Me & My Money Series (Sunday Times)

[Musicwhiz]

Sep 12, 2010
me & my money
Insurance honcho's modest start
Chief executive who toiled part-time from age 13 hits pay dirt
By Lorna Tan, Senior Correspondent

Insurance honcho David John Beynon started out in his career as a drama teacher in 1971 and was a part-time rubbish collector during the summer holidays. It shocked him to find out that he was paid 60 per cent more to collect rubbish than to teach.

In 1973, Mr Beynon became an insurance agent.

It marked the start of an illustrious lifelong insurance career that has spanned almost four decades. The firms he worked for include Allied Dunbar Assurance, J. Rothschild International Assurance, John Hancock Life Assurance and Manulife Financial (Indonesia), where he was the chief executive and president director from February 2006 to this year.

The 60-year-old Mr Beynon's latest appointment is with TM Asia Life Singapore, where he has been chief executive since July. The firm, an arm of global insurer Tokio Marine Group, will be rebranded as Tokio Marine Life Insurance Singapore from tomorrow to coincide with the group's move to its new regional headquarters here.

His current investment portfolio comprises residential properties in Bali, New Zealand and the Caribbean, and a pension fund that is mostly invested in capital-protected funds and global equities. As he plans to retire in New Zealand, he has a home there and a substantial portfolio of New Zealand government bonds.

Mr Beynon is married to homemaker Nikki Nicholson, 58, and they have two daughters and four grandchildren.

Q: Are you a spender or saver?

I am probably more of a spender but usually on assets like antiques or art. I own Victorian and Georgian antiques, porcelain Chinese tea cups and saucers, and paintings from Vietnam, Cambodia and Thailand. The antiques and paintings are worth about $500,000.

I like to buy good suits and shoes and eat out once a week or so, but that's about it. We like to holiday in Bali, but at my own villa.

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

I spend between $3,000 and $4,000 a month, but usually for bigger items like flights for my wife and myself plus my daughters and their families. I withdraw $500 from the ATM every fortnight.

Q: What financial planning have you done for yourself?

Besides my properties, I have a personal pension fund in Guernsey (Channel Islands) invested in various ways, including a capital-protected currency fund, global equities, a recycling fund, an environmental fund, a global property fund and a legal loan fund. Most of this is capital-protected as I am too old to take too many risks with my retirement fund. The pension fund is self-managed and I channel my savings into it regularly. I have a financial adviser in England who recommends financial products.

I also own a substantial portfolio of New Zealand government bonds since I intend to eventually retire there. The return is about 5 per cent for a five-year bond. Most of my insurance policies have matured. My wife and I have about $1 million each in life cover and we have medical cover as well.

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

I had a great childhood although my family of six was not well off. I was the youngest. Both parents worked but in modest jobs. My father was a fitter in a small manufacturing company and my mum served dinners at school and was a shop assistant at one stage. We lived in an 800 sq ft three-bedroom house in Somerset, south-west of England. It was rented from the government.

I worked part-time, mostly on weekends, from the age of 13 and pretty well took care of my own needs from then, such as buying my own clothes and shoes. I made do with one pair of shoes at a time. Consequently, if you check my wardrobe now, you will find I have about 10 brand new, unworn suits, dozens of new shirts and at least eight pairs of brand new, unworn shoes. A reaction from my less privileged youth, I guess. My wife and daughters laugh at this quirky thing all the time.

Q: How did you get interested in investing?

In England, everyone aspires to be a home owner. I started with buying my first house back in 1972 when I was 22. I was already married for about a year to Nikki, who was a ballet teacher then. The profit we made from this first house was used as a deposit for our next home and we just kept upgrading to a more expensive home each time. We moved lots to trade up. This was during the 1980s and 1990s and it was an amazing way to make capital.

Q: What property do you own?

I have a condo in Grand Cayman, a villa in Bali and a house in New Zealand. My Villa Santai in Bali is located in Seminyak, in the Kuta area. I bought it in March last year for US$310,000 (S$415,000). Its land area is about 10,000 sq ft and its built-up area is 3,000 sq ft. It has four bedrooms, a huge open dining/living room and can be rented out at up to US$400 a night. Its current value is probably US$500,000. I'm enjoying a rental yield of almost 15 per cent from the villa.

My main retirement house is located in Kaikoura, in South Island, New Zealand. It is an old house, built in 1906. I bought it in July last year for $600,000 and spent another $400,000 renovating it. Its current value is about $1.5 million. It is 5,000 sq ft and has six bedrooms and 10 acres of land. My two daughters and their families live in Kaikoura too. We bought a house each for them - sort of a living legacy when they most need it.

