Every crisis is an investment opportunity

Have you ever paused to wonder why Singapore has one of the highest concentration of millionaires in the world? There are so many cash-rich Singaporeans out there that even during the recent downturn. Many of them were seen snapping up private properties like hot cakes, despite the sky-high prices.

The reason is simple: many of them made big money from the stock market during previous financial crisis. It may sound odd, but every crisis is an opportunity for retail investors to make big money because that is the time when stock values dropped below their intrinsic values.

investment opportunity

Most investors, especially the novice ones, tend to panic sell during stock market crashes because of the crisis in confidence. This is a typical “herd mentality” mistake that most investors tend to make and because of this, they tend to “buy high, sell low”, instead of “buy low, sell high”. The reason why most investors committed such mistake is because many of them are not fully aware of how the market works.

The stock market consist of three groups of players, namely Institutional Investors, Rich Investors and Retail Investors. Institutional Investors are players who invest on behalf of investment/insurance companies. They are the ones who usually flow huge amount of “hot money” in/out of the financial markets.

Rich Investors are the “big boys” and Retail Investors refer to the small fries. Usually at the first sign of economic problem, the Institutional Investors would pull out funds from the financial markets, resulting in the first wave of wealth destruction in the stock market. Rich Investors would tend to offload their investment holdings to take in profits, because they had bought the stocks cheaply in the previous crisis.

Retail Investors are normally the last to react to the unfolding crisis and seeing their investment value …

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Who will work for the rich?

In my previous post, I advocated the teachings of financial, professional and general knowledge to our kids. One of my readers then questioned “who will work for the rich?”

I suppose there is a mistaken belief among Singaporeans that if we exposed our child to the financial world or encouraged them to be entrepreneurs when they are young, they will all become or aspire to become businessmen when they grew up. The truth is, not all of us have the attributes and aptitudes to be a successful entrepreneurs. Out of ten players, possibly only one will emerge as winner and went on to become successful entrepreneur. Its a cruel reality but then again this is the rule of the game. We have to accept the fact that entrepreneurship is a no-sure win venture and if you messed up royally, you could be financially defeated.

So the question now is whether is it right for us to instill financial, entrepreneurship and investment values in children when they are still kids. My answer is still yes. Why? Because financial ignorance is NOT bliss, it is a disaster. As Asian, when we were children, we were told we should not be involved in discussions about money and saving money is the most important thing you can do. Our parents or schools do not explain the concepts of managing debts, budgeting, investing, retirement planning, passive incomes and entrepreneurship. So in the end, most of us learnt these important life skills through the hard way.

Exposing our child to money lessons will give him a headstart in life and prepare him to make informed financial decisions. The era of getting a good degree and making good money as an employee in MNC companies is long gone. In this day and age, we have to make …

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The truth about money

Last month, our Education Minister commented that employers believe Singapore students lack drive and the willingness to try new things to succeed. After reading the article, I have mixed feelings because I think he missed the point on the truth about money.
Look, it doesn’t take a genius to figure out that our education system has been result-driven and highly competitive for the past three decades. Everyone in Singapore knows for a long time that the education system is all about ranking, examination results and streaming. Obviously, to excel academically in such merciless system, one has to put in tremendous amount of effort and study real hard (unless of course if you are a genius). Henceforth, there is a lack of drive among our students to explore new ideas and new things. Much less to think about how to create money.


So what is the point of telling Singaporean an obvious fact that has been happening for the past decades? What is the Ministry of Education going to do? Just like many Singaporean in their thirties, I went through the education system and was taught to get a job, buy a house and save money for my retirement fund. At the end of the day, I have been asking myself, has the Singapore education provided me adequate knowledge to succeed in life?

My answer to that is a definite no. The Singapore education is good at forcing students to memorize information and poor at imparting critical knowledge and skills that are of relevant to our present society. I studied at a SAP secondary school and graduated from a top 5 junior college. I remember having to memorize countless Chinese, Geography, Chemistry and History textbooks in order to achieve respectable results.

