no mortgage and only one car.

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

I bought a 1.5-litre bottle of Krug champagne for about $10,000 in 2008. Krug is the Rolls Royce of champagne. For that bottle, the grapes were harvested in 1969, which is the year I was born.

Q And your home now is...

Our condo unit at East Coast.

Q And your car is...

A white Land Rover SUV for when I need to move people and cargo. I use my silver VW Golf twin turbo when I am in a fun mood.

lorna@sph.com.sg
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WORST AND BEST BETS

Q What has been a bad investment?

It was an investment in a local telco content company which was a start-up then in 2005. I invested $50,000 and was asked to top up another $50,000 later. In all, I lost close to $100,000 before I withdrew from the venture in 2007. It was a passive investment that didn't work out. I didn't keep an eye on the day-to-day operations although I asked for the first-year accounts.

Another bad money management 'practice' was lending money to friends with amounts ranging from a few hundred dollars to $10,000. I didn't chase them so I never got my money back.

Q Your best investment to date?

Friends Group would be my best investment. Jane and I have constantly ploughed back our earnings to grow the company.

More than 80 per cent of the group's revenue comes from our catering arm, Friends Catering Services. Our outlets, some of which are franchised, include Friends Restaurant@Jelita, The Chicken Rice Company at Lau Pa Sat, and Friends Junior at Holland Drive and Depot Road.

Another good investment is in wine. While my firm has more than 1,000 bottles, I have a personal collection of more than 300 bottles which are now worth about $200,000. My advice to novice wine investors is to ensure that they have the holding power and never to borrow for wine investments. Like buying shares on margins, you may be forced to sell when there is a margin call.

[Musicwhiz]

Nov 7, 2010
me & money
Dad's death turns him to insurance line
The benefits of being covered became clear when his father died of heart attack at age 43
By Lorna Tan, Senior Correspondent

Insurance veteran Richard Vargo witnessed for himself the benefits of life insurance when he was a student.

He was just six weeks from graduating from the University of Colorado when his 43-year-old father died of a heart attack. While Mr Vargo's university expenses had been paid for, his sister was in her second year and his brother in only his first. Fortunately, his father had bought life insurance.

'From the proceeds of a US$100,000 life insurance policy, both my siblings were able to graduate, with my sister continuing and completing her medical degree,' recalled Mr Vargo, 51.

Today, his sister is a respected orthopaedic surgeon in Chicago and his brother owns a very successful air freight business in Boston.

Inspired by his own experience, Mr Vargo embarked on a career in the insurance and financial services industry and has not looked back. The United States citizen and Singapore permanent resident is currently DBS Bank's managing director of bancassurance.

'The financial consequences from my father's thoughtful planning have literally meant millions in additional earnings to my family over the last 30 years and is an outstanding example of the long-term impact that life insurance proceeds can have on a family,' he said.

He graduated with a bachelor's degree in finance in 1981 and worked at John Hancock till 2000. During that period, he was posted to Singapore in 1991, where he was vice-president of marketing and alternative distribution.

After he quit John Hancock, he worked at OCBC Bank, Axa Life Indonesia, AIA Singapore and AIA Asia Pacific life operations division in Hong Kong, before joining DBS in 2008.

DBS is now the No. 2 bancassurance player here after OCBC, and he aims to help it clinch the top position by 2013.

Mr Vargo is married to Singaporean Michelle Soo, who is a housewife, and they have a son, Richard, 16, and a daughter, Vanessa, 15.

Q: Are you a spender or saver?

I am a saver with two dominant goals of growing my children's future education fund and my retirement fund with my wife. I put in a monthly contribution in both funds, and in good years, additional sums from my bonus.

I save about 10 to 15 per cent of my pay and most of my bonuses.

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

I charge a lot, including utility bills, to my cards each month primarily for convenience, consolidated statements and time efficiency. I also make it a point to pay the balances off each month. Using these cards greatly reduces the amount of cash I carry in my pocket. In months that I travel, the amount charged to cards could be a five-figure sum.

Q: What financial planning have you done for yourself?

My financial plans can be broken down into four categories - a budget to manage monthly cash flows, insurance for my protection needs, a college savings fund and a retirement fund. I am a big insurance consumer. My wife and I are well insured. I have eight life policies from whole life, investment-linked, term, disability income to critical illness. I have a total life cover of about $4 million.