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

This was back in 1973 when I was a poor teacher. I paid $500 for a Flamenco guitar which was equivalent to two months of my income then. But I still have it and play it!

Q: What's your retirement plan?

I'm probably financially independent now. My wife and I need about $2,000 a month just for general living expenses, apart from rental. But if you add the travelling costs, we will need about $10,000 on average a month. We will move between Bali and New Zealand, depending on the weather.

Q: Home is now....

A rented 3,000 sq ft condo off Orchard Road.

Q: I drive....

A metallic black Mercedes-Benz 300E.

lorna@sph.com.sg
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WORST AND BEST BETS

Q: What has been your worst investment to date?

My 3,000 sq ft condo in Grand Cayman in the Caribbean. It is on a golf course that overlooks the fairways and a river. I bought it for US$720,000 (S$965,000). It is now worth about US$600,000. Our daughter used to lived there and we wanted a place close to her. It was a good family decision but a bad financial one. I bought it in 1999 before the US property crash.

Q: And your best investment?

Definitely my first property - a semi-detached Victorian house - which I bought for $20,000 in 1972. The mortgage, which was 95 per cent of the house price, was huge, considering my income as a drama teacher. I also had to borrow the deposit. I sold it for $30,000 after two years.

I consider this my best investment because I used the profits from the sale of this house to begin funding my subsequent property purchases.

Another good investment was my house in Sussex, Britain, which I bought for $400,000 in 1986 and sold for $1 million in 1989. I then bought a big old Georgian house occupying 1.8ha of land, just outside the city of Bath, for $1.4 million in the same year and sold it for $2.2 million in 1995.

[Musicwhiz]

I like this guy's frugality, but I think the part about his stock investments sounds a little hyped up. Yes, he made tons of money from OSIM and Golden-Agri, but he could have been in the right place at the right time (i.e. at the nadir of the financial crisis). The key is to be able to consistently make money from the markets, and I see that he is dabbling into products which are highly risky such as derivatives and futures.

Also, I question why he purchased the condo and put in $450,000 of cash into it. It would seem that he had invested when property prices were pretty exorbitant.....

On a positive note, I like the fact that he saves rather than spends, and also does not drive a car.

Sep 19, 2010
me & my money
23-year-old made $400k from stocks
Global financial crisis was good for SMU student, who owns a financial consultancy
By Lorna Tan, Senior Correspondent

For managing his personal finances prudently, Mr Sam Goh won the Money Sensible Youth Excellence Award organised by the national financial literacy MoneySense programme in 2006. Back then, he was pursuing his diploma in accounting and finance at Temasek Polytechnic.

The award turned out to be a turning point in his life, and played a major role in his decision to venture into his current profession. He graduated from the polytechnic in 2007 and joined Singapore Management University (SMU) last year after serving his national service.

While still in his first year at SMU as a business management student, Mr Goh set up financial consultancy firm Wisdom Capital with a friend. It provides financial and investment planning workshops and seminars to corporations, schools and individuals. The 23-year-old is currently in his second year of studies.

To date, Mr Goh has invested $90,000 in the business. The firm broke even in the middle of this year. It has a team of 20 undergraduates running its training programmes.

Although Mr Goh lost some money in his first attempt at stock trading, when he was 18, he has managed to turn his performance around by doing his homework before investing. During the global financial crisis, when markets were volatile, he made close to $400,000 trading stocks.

For instance, he invested in Osim when the counter was 9.5 cents and made about $86,000 when it hit 45 cents to 55 cents per share. Another good investment was in Golden Agri in 2008 when the share price was averaging 28 cents. He made about $60,000 when he sold his shares at about 58 cents apiece.

He interned at a financial advisory firm as an investment paraplanner during his third year at poly and worked there part-time last year before setting up Wisdom Capital.

Early this year, Mr Goh completed the certified financial planner (CFP) programme and is now studying to become a chartered financial consultant (ChFC). He is single.

Q: Are you a spender or saver?

I think I am more of a saver than a spender. I usually save up to 40 per cent of my monthly income. The savings are allocated proportionally to various asset classes ranging from stocks to fixed-income mutual funds so that I can accumulate and grow my personal wealth.

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

I do not have any credit cards, but I have four debit cards. The reason is there will be an urge to splurge with a credit card. Besides, it comes with high interest rates. I go to the ATM weekly, withdrawing $200 to $300 each time.

Q: What financial planning have you done for yourself?

I usually channel 30 to 40 per cent of my monthly income into investments. I invest in a variety of asset classes, including stocks, mutual funds and derivatives products like futures contracts and forex.

