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Stroke of Calamity

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Since 2013, I have written articles paying tribute to my late father during Father’s Day. This year will be no exception. Dad passed away at home after 20 years of struggle with a major stroke that resulted in him being half-paralysed. It was really a stroke of calamity for our family and the last 20 years were like “lost decades” for us. Dad had played a major role in shaping my values, character and life’s perspectives. I cannot claim to remember everything that he said but most of his important teachings still live in my heart. I hope that by walking down this memory lane, my children will appreciate and learn from his legacy.

As a child, I had very little opportunities to spend time with Dad because he was always working. In fact, he even worked on weekends because in the late 80s, there was a huge construction boom in Singapore. Dad was a self-employed lorry driver and business was thriving back then. He was a typical baby-boomer – hardworking, thrifty and disciplined. Every morning at six, he would wake up and had quick shower and breakfast. Then he would do some quick calculations using the Chinese abacus and then promptly left for work.

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As the sole breadwinner, Dad had to work really hard to support a family of six. So when he was down with stroke, we were totally caught off-guarded by this family crisis and did not know how to handle the situation. We did not send him for treatment at hospital because in those days, awareness of stroke was really low. We thought that by letting him rest at home, he would recover in due course. We only send him to hospital after a few days when his condition did not improve. By then, the damage had been done. Years later, we learned that chances of recovery from a stroke are very high if you received treatment within hours.

On hindsight, it was a blessing in disguise that Dad was self-employed because if he was an employee, my family would be finished. In those days, there was very little social safety net and the notion of financial planning was unheard of. Of course, I am not saying that things have improved today but then again, even if in those days there were social aids available, we would not know how to apply. After all, my family could not even understand a simple government letter back then and always had to ask our relatives and neighbours for help for interpretation.

I was only 13 when all these happened and it is difficult to imagine that a boy of that age would apprehend the implications of this calamity. Nevertheless, I slowly realized that even though there was passive income from Dad’s small business, a large chunk of our income was lost because of no active incomes. Dad had to rely on his business partners and lorry drivers working for him. Because he was unable to monitor their activities, our income also suffered a lot.

Subsequently, Dad’s lorry business began to have cash-flow problems because in those days, there was no such thing as progressive payments by construction contractors. Thus, even though he managed to complete the jobs on hand, it would be several months before he received payments from the sub-contractors. We were wondering how long we were able to sustain in that sort of circumstances when Dad made the best financial decisions that changed our family’s fortunes. The family living next door was moving out and Dad offered to buy their unit and then sub-let the unit for passive incomes. The income from the rental was very helpful because otherwise, we had no financial assistances at all.

My family’s calamity certainly set us back financially for several decades and made me realized the importance of wealth building. In Singapore, education should not be seen as merely a tool for gaining knowledge but a pathway towards a better life. Too many Singaporeans like to compare the branding of their universities they graduated from. But they don’t realize that it does not matter whether you are a graduate from America’s Ivy League, local universities or private universities. That tertiary education will only open more doors for you and does not guarantee you success in life. Whether you are able to climb the corporate ladder and make more money really depends on your hunger, performance at work, skill mastery and emotional management.

Another lesson learned is the importance of having financial literacy. On looking back, my family’s disaster could have been mitigated if Dad had insured himself adequately. As a sole bread-winner, he should have known better to insure his income ability against death, permanent incapacity and terminal illnesses. Like many Singaporeans, Dad had the flawed thinking on term life insurance, which is a cheap protection against life events that might impact your family’s financial loss. When he was healthy, he didn’t like to think about possibility of bad things that might happen to him and he certainly felt that it was a waste of money to buy term policies as they don’t have cash values when the term expires. As a result, when disaster really struck, we had no protection at all.

There are many bloggers out there who argue that building passive income streams from rentals is no longer feasible in today’s context because of the market conditions. Whether they are right or wrong is subjected to debate but based on my family’s experience, I believe rental income is very much a viable solution to achieving financial freedom, if you play the game right. Just think about it, Singapore has no natural resources and has to import virtually everything. Even some of our people are newly imports. Only properties cannot be imported and they have to be built on limited land spaces. What this means is that there is no quick fix solution if there is a shortage of housing. Indeed, currently there is a glut of housing and market conditions are bad. But if you think long-term wise, the next generation of Singaporeans might not be able to afford to own their homes and many may have to resort to renting a house.

Many Singaporeans, especially the young ones, assume that by investing in stocks, they are on their way to securing financial freedom. They don’t realise the risks involved and many worship Warren Buffett as their investment god. However, they don’t realize that Warren Buffet is not exactly an investor but in fact, a businessman with astute foresight. Unlike minority stakeholders, he invested a huge amount of monies in companies and thus is able to influence business outcomes. In this respect, can you control the companies that you invested in like he does? I am not trying to discredit Warren Buffett and his teachings but we must adapt his teachings to suit our levels. As a big player, he can take substantial stakes in various companies and adopt a buy-and-hold strategy. For you, being a small fish, you cannot afford to do so.

Although Dad invested in stocks and was quite successful in his investments, his wealth was not built upon shares. Like Warren Buffett, he believed that minding our own businesses is the best route to building wealth because you will have control over how money is being managed. As stock investor, especially as a minority shareholder, you always have limited control over the business decisions. To lower the risk, make it a point to research the companies and learn how to read their financial reports. From the financial statements and reports, you can glean the management execution, their insights, performance and track records. In fact, management execution is supposed to be one of the investment moats you should look out for when investing in stocks. Thus when it comes to stock investing, don’t have the naïve thinking that you are just one multi-bagger away from being rich when in fact it can be a trap waiting for you to walk in.

I guess the most important wisdom that I gained from Dad is “health is wealth”. In our pursuit of financial freedom, many of us often overlook the fact that it is a privilege to play the money game and hence we tend to take health for granted. We can lose our monies through frivolous spending or poor investments, but then again, we can always earn back the money. However, if we lose our health, we may not regain it back. Dad used to be very strong but developed high blood pressure and high cholesterol levels because of his work, which requires him to drive long hours. Due to his desire to make more money, he often skipped his medication and inevitably caused the stroke to occur. He was only 38-year-old when he suffered from the debilitating stroke.

I wish all fathers a Happy Father Day. Hopefully you can spend more quality time with your family. Stay healthy to build wealth for a better tomorrow!

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SG Wealth Builder

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