My college fund is a combination of private equity, equity-based unit trusts, bonds and some individual stock. At one time, both children had endowment insurance policies but they have matured and the proceeds have been put into other investments. I have been a regular saver for this fund for many years, starting with US$25 a month back in the 1980s when I was single. My goal has been to accumulate $800,000 in this fund by 2013-2014, based on the very high cost of studying at US universities these days. Despite the ups and downs over the last several years, I will be close to achieving this goal.

Similar to the college fund, my retirement fund is made up of a well-diversified and broad range of equity-based and bond funds offered by various international fund houses. For further diversification, funds are in Singapore, Hong Kong and the US.

The majority of my retirement funds are invested in equity (fairly aggressive at 70 per cent) and bond funds (30 per cent), with a heavy bias towards Asia and emerging market funds. My annual target returns are 7 per cent to 10 per cent.

I also own blue-chip stocks like DBS and Singapore Press Holdings in Singapore, and US stocks like Bank of America and AIG. When I select stocks, I look for long-term growth and dividend yields.

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

My dad was a sales and marketing executive in a cash register and retail system firm. Mum worked in a legal firm as an administrative executive. The five of us, including my two younger siblings, lived in a four-bedroom, two-storey house in New Jersey. It was a typical suburban house. My dad was 43 when he died of a heart attack.

Q: How did you get interested in investing?

I can remember my dad and grandfather talking about stocks and investing when I was 12. I also remember my mum taking me to a stockbroker when I was 15 at my request. My first investment was in Getty Oil, through my dad, when I was 15. In college, my fraternity brothers and I invested what little money we had in penny stocks. As I recall, those were great learning lessons on how to lose your money.

Q: What property do you own?

We've just moved into our new home, a recently completed 2,200 sq ft, four-bedroom condo unit off Thomson Road. I bought it for almost $3 million in 2007. Its current value is up about 20 per cent.

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

Hmm... nothing very extravagant. It would be a Marriott time-share membership in Phuket bought in 2006, and a number of Mac products over the last couple of years... All loads of fun. The time-share membership cost $40,000 and it gives an unlimited period of ownership. It would have gone up in value, but I'm not sure by how much.

Q: What's your retirement plan?

I am currently planning for 25 years of retirement, and have assumed that both my wife and I will live into our 90s based on our current health, lifestyle and family history. This also means I am planning on working until age 70, which I think is realistic for my generation (I am at the tail end of the baby boom generation). Aside from the real estate, my retirement fund consists of private and public pension schemes in Singapore, Hong Kong and the US.

Q: I drive....

A dark grey Honda Odyssey MPV.

lorna@sph.com.sg

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WORST AND BEST BETS

Q: What's your worst investment to date?

The worst investment would have been a high-tech private equity investment during the dotcom period between 1999 and 2000. A lot of people lost money during the dotcom craze. I lost a five-figure sum and it was a humbling experience. I learnt not to take a short-term view and to avoid gambling on things that I don't understand.

Q: And your best investment?

My best investment to date would likely be one of my unit trusts invested in China equities that would have more than doubled during the last decade.

My most fun current investment would be some physical gold bars I bought in Hong Kong at the end of 2008 for US$10,000. My total return is currently 54 per cent over the last 20 months. Not bad, considering the time period and risk class.

My most important investment, however, is in my time and money devoted to my two children. The income and economic value they will generate for their families and communities during their lifetimes as a consequence of a stable upbringing and a good education will likely be significant.

[Musicwhiz]

Wow, there's finally a different question! Share property tips. Haha. But with passive income of $3,000 a month and him charging $10,000 a month to his credit cards, I think they still have some way to go towards financial freedom!

CORRECTION: Someone pointed out my typo that his passive income is $30,000 and not $3,000. But what I also wish to point out is that this income is not consistently $30,000 and does fluctuate, hence I believe $30,000 is the "peak". A studious examination is required to determine if his expenditure is within reasonable range as compared to his average commissions received.

Nov 14, 2010
me & my money
Husband and wife sold on real estate
Their team of property agents is doing so well that they can live on passive income alone
By Lorna Tan, Senior Correspondent

Mr Kelvin Fong and his wife Janet at home with their daughters, Chloe (left) and Carlyn. The passive income generated by the commissions from their PropNex team of agents allows them to spend more time together as a family. -- ST PHOTO: MARYANNE TAN

In 2007, Mr Kelvin Fong and his wife Janet Lim - both real estate agents with PropNex - achieved their first million in sales commissions.