I have two portfolios - one for stocks and the other for mutual funds. The stock portfolio has been averaging an annualised return of about 21 per cent. I have bought shares in mining companies, banks, property developers and real estate investment trusts across different markets, including Singapore, Malaysia, the United States and China.

My Singapore stocks include SPDR ETF Gold, Golden Agri, CapitaLand, Sembcorp, CapitaMalls Asia and Suntec Reit.

My mutual funds portfolio has been averaging an annualised return of 10.5 per cent over the past two years. I'm close to 80 per cent invested in Asia and emerging markets, with the balance being global equities. I am satisfied with the portfolio's performance, given that it is made up of mostly fixed-income and global equities funds such as Aberdeen Pacific Equity, Pru Asian Balanced Fund, Legg Mason SEA Special Situations and Aberdeen Global Emerging Markets.

Occasionally, I engage in futures trading. I also own a medical and an education policy.

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

I come from an average-income family of four and I have a younger brother. Both my parents are now semi-retired.

My father is an engineer in the aviation industry while my mother is now a retail assistant. She had accounting responsibilities at a steel and hardware firm before.

Our family has always led a frugal life and my parents played a major role in influencing me to manage my finances at a young age. My mother would always stress the importance of saving and spending wisely. I guess my personal money habits have been shaped by her influence. I started giving tuition when I was in the polytechnic.

Q: How did you get interested in investing?

My uncle, who is my father's brother, played an instrumental role in arousing my interest in investing. I spent six memorable years at my uncle's house during my primary school days as he lived near my school, Opera Estate Primary.

My uncle is a retiree and he plays the stock markets occasionally. I remember that every time he ventured into the stock markets, his eyes would stay glued to the Teletext stock information available on TV. I learnt that one could make money from this screen.

I read up on stock trading when I was in Secondary 2, and started trading when I was in Temasek Po-lytechnic using my uncle's account.

Q: What property do you own?

In December last year, I bought a 1,100 sq ft, three-bedroom, freehold condominium in the East Coast area with a friend. It cost $900,000 and I put in about $450,000 cash. I didn't take a housing loan because I don't like debts. It is rented out at $8,000 a month. The current value is $1.2 million.

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

I spent $800 on a Louis Vuitton belt on impulse during a shopping trip at Orchard Road one year ago.

Q: What is your retirement plan?

Achieving financial freedom before the age of 40 is one of my life goals. I aim to have a flow of regular passive income from property rentals and investments. However, I do not intend to retire and hope to continue working as I am passionate about what I do.

As long as health permits, I will want to expand this business and, in the process, educate and create awareness for more people in the area of financial literacy.

Q: Home is now...

I live in a five-room HDB flat with my family in Tampines.

Q: I drive...

I do not drive a car.

lorna@sph.com.sg
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WORST AND BEST BETS

Q: What has been your worst investment to date?

The first stock I bought when I started investing in 2005. Back then, my investment knowledge was rather limited and I was not aware of the risks associated with stock trading. I bought the stock on the recommendation of a good friend who had been pretty successful in the stock market.

I invested my savings of $8,000 in a local water treatment and biotechnology firm. It proved to be a bad investment decision as the share price of the company plunged by more than 40 per cent after a series of negative news announcements associated with the company's business operations. All this happened in one month... It taught me that I needed to do my homework before investing.

Q: And your best investment?

In 2008, I invested close to $15,000 in a US health-care company. Within two years, its share price has more than tripled. The reason for this is the strong business model that the experienced management team has shaped over the years. Today, the unrealised profit from this investment stands at 320 per cent.

[kazukirai]

I like this guy's frugality, but I think the part about his stock investments sounds a little hyped up. Yes, he made tons of money from OSIM and Golden-Agri, but he could have been in the right place at the right time (i.e. at the nadir of the financial crisis). The key is to be able to consistently make money from the markets, and I see that he is dabbling into products which are highly risky such as derivatives and futures.

Also, I question why he purchased the condo and put in $450,000 of cash into it. It would seem that he had invested when property prices were pretty exorbitant.....

On a positive note, I like the fact that he saves rather than spends, and also does not drive a car.

I admire this guy's frugality too. For his age, that is a huge sum of money and I'm willing to bet (maybe a mug of beer =)) that many of his peers would have way less than him and yet be spending beyond their means.

His returns, admittedly seem a little over-hyped but is this due to (a) him over-hyping it?, (b) mis-print? especially given the 10% rental yield on his apartment (would be great if the property gurus like Koh-san or Serial-san could share the likelihood of this) or © him being quoted out of context by the reporter? After all, he does have a company now where his vested interest lie in making him seem financially god-like, so he naturally would sugar coat his facts. It should have been the newspaper's role to fact-check plus temper expectations but although it seems unlikely from the nature of the column (probably one of those just email the questions, receive reply, then print)

But more importantly, on your point of not owning a car, I think it's too simplistic to say it's good he doesn't own a car and bad that he does. What's important is the motive. As this article says, "Don't spend money to feel good better about yourself" (link)

[Musicwhiz]

Interesting interview, and I've always liked Botak Jones' portions and food (they give a whole chunk of French Fries!). But it would seem Botak Jones himself is more of a spender than saver, and I am surprised he does not pay all his credit card bills in full.