After working for so many years, I didn’t even put

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Learn how to sell

In life, we must always learn how to sell in order to achieve success. When I just started working as a manufacturing engineer in the aerospace sector, I always thought that my department (operations) was the most important department in my company. This was because I felt that without engineers solving problems in the production lines, the company would not be able to function as per normal.

It was only years later that I realized that my thinking was flawed. The most important department in every private organization has to be the sales department. Every profit-driven company exists because of sales. Without sales, there will be no company.

How to sell

The problem with sales is that most people view it in a derogatory context, like a pushy insurance salesman or a telemarketer who interrupts your meetings. Most of us do not want to appear like those people, so we either sell passively (inform family members and hope they spread the word) or skip the selling exercise entirely. The result is half-baked effort and wasted time and money put toward building a business concept that will not come to fruition.

It is extremely hard for an inventor or entrepreneur to succeed if you do not change this mind-set because every type of business requires sales. Whether its selling an insurance policy or pitching your business ideas to potential investors, you must be  able to talk confidently about what you are offering in order to get people interested in your product or ideas.

So if you want to be successful in your business, you have to overcome the sales stigma and learn how to sell.

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The one million dollar question

If you were given a choice between having one million dollar and gaining the ability to make multi-millions, which one would you choose? I suppose most of us would dream of getting rich quick.

Many people, including me, would normally choose having one million dollar. After all, its human nature to dream of being rich, not having to work and to indulge ourselves. But look, how long can the million dollar lasts? Especially in Singapore, where the cost of living is so high. With a million dollar, you can probably pay off your car loan, housing loan and afford not to work for about 5 years. The million dollar probably would not be able to last you a lifetime. At least not in Singapore.

Many years ago, when I was studying in NUS, one of my school mate confided in me how much hated his father, who had struck the lottery big time TWICE. I wondered why and he told me that his father quitted his job, spent all his prize money within a couple of years and became a drunkard. His mother, who used to be a housewife, ironically has to look for a job to support the family. This lesson made me realized that even if you are blessed with a lot of money, if you don’t have the financial discipline and knowledge, you will still be financially defeated at the end of the day.

So always make sure you have good financial discipline. Otherwise, even if you have lots of money, it will be gone in a matter of time.…

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Ten habits of highly effective entrepreneurs

1. They note down their ideas (just like my Investment Notebook). If there is an ah-ha moment, they would quickly note it down and revisit the idea again.

2.They think through their ideas over and over again to see if they can be successful. Sometimes their ideas might have been implemented by others. But if they are able to develop a better and more cost effective way of doing it, then they stand a higher chance of winning.

3. They do their homework and spend tonnes of effort on researching. After all, no generals would like to fight a losing battle.

4. They can sell their ideas effectively. In business, if you cannot sell, you are finished. To make money, you must know sales tactics.

5. Passionate about their ideas. Conviction and belief are key to a successful business idea. A successful entrepreneur would always speak with a belly of fire whenever they touch on their projects.

6. They have no qualms in making revisions to their business strategies and adapting to changes if it means to making more money.

7. Great entrepreneurs are fiercely resilient and do not give up easily without a good fight. They are not affected by setbacks and would do anything to win.

8. They understand the concept of teamwork and know that not everyone can be good at everything. As such, they are able to work well with people.

9. They are flexible and know when to back out and cut losses. However, they always learn from their mistakes and improve their methods of doing things.

10. They enjoy the process of creation and love the challenges of being an entrepreneur.

Magically yours

SG Wealth Builder…

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Five reasons you should not quit your job to start up your own business

Starting up a business is not easy and very often, it can really take over a person’s life due to the huge efforts and financial commitments required. Therefore normally I would not advise anyone to quit their job and start a business because that could be a recipe for disaster. Do it right and your life changes drastically for the better. Do it wrong and your life goes spirally downhill. So always plot your move carefully and make sure you do your homework before making the big escape from the rat race. Below are five reasons why you must never quit your job and start up your business.

