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Bullionstar

Bullionstar

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Hi SG Wealth Builder,

 
Let me first introduce myself. I’m currently an undergraduate and I would like to seek some advice from you because I’m quite lost. How can I increase my wealth to the next level? I’ve been making thousands every month month through trading for the last 2 years but I want to earn more. Is there any way to achieve this?
 
PS: In case you think I’m kidding around, I’ve attached my profit for March.
Thanks. 🙂
 
Yours sincerely,
Jacky
Many Singaporeans want to make money and become rich quick but very few bother to acquire the investment knowledge needed to build wealth.

I received the above letter from one of my readers a couple of weeks ago but could not find the time to reply due to my work commitment. As usual, I was reluctant to provide specific advice or guidance on investments that would mislead my readers into thinking that I am a financial guru. I just want to emphasize again that I am not. As a matter of fact, I don’t even work in the finance sector. But after much thoughts, I decided to share some of my insights pertaining to the reader’s question.

It is important that young Singaporeans have the right mentality before they embark on their wealth building journey, especially those who are about to enter the workforce. The decisions made in the early stage of our lives will shape our financial destiny and future but young folks can become lost in their pursuit of money. So I want to impart some knowledge and life experiences to Jacky (not his real name) and guide him along. Hope this article will make a positive impact to his life.

First of all, congratulation to Jacky for making so much money through trading the market. Even though he did not reveal much details about his portfolio holding, I never doubt his success and assumed that his investments were all in cash. I suppose when the market is good, it is easy to make money through trading. Now, having so much money at such an age can make you really giddy and give you a false sense of invincibility. You are more likely to be driven to hit that holy grail of one million dollar jackpot. So I am not going to pour cold water on Jacky and tell him to take it easy and stay grounded. That would be crap stuff for him. But it is important for him to take a step back and reflect on what he is going to achieve in life. For sure, half a million is a lot of money for a young Singaporean, but then again, you can only afford to buy a 5 room HDB flat in Singapore with this amount of money. Furthermore, one day Jacky is surely going to get married and have children. Is he able to beat the market consistently and have a sustainable income to provide a good life for his family? He needs to have a long term vision of his future and not be carried away by short term financial success.Of course it is many Singaporeans’ dream not to work and be a full time trader. I used to go through this stage and fantasize the kind of freedom that wealth can bring. But after two financial crises in 1997 and 2008, I realized that financial market always goes in cycles. What goes up, must come down one day. It is a fundamental economic phenomenon that has been going on for many centuries. Investors must understand that it is not possible to beat the market consistently. You are considered very good if you won 80% of the times. So in order to withstand these turbulence, Jacky must develop the character and wisdom to preserve and grow his wealth.

Jacky should read widely on various topics to improve his general knowledge and understand how the world works. The knowledge gained will put him in good stead but only if he practiced what he learned. Having made so much profits from trading, I supposed Jacky had developed his own set of investment techniques. To increase his wealth to the next level, he should read up on topics such as value investing, dividend investing, property, gold, bonds and insurance. These are techniques and instruments that can strengthen and add value to his portfolio, but only if he applied them correctly.

Another thing that Jacky should think through is whether he wants to pursue a full time career as a trader upon graduation. It really depends on where his interest lies in. In Singapore, whether you like it or not, a degree is still the entry-level requirement for a good career. So Jacky should try to harness the value of his degree and strive to extract the maximum return out of it. If he spent $40,000 for his tertiary education, then he should get a job that pays well and recoup at least 10 times the investment. If he chose to become a full time trader, then there would be an opportunity loss. This is because you don’t need a formal education to be a good trader. You just don’t learn this skill from the school. Conversely, most Singaporeans spent at least 16 years to pursue their education, so it is important that you extract the maximum value from the time and resources invested. Otherwise, it will be a real waste.

Making money is important but there is more to life than making money. We are born to enjoy life, so don’t be so engrossed in making more money. Chasing the money will only make you miserable. Enjoy the process.

Magically yours

 SG Wealth Builder

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4 Comments

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  1. During the Internet Bubble, one IA student from our local U was attached to me was telling me that he was making thousands and thousands every month and wondering should he continue to study or trade full time.

    He was trying to hint to me there was no need to bother him with job assignment as he was too busy making money from stock market.

  2. I reckon he got “destroyed” by the burst of the internet bubble thereafter.

    Hahaha.

  3. Hey happened to chance upon your blog and my first thought is that the $500k is the trading volume (buy sell volume) and that he’s earning $5k from it. It’s an extremely low earning of 1% and he can be easily burnt by it by a minor pull back/correction in the market. I did not interpret that as his cash balance. Do correct me if I’m wrong as you have the full info. It’s extremely impressive if he has half a mil while studying!

  4. Hey just to clarify, Oanda allows leverage up to 50:1 maximum , meaning that guy might have used the maximum leverage when executing his trades! If that’s true, his actual trading volume would be 587K/50= $11.74K for that month, profiting around 40+% in those trades! 🙂

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