Recently, I also discovered that the Marine Parade branch of Botak Jones had disappeared. Why was this so? Could it be that expansion was too quick and overheads started piling up? I do miss my Botak Jones though....

Sep 26, 2010
me & my money
Botak brimming with F&B shoots
Founder of popular Western food chain reaping rich harvest from what he sows
By Lorna Tan, Senior Correspondent

Mr Bernie Utchenik, better known as Botak Jones, with his wife Faudziah Mohd Ali. Together they hold 51 per cent of Great Big Food, which owns a popular Western food chain. -- ST PHOTO: BENJAMIN NG

Detroit-born Bernie Utchenik is better known by his moniker Botak ('bald' in Malay) Jones, which is also the name of the popular Western food chain that he runs as a major shareholder. Set up in 2003, the chain which comes under the parent firm Great Big Food, has grown to 12 outlets - seven Botak Jones, four Botak's Favorites - most of them in food courts in the heartland - and a new restaurant Botak's Backyard in Dempsey.

Mr Utchenik dropped out of Wayne State University in Michigan when he was just a year shy of graduation. At the time, he was working full-time in a jewellery firm while studying. After several years in the jewellery line, he toured the United States on his Honda motorcycle for six months and ended up running a ski lodge in Aspen, Colorado.

After a number of jobs in different sectors, including working on offshore oil rigs, he found his calling in the food and beverage business in the 1990s in Singapore.

He first came to Asia in 1991 as an oil industry engineer. In 1996, he settled down here and started pub restaurant Bernie's with some friends in Upper Changi Road, under the holding firm Four Amigos. When he left the firm in 1999, he had made five times his personal investment of $65,000.

He then set up Bernie Goes To Town in Boat Quay with two friends. The total initial investment was $500,000, of which $200,000 came from Mr Utchenik. Unfortunately, the investment turned sour and he sold it in 2000, leaving him more than $200,000 poorer.

He slipped into despair, sold his Land Rover and Harley-Davidson motorbike and downgraded to a cheaper rental flat. He worked at the Home Beach Bar in Robertson Quay and at Handle Bar in Alexandra Road for a short stretch before venturing into running his own business again. The first Botak Jones opened in Tuas in 2003. And the rest, as they say, is history.

Last year, Mr Utchenik, who turns 58 next month, became a Singapore citizen. He is married to Singaporean Faudziah Mohd Ali, 48, who is director and head of administration at Great Big Food. They have no children together, but she has two children from her previous marriage.

Q: Are you a spender or a saver?

I am definitely a spender, although I try to keep a little aside for rainy days. I watched my father slave away for us his whole life and when it might have been starting to turn good, he suffered a stroke when I was 19 and passed on eight years later. He was never able to enjoy any reward from his labour so I think, subconsciously, I feel it is better to smell the roses as I go by. If I were a smart fellow I would probably have saved more than I had spent. What to do?

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

I have three cards and I try to use them where I can as I don't carry a lot of cash with me. I try to pay off the balance every month but if there is a special purchase that takes a while to pay off, I may have some balance on the account. I try to clear it quickly though. My average bill is $1,000. I don't own an ATM card so if I need cash, I get it from the bank.

Q: What financial planning have you done for yourself?

Although I may not agree with all of his teachings, I am with investment guru Robert Kiyosaki when he says the best way to acquire an asset is to create one. This is what I have been working on. Rather than invest in other things, I believe in what I do so much that I would rather invest in my own ideas.

I started Botak Jones with my wife, with an initial investment of $10,000. A silent partner came up with another $10,000. There were other shareholders along the way. Now my wife and I own 51 per cent in Great Big Food. We have re-invested at least $200,000 in the firm so far. I had some stocks in the past which I sold around 1999 when I needed the money.

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

My father was a furniture salesman and my mother was a bookkeeper. We were considered to be in the lower half of the middle class, so we didn't have a lot of expendable dollars around the house. We lived in a small three-bedroom house in Michigan.

I think everyone growing up learns to find their own level of enjoyment until they start earning their own money. So my father treating the family to candy every Tuesday night was a big affair. As I started to work on my own, the 'candy night' became less important as I was always focused on doing better. I have worked since I was 12, cutting lawns, delivering newspapers and shovelling snow. When I was 16, I worked part-time after school at a furniture firm where my father was working. I was a saver then and saved enough to buy a car.