Mr Fong, a senior associate district director, went on to become the No. 1 team leader a year later when his team of 1,200 agents earned $13 million in commissions. His team, Power Negotiators, brought in $28 million last year, which ensured his reign as the No. 1 team leader.

Mr Fong, 35, now earns as much as $30,000 a month in passive income from overriding commissions from his team.

But in 2001, he didn't even have $5,000 to pay for the cash portion of the downpayment for his matrimonial home, a four-room HDB flat in Woodlands. He resorted to borrowing the amount from his father-in-law. The loan was repaid in instalments by 2003.

The purchase of the flat led the couple to become property agents. In an effort to earn extra income, they started out as part-time telemarketers for property agents in 2001. Madam Lim, now 36, became an agent a year later and Mr Fong followed suit in 2003, leaving the air force where he had served for six years.

An electrical engineering graduate from Singapore Polytechnic, he studied part-time while in the air force and graduated with a Bachelor of Business Administration degree in 2001 from La Trobe University, Australia.The couple now have two daughters, four-year-old Chloe and 11/2-year-old Carlyn.

Q Are you a spender or saver?

Because of my childhood experiences, I'm very careful with my money and I don't spend on unnecessary things. I believe in investing in assets that will grow.

However, I do set aside some money for family holidays, so I can spend quality time with my family after working so hard. I save about 30 per cent of my income for cash flow and invest 50 per cent in various investment vehicles, including my businesses, and spend the rest.

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

I charge about $10,000 a month to my cards. I have four cards and I pay my bills in full` every month. I withdraw about $500 a week from the ATM.

Q What financial planning have you done for yourself?

The team (Power Negotiators) in PropNex is an investment that my wife and I have built up together. It has helped us generate a good flow of passive income monthly so that we can choose not to do any sales.

Janet and I love this job so much that we will continue to serve our personal clients. We've spent $150,000 promoting the team since 2004.

I also bought insurance to provide my family with sufficient protection. I have two whole-life plans and one endowment policy. The yearly premiums are about $14,000. When they mature, the projected amount is about $1.5 million.

We've about $160,000 invested in stocks, mostly blue chips such as CapitaLand and SGX. Recently, I invested $50,000 in education and training firm Zest Consultants with some partners. The firm aims to teach property investors to be more knowledgeable in real estate investing.

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

I am an only child. About a month after I was born, my parents placed me with my grandparents who brought me up until I was 21 years old. I grew up in a three-room HDB flat in Commonwealth with my grandparents.

My parents had to make a living so they couldn't take care of me. I saw them only on weekends when they visited me after work.

That made me realise the value of money. My father was working in a photo shop as an assistant and my mother was a waitress. I would go to my parents' three-room HDB flat in Ang Mo Kio once a week.

I was an independent child. I worked during my school holidays to earn my own pocket money and saved up for a rainy day. I took a bank loan to finance my part-time degree course during my days as a regular in the air force. I guess this is why I believe so strongly in investments.

Q Please share some property tips.

One of the key points in making a sound property investment is knowing what you can afford after taking into consideration the capital gain and rental yield potential.

I advise my clients on committing to a sale or purchase only after I have worked out their risk factors and potential profit gain.

It does not matter whether the property has a 99-year lease or is freehold. The most important factor is the location as land is scarce here.

Good properties at good locations will always have strong potential upside even during a downturn. Their prices may drop but when the market rebounds, they will be the first to move upwards in price compared to others.

One analysis that I do for my clients is to chart the history of the property. This helps me to see what the upside is and whether it is worth it to buy or sell.

Q What property do you own?

I own a four-room HDB flat in Rochor. We bought it for $313,000 in end-2006 and it should be worth more than $500,000 now. I can't buy private property now as I had taken a $40,000 grant to buy my HDB flat. I can invest in private property only after I have lived in the flat for more than five years.

I bought my parents a 1,033 sq ft unit in Balmoral Road for $1.7million in March as I want to enrol my daughter in Singapore Chinese Girls' School nearby. It will be more convenient for her and my parents as they are helping to take care of her. The value of the property remains the same.

Other properties that I bought for my parents include a 980 sq ft apartment at Tessarina in Bukit Timah. I bought it for $1 million and sold it for $1.1 million.