Q: How did you get interested in investing?

I have made three investments outside of my own ventures. One was in forex in the 1980s, which failed miserably. I lost US$10,000 when the British pound I bought devalued. The next one was quite profitable but the amount was not significant enough to put me on Easy Street. I invested US$10,000 in Microsoft in the 1990s when Bill Gates became the world's richest man. I thought what was good for him would eventually be good for me. I was right and the stock split four times after I bought it.

Q: What property do you own?

At this time I own no property.

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

I think my wife's diamond ring. It's a GIA certified emerald cut 1.03K VS2 E colour. I used to be in the jewellery business, so I was able to make very good buys in high-quality gems. I bought it for US$4,000 at a trader's price in Cleveland, Ohio, although the appraised value was US$20,000.

Q: What's your retirement plan?

My wife and I own 51 per cent of Great Big Food. I am hoping that in the next two or three years, besides making profits, we can sell some or all of our interest in the company and use that as our retirement fund.

Q: Home is now...

An executive HDB flat in Yishun. We rent it from some very nice people we had met as customers.

Q: I drive...

My wife and I share a blue Toyota Rush. It'll do until we can decide on a colour for the Bentley.

lorna@sph.com.sg
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WORST AND BEST BETS

Q: What has been your worst investment to date?

It has to be Bernie Goes To Town as my partners and I ended up losing over half a million when everything was considered. I had spread myself too thin and I had a finger in every pie in the operations. The staff were pilfering and we ran out of cash. We had opened something big without the reserves to keep it going. I went from the darling of F&B to nothing. I didn't want to show my face.

Q: And your best investment?

It has to be Bernie Goes to Town as I learnt so much about business, people and myself that after getting back on my feet, I felt I had become much more capable than before. Definitely one of the most profound learning experiences of my life.

[yeokiwi]

I am actually quite surprised that the chain of stores did not yield him a high income.
I think he did not watch his cost. I noticed that his stall is normally overstaffed.

In fact, not all the stalls are busy. Some stalls are not even busy during lunch or dinner time.

[kazukirai]

I've tried Botak Jones ever since it was just operating out of a small, out of the way coffee shop in AMK. This was before the mid-priced western stalls with a brand names started popping out everywhere (e.g. Astons, Ministry of Steak and their related Steak republic stalls).

I gotta say that it was them who were probably the pioneers of affordable, slightly better in quality western food stalls but I remember that Bernie was featured in an article some time back. My sensing from reading all the articles so far is that he has this knack for starting up but not the strategic planning, execution and management style to take things to the next level (think some other company like Breadtalk).

Personally I prefer Astons too. Botak Jones, from day one, serves food that's very american (very visual i.e. large portions, huge patties and sausages but not much in terms of flavour)

[Musicwhiz]

Oct 3, 2010
me & my money
Investing's the key for marketing guru
German channels his money into retirement and education funds
By Lorna Tan, Senior Correspondent

Like many Singaporeans, German Laurenz Koehler used to think his government would take care of his retirement needs.

But it became clear to him when he started working that his retirement fund, akin to the Central Provident Fund here, would not be sufficient.

'I realised over the last decade that the government is not able to sustain the fund the way it was doing in the past because of an ageing population. There are fewer working people paying into the fund than people withdrawing from it. People started doing their own investing,' he said.

He now believes that investing is the best way to ensure a bright financial future.

Every month, he channels a portion of his savings into his personal retirement fund. He also has a separate education fund for his children. Recently, he bought a few rooms in a hotel in London as an investment.

Mr Koehler, 42, managing partner of marketing and strategy at research consultancy firm Mext (Next Generation Marketing), graduated with an economics degree from Ruhr University Bochum in Germany in 1996. He worked in advertising firm BBDO as its account and business director in Germany and later in J. Walter Thompson as its management supervisor in Germany and the United States, before joining Batey in Singapore in 2006. When he left Batey last year, he was its director of strategic planning.

With more than a decade of advertising and branding experience under his belt, Mr Koehler became a franchisee of Mext for Asia last year, together with business partner Alan Fairnington. Although Mext was founded in Australia in 2004, its Singapore office in Duxton Road is now its global head-quarters.

Mext provides insights into what drives people's buying decisions in different industries and how to deliver them. Among its clients are the Health Promotion Board, M1, Crabtree & Evelyn and Malaysia-based Celcom.

Mr Koehler is married to school administrator Mel Ertas, 41. They have two sons, Lennart, eight, and Luke, seven.

Q: Are you a spender or a saver?

I am a saver or investor rather than a spender. My savings would be around 20 to 30 per cent of my income and the rest is spent on housing and the children.

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

I pay everything I can with my credit cards. I don't like to carry around loads of cash. Depending on my travel schedule, I use my cards for about 40 per cent of my monthly expenditure. I withdraw money during my weekend supermarket visits. I have only a MasterCard and Visa card from one bank. My average credit card bill is about $5,000 a month.

Q: What financial planning have you done for yourself?

About 10 years ago, I set up a private retirement fund each for my wife and me. They are mainly invested in insurance products which guarantee the principal sums. We also have an education fund for the children to pay for their university studies. The latter is meant to generate a solid five-digit sum in euros when they turn 20. The education fund is flexible and allows withdrawals of money when needed.

I pay money to these funds monthly. A third party manages all these funds out of Germany and I review the funds once a year. The target returns are 4 to 6 per cent a year. When Mel and I are 60, our retirement funds should provide a total amount of about $1 million. We also have life insurance, partial disability income insurance and medical coverage. My life coverage is about $500,000.

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

I am the youngest of three siblings. My father was an architect who ran his own company. My mother was a housewife. My parents got divorced when I was seven. I lived with my mother in a three-bedroom apartment till I was 16, and with my father in a five-room apartment after that. We lived in Essen, western Germany.

I experienced all the ups and downs of an 'SME family'. We struggled during recessions and downturns, but benefited from the big payback in the golden years. In general, money was rather tight and we did not spend beyond our means.

So taking credit is something I have avoided pretty much throughout my life. I took on vacation jobs during school holidays like being a waiter and working in super-markets.

Q: How did you get interested in investing?

When I started working, it became very clear that my retirement fund - made up of contributions from my pay - would be very small. Then, living in the US and subsequently in Singapore, I realised investments are the only way to ensure a bright financial future.

Q: What property do you own?

I own a piece of a hotel in the financial district in London. In July, I bought a few rooms in a 150-room hotel, which is part of an inter-national hotel chain. I paid a six-figure sum for it and the potential yields are between 8 and 10 per cent a year. It will be operational in 2012 and I expect to get a half-yearly dividend from the investment.

Q: What is the most extravagant thing you have bought?

A red dirt bike. Its brand is Husq-varna and it is the biggest joy in my life, apart from my family. I use the bike to zip to my office if I don't have a big client meeting. I bought it here in 2008 for $12,000. I used to own one in Germany.

Q: What is your retirement plan?

No plans as yet. The master plan is to build a big enough company that can be sold in five to 10 years' time. But I am way too excited to build this company that I cannot think of when to sell it or retire. We're not big spenders so we don't need much money.

We will need about $10,000 a month when the children are financially independent.

Q: Home is now....

Having two young boys, we decided to rent an apartment in the Holland Road area, a family paradise. Once the boys are 12 and older, we will consider buying a house.

Q: I ride....

My dirt bike or I commute by taxis.

lorna@sph.com.sg
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WORST AND BEST BETS

Q: What's your worst investment to date?

I was one of the victims of the Internet investment bubble in 1999-2000. I had built a very nice portfolio with huge gains in new market companies, but pretty much lost everything in a very short period of time. I invested about $30,000 in six to eight German technology firms, and it grew to $100,000 in a year. But I got back only $15,000 while the rest evaporated in a week. I simply wasn't on top of things and was unclear about the market development. I thought the Internet hype could go on forever. I learnt not to invest in something that is not tangible.

Q: And your best investment to date?

My company Mext. It was profitable within six months. My partner Alan and I invested $10,000 in the firm. The current annual turnover is nearly $1 million. We have five staff members.

Another good investment was growing a nice sum of money when I was with my former employer J. Walter Thompson in the United States. As part of the 401K plan, I invested in a Merrill Lynch fund and the value of my investment doubled during a two-year period.

[Musicwhiz]

Wow a Value Investor who got very wealthy through his investments! It's an inspiration for all value investors out there!

Though I do wonder - would it have been possible to avoid the carnage at Fibrechem and China Sun-Biochem? Most of the net margins and consistency in profits were too good to be true. As a value investor, you can't afford to take things at face value....

Oct 10, 2010
Army days led to money making ways
It was during national service that Mano Sabnani acquired an interest in investing
By Lorna Tan, Senior Correspondent

Mr Sabnani - with daughter Natasha, wife Mohini and sons Karan and Dev - has made building up healthy savings for his family a central part of his financial planning. -- ST PHOTO: LAU FOOK KONG

It was during his national service in 1975 that Mr Mano Sabnani became interested in investing, especially in stocks. He remembers the army officers talking about the market and their investments during their free time.