Another good deal was a 1,055 sq ft apartment at Robertson 100 which I bought for $1.15 million and sold for $1.48 million. Both properties were bought and sold in 2007.

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

In 2008, I bought an Audemars Piguet Royal Oak Offshore watch worth $35,000 for my wife for Christmas. It is a woman's watch and is limited to 100 pieces.

Q What's your retirement plan?

My retirement plan is to have a strong flow of passive income from my team and accumulate assets that will also generate passive income.

I believe that if my investment channels can provide us with $30,000 in passive income per month, it will be sufficient for my family. I want to spend more time travelling with my family.

My target is to achieve a consistent flow of passive income of $30,000 when I'm 40.

Q Home is now...

My Rochor flat.

Q I drive....

A black Audi A6.

lorna@sph.com.sg

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WORST AND BEST BETS

Q My worst investment to date...

My worst investment was buying 40 lots of a penny stock (Advance SCT) in 2007 based on hearsay.

It was trading at 40 cents per share then. I did not understand what I was buying nor did I check the historical performance of the stock.

Now the stock is worth less than five cents.

The lesson I learnt is that we must understand the fundamentals of the stock, instead of relying solely on tips. I'm still holding on to the stock.

Q My best investment to date...

My best investment to date is this job as it has helped Janet and myself achieve our first million at the age of 32 - something which both of us never imagined was possible.

Janet was the No. 1 producer last year at PropNex. She also received the IEA (Institute of Estate Agents) Top Achiever Award 2009.

The next best investment is my team in PropNex - Powerful Negotiators.

We have been the No.1 team since 2008, thanks to my dedicated team leaders and members.

Our team's group sales in terms of commissions have been growing since 2007, from $10 million to $13million in 2008 to $28million last year.

We have already achieved more than $28million this year.

[Ben]

It does not matter whether the property has a 99-year lease or is freehold. The most important factor is the location as land is scarce here.

I know that location is very important in property investing, but why does he say that lease term does not matter? Surely, a freehold property should worth more than a 99 years right? Can someone enlighten me?

[Musicwhiz]

Wow this guy is good! He does NOT own a car or private property and has more than S$1 million in equities alone....

Nov 21, 2010
me & my money
Punter takes stock and prospers after losing money
Long-time investor has steadily built up a blue-chip portfolio worth more than $1m
By Lorna Tan, Senior Correspondent

Mr Brennen Pak, 47, does not own private property or a car. He lives in a Woodlands HDB flat and believes in parking his funds in the stock market instead. -- ST PHOTO: KEVIN LIM

The year 1998 was a watershed for Mr Brennen Pak. He lost nearly $100,000 in the stock market during the Asian financial crisis.

After 10 years of working and dabbling in stocks in his free time, Mr Pak was left with just $22,000 in savings. He realised he did not really have a proper strategy in his stock trading. For example, he did not even know the businesses of the counters that he was trading in.

Mr Pak pursued a part-time Master of Applied Finance at the University of Western Sydney that year. 'It... gave me insights into why I was doing so badly in stock trading,' he recalled.

Slowly and steadily, he grew his stock portfolio which now stands at more than $1 million. His portfolio comprises about 20 stocks which are mainly blue chips like DBS Bank, OCBC Bank, Jardine Matheson and Singapore Press Holdings (SPH).

Last year, he left aluminium production firm Alcan Aluminium Valais where he had worked since 2000. In April this year, he set up BP Wealth Learning Centre with an initial investment of $40,000. Prior to Alcan, he worked in Defence Materials Organisation as a project engineer and then as a manager for 12 years.

Mr Pak, 47, graduated from National University of Singapore with a bachelor's degree in engineering in 1988 and obtained an MBA from the University of Leicester in 1997.

He is married to housewife Chua Lay Choo, 38, and they have a son, Tze Bin, four.

Q: Are you a spender or saver?

A saver. When I was an employee, I could easily save 60 to 70 per cent of my salary. Given that I have just set up my new business which is not yet profitable, I have cut down on my expenditure. It helps that my family can live on passive income from my dividends. I cultivated all these good money management habits during my younger days.

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

I have three cards but I use only one actively. My total expenditure, which includes charges to my credit card, is about $3,000 to $3,500 a month, including insurance premiums.

I have no debts and all my credit card bills are paid fully every month. I withdraw about $150 to $200 from the ATM each week.

Q: What financial planning have you done for yourself?