His stock investments have paid him handsome dividends. In the past 20 years, Mr Sabnani, 60, has managed to grow his stock portfolio from $200,000 to $4.8 million. Another $250,000 is invested in private equity and unit trusts. During the same 20-year period, he earned about $1.4 million in stock dividends. At present, he enjoys an annual flow of dividend income, which is sufficient to cover his basic annual expenses of $150,000.

Mr Sabnani has worn many hats in his 35-year career. He joined The Business Times as a reporter in 1977, became BT editor in 1986, and was managing editor of The Straits Times and head of the editorial support unit of Singapore Press Holdings' English/Malay newspapers from May 1992 to late 1995.

He then moved to DBS Securities as its director of research in 1996 before joining DBS Bank a year later. He was managing director for investments and later managing director for equity capital markets. In 2001, he left the bank to join Corporate Brokers International as executive director.

Two years later, he joined MediaCorp as Today's chief executive and editor-in-chief, leaving in 2006.

For the next year, he was executive director at consumer group Novena Holdings, after which he served at Multistar Holdings as group managing director until last year. He is currently chairman and chief executive of Rafflesia Holdings, which assists SMEs with growth strategies and corporate governance. He set up the firm in 2008 with $200,000.

Mr Sabnani graduated from the University of Singapore in 1973, with a bachelor of science degree. He is married to housewife Mohini R. Nathani, 56, and they have a daughter, Natasha, 22, and two sons, Karan, 21, and Dev, 18.

Q Are you a spender or saver?

I believe in the power of savings. My family has been putting aside between 30 per cent and 50 per cent of our income over the past 30 years. This is after provision for premiums on various insurance plans and monthly contributions to my (late) retired father and dependent younger brother as well as contributions to charity, which is allotted 2 per cent of annual income.

Q What financial planning have you done for yourself?

My portfolio covers bonds, unit trusts and equities with the focus on SMEs and real estate investment trusts. The average yield is about 4per cent net per annum. When selecting stocks, I read annual reports, attend annual general meetings, and analyse the business model and the credibility of the management.

The children and my wife are covered for up to $500,000 each. My own cover is about $750,000 and the plans range from health and endowment to whole life and group term policies.

Our fixed deposits of $500,000 are enough to cover three years of family expenses. There is an additional similar amount for unforeseen or extraordinary expenses which could arise in the future. It is a form of self-insurance.

For the children and my wife, I have built up separate, private endowment funds. About $8,000 is set aside each year for each member for the past 22 years since our daughter was born in 1988.

I hope to set up the Mano Sabnani Trust Foundation in the next two years. It will focus on financial literacy, nature/environment and community needs. The money will be drawn from the portfolio.

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

I grew up with five siblings and I am the third child. My mother, a housewife, developed complications and died following childbirth at the young age of 40 in 1963. I was then 13. My father was a textile merchant. My two elder brothers had to work after their O and A levels. I was lucky to be allowed to go to university but my dad could cover only the fees, so I had to give tuition or teach in adult evening classes to cover my personal expenses.

We lived in a rented flat in Joo Chiat until 1963, when my dad managed to make a down payment on a flat in Katong.

Q How did you get interested in investing?

I got interested in stock investing during my army days. Joining BT in 1977 allowed me to develop my knowledge of financial markets and people in business. I am a value investor and agree with Warren Buffett when he says one should be greedy when others are fearful; conversely, one should be fearful when others are throwing caution to the wind. I buy stocks with good business models and governance during crisis periods; the time to sell is during euphoria in the market.

Q What property do you own?

Home is a 3,687 sq ft freehold semi-detached house in Katong. We bought it in 1998 for $1.25 million. It has 5,000 sq ft of built-up space over three floors and is now worth about $3.75 million.

Before moving into the semi-detached house, we lived in an HUDC maisonette in Bedok, which I bought in 1984 for $230,000. We rented it out from 1998 and received an en bloc buyout for it at $660,000.

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

I bought a Volvo S80 T6 in 2000. It cost me about $200,000. I had to do major repairs from the sixth year onwards and, finally, the flood got to it three months ago. It was not worth repairing the car and we scrapped it.

Q What's your retirement plan?

I have been financially independent since I was 55. My dividend/interest income is sufficient to cover our basic expenses of $150,000 per annum. What Rafflesia Holdings earns in future will be channelled into investments to grow the pool and provide for the family's needs as well as support my philanthropy effort in my own small way.

Q I drive....

I now drive a black Toyota Camry 2.0. My wife, Nisha, drives a black Toyota Wish 1.8. They are both good value for money.

lorna@sph.com.sg

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WORST AND BEST BETS

Q My worst investment to date...

My worst investments have been in private equity and mostly in software firms whose shares were bought from 2000 to 2002.

The problem with small companies is that they run out of funds while still developing their products and the founders often lose interest, leaving shareholders in the lurch. I have written off more than $100,000 on these investments.

Despite due care, I have also lost about $100,000 on listed S-chips like China Sun Biotech and Fibre Chem from 2005 to now.

One moment, the companies appeared to be normal with steady business. The next, they were down and out with large amounts of money missing or unaccounted for. Investors have had no chance with such China-based companies and their downfalls were unexpected.

Q My best investment to date...

I have done well in earlier years with Malaysian shares like RHB Bank and Kulim Plantation and Singapore-listed Straits Trading. I bought them during the Asian financial crisis in 1997/98 and sold them by 2007, multiplying values between four times (Straits Trading and RHB Bank) and 7.5 times (Kulim).

Properties and plantations usually do well in the long term, with appreciating assets.

I am also currently sitting on good profits for stocks like Sunningdale and Ellipsze. I bought them when they were completely out of favour and trading below five cents in March last year during the United States financial crisis.

[d.o.g.]

would it have been possible to avoid the carnage at Fibrechem and China Sun-Biochem?

A healthy skepticism would have helped. Almost all the S-chips that blew up reported fat margins despite being commodity-type businesses with little or no pricing power.

In the case of China Sun, it produced corn starch. This is a commodity product for sure - sold by the ton according to specification. Yet before it blew up the company was getting 20% net margins.

Likewise with Fibrechem. Synthetic fibres are also commodities sold by the ton, according to specification. Again, before it blew up the margins were amazing, over 20% net.

Think about how these businesses work:

1. You buy specialized equipment made by only a few companies;
2. Your raw materials are commodities (raw corn, crude oil derivatives);
3. You sell products to customers much bigger than you; and
4. Anyone who can get financing can enter the business

So:

1. Your upfront capital cost is high;
2. You can't control your input cost;
3. You can't control your selling price; and
4. Everytime you make some money, new capacity enters the industry

Any one of these conditions alone would make business difficult. But multiply them together and it's virtually impossible to make good money over the long term. So if a company claims to be doing the impossible, unless you can see why the company is so special (your reasons, not the company's) you should stay away.

Of course, all this is hindsight and many professionals were fooled too. But we should all learn from this and not repeat the same mistake. There have been new S-chip listings. So far it seems to me that more than a few face the same issues above. I don't think the long-term business outcome is likely to be any different. So anyone who wants a different outcome i.e. don't lose money should do something different i.e. don't invest.

Obviously, apart from starch and synthetic fibres, there are lots of commodity-type businesses out there. To name just a few more:

paper manufacturing
plastic packaging
textile processing
apparel manufacturing
steelmaking
shipping
airlines

As usual, YMMV.

[kazukirai]

Not to take away anything from him but for a self-proclaimed Value Investor, don't you think he's not a very good one? Might he not have been better off in an Index Fund? Although, it's arguably that Index Funds for the SGX probably didn't exist at that time...

His stock investments have paid him handsome dividends. In the past 20 years, Mr Sabnani, 60, has managed to grow his stock portfolio from $200,000 to $4.8 million. Another $250,000 is invested in private equity and unit trusts. During the same 20-year period, he earned about $1.4 million in stock dividends. At present, he enjoys an annual flow of dividend income, which is sufficient to cover his basic annual expenses of $150,000.

The average yield is about 4per cent net per annum.

Rather, it seems like his various high-flying positions re the one that brought in the dough and, also, his attitude towards money (i.e. saving, investing and not spending unnecessarily) are the key factors for where he is today.

Mr Sabnani has worn many hats in his 35-year career. He joined The Business Times as a reporter in 1977, became BT editor in 1986, and was managing editor of The Straits Times and head of the editorial support unit of Singapore Press Holdings' English/Malay newspapers from May 1992 to late 1995.

He then moved to DBS Securities as its director of research in 1996 before joining DBS Bank a year later. He was managing director for investments and later managing director for equity capital markets. In 2001, he left the bank to join Corporate Brokers International as executive director.

Two years later, he joined MediaCorp as Today's chief executive and editor-in-chief, leaving in 2006.

I guess maybe that's the peril of working too closely with the hype that you sell in your news. You end up believing what you write (better believing it than writing and selling something you don't even believe in!). In the end, I see problems of him investing in things he doesn't really know (e.g. his pte equity forays), deworsifying (his wide range of holdings which also ties in with not knowing).

Having said that, might a positive takeaway be that "Rule 1: Never lose money and Rule 2: Never forget rule 1" prove that even less than stellar returns will get you somewhere?