My investments are mainly in Singapore stocks. I also have another $10,000 invested in unit trusts which I bought online. They are mainly Asian equity funds as well as commodities funds. I have insurance policies, including one accident and two whole life ones, and I am covered for a sum of $300,000 on my life.

I have invested in stocks for the past 20 years. I generally hold stocks for the long term. I also hold a high level of cash in case some interesting investments come along. I have cash savings which are equivalent to five years of my expenses.

When selecting a stock, I will analyse the management team, the business of the firm, and quantitative ratios like price to earnings and growth potential.

I will buy stocks when I feel there's good value. During a market run-up, I may divest myself of firms that I don't wish to keep for the long term and keep the cash as a war chest for future market dips. My yearly dividend income averages 4 to 6 per cent.

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

I was the sixth child in a family of eight children. My father was the main breadwinner, working as a subcontractor for painting jobs. All my textbooks during primary school were on loan from schools. The 10 of us lived in a two-room rental flat in Lower Delta Road. I had to walk about 1km to my primary school. When I was in secondary school, I walked 2km to school in tattered or worn-out shoes. Sometimes the shoes were so worn out that I literally walked barefoot to school. My mother was a good 'manager' at home, sometimes holding two part-time jobs such as being a maternity confinement lady to make ends meet. She died more than a year ago. I picked up frugal habits from my father.

Q: How did you get interested in investing?

Many years ago, when I was in primary school, my father was house-bound for a month after being hit by a crane hook at a construction site. During that time, he lamented that he was not earning an income. I resolved then that when I started working, I would continue to earn an income even in the event that I got incapacitated.

My earlier investment days were bad. Nobody taught me how to invest and I had to learn it the hard way. At that time, I had a very short-term view. That is the reason I want to start a wealth-learning centre, to help people jump-start the financial learning process. It was painful to have lost 10 promising years of my working life in bad stock investments.

Q: What property do you own?

I do not own any property other than the flat that I live in. It is a 1,600 sq ft HDB executive flat in Woodlands. I paid up the mortgage loan in full by 2006, about 18 years ahead of schedule. My wife and I bought the flat in 1997 for $365,000. It is currently worth more than $400,000.

I do not own any private property, as I prefer to invest my money in the stock market. The rental yield for a private property is low at 3 to 5 per cent yearly.

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

I paid $4,000 for a training course on starting a business last November and another $3,000 on a course in money attitudes in March. I consider my expenditure on these two financial courses as most extravagant as I didn't get any value out of them.

Q: What's your retirement plan?

I've been financially independent since this year. This means I have enough savings and a passive flow of dividend income. I currently need $3,500 a month and I expect to require the same amount when I do retire. I will be very comfortable with a nest egg of $2 million.

I want to build my new business into a profitable company so that I can continue with my investments and consultancy work indefinitely. I also do some social work regularly.

Q: Home is now...

My Woodlands flat.

Q: I drive...

I do not own a car. I estimate that the cost of owning a car is $18,000 a year. With that, I could have bought two lots of OCBC or one lot of DBS or five lots of SPH. I cannot find more happiness or convenience owning a car anyway. Public transport is convenient enough.

lorna@sph.com.sg

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WORST AND BEST BETS

Q: What has been your worst investment to date?

I incurred a paper loss of $22,500 in a counter of which I own 60,000 shares. I bought the shares at an average price of 44 cents and now they are about five cents each.

It was a good company in the early 1990s but it started getting complacent and made some risky investments. Since then, it has gone into different businesses and the management team has kept changing through the years. It has not paid dividends since 2001.

Q: And your best investment?

They include buying 244,000 shares of St****** at an average price of 31 cents; 21,000 shares of Cerebos shares at an average price of $2.50 and 90,000 shares of Osim at an average price of 20 cents. Stamford and Cerebos are currently trading at 55.5 cents and $4.81, respectively. I've also earned dividends along the way.

My returns on Osim alone are 600 per cent as it is now trading at $1.22. What I like about Osim is that the firm started buying back its shares in order not to create an overhang situation following its rights issue during the global financial crisis. By doing this, it gives investors confidence in holding their shares. They are even buying back at 91 cents to mop up additional liquidity in the market. This reflects very well on the management.

[pianist]

nice posting thanks MW, i am curious how does an investor analyze the mgt team and what are the screening methods and indicators to look for when analyzing the mgt team?
i think this guy is very frugal and have worked hard and endured a lot before enjoying his fruits now