Starting up a business needs time
Starting a successful business takes time. Do not be fooled by media reports of young entrepreneurs achieving overnight success and becoming incredibly rich. Founders of Microsoft, Google and Facebook actually went through a lot of hardship, trial and errors before attaining wild success at international platform. They had made a lot of mistakes and setbacks before achieving business successes. Henceforth, learn from others mistake and avoid the potential pitfalls. It could be a long time before your business makes any profit, so make sure you hold a job while going through the phase of starting up a business.


Bills, bills and bills
Unless you are born with a silver spoon, we all have bills to pay and worry about. Quitting your job would hurt your pocket especially if your business has not started to earn sustainable revenue. Your relationship with your spouse or family members could also be strained if you are the sole breadwinner. So make sure your household finance is in order and in shape before you made the plunge.

Do it for the Passion, not for the Money
Not everyone starts a business …

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Investment Notebook: Opportunity Fund Part II

In my previous posting, “Investment Notebook: Opportunity Fund”, one of my readers posed this question to me “how many percentage of my net worth coming from the return of my stock investment, would I consider it has made me rich”.

This is a very interesting question and it has set me pondering hard for several days. One thing for sure is that I did not have a clear cut answer to that question but nevertheless, I shall try my best to reply.

Rate of returns VS net worth yield
When I invest in anything, normally I look at the potential rate of return on my investment capital. For example, if I rent out a HDB flat I would set a yield target of 10 -15%. Likewise, when I invest in stock, my target is value appreciation of 10-20%.

For example, when I activated my “Opportunity Fund” in 2008, I made a return of about 17% from my stock investments of S$20,000. Setting return target based on personal net worth is another matter altogether. It requires one to consider their personal income, fixed assets (housing, CPF,etc), insurance policies, investments (gold, shares, property,etc) at that point of time.

Furthermore, one’s net worth changes all the time, subjected to economic situation. For example, we may get retrenched and lost our sole incomes due to downturn. So I would say it is not easy to determine one’s net worth.

My best investment
If I have to consider the percentage of net worth coming from my stock investments that I think will make me become “rich”, I would say it has to be at least 1000%.

When I obtained my degree in 2005, my father helped to pay the student loan of $22,000. I had since repaid him back several years ago and “recouped” the …

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Opportunity Fund

To make explosive wealth, one must have opportunity fund to invest during times of crisis. In September 2008, the collapse of Lehman Brothers (an investment firm in the United States.) ignited the world financial crisis. Before the collapse of Lehman Brothers, fear of a “big bang” recession had been lingering around for months due to the festering subprime mortgages mess in United States.

But no one would have predicted the magnitude of the economic crisis. Back then, the President of the United States announcing no bail-out for Lehman Brothers as it was considered not “too big to fail” (unlike other mega banks like Citibank, Bank of America, etc).

Opportunity fund

The next day, there were blood-letting carnage in stock markets throughout the world. Dow Jones witnessed a jaw-dropping decline of more than 770 points overnight. Singapore’s stock exchange (SGX) was not spared either. In the six months following the collapse of Lehman Brothers, from September 2008 to March 2009, stock markets worldwide fell by almost 40%, wiping off about USD16 trillion in capitalization. Singapore’s stock exchange also fell by close to 35%.

On looking back, the 2007-2009 financial crisis was indeed a “once in a generation” defining event in the financial sector. Personally for me, it had been both an eye opener and rewarding experience for me.

Back then, I had accumulated S$20,000 of “Opportunity Fund and waiting for the right opportunity to invest in several stocks I had been researching for 6 months. So when this crisis came along and there was so much fear and panic, I knew it was the correct time to enter the market.

I pumped in my Opportunity Fund and bought 100 lots of Mercator Lines and subsequently sold off my investments several days later, making about S$3500 of profits. It wasn’t a spectacular profit …

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Three ways to become rich in Singapore Part II

In my previous post “Three ways to become rich in Singapore”, I have some readers providing feedback and comments. I appreciate readers for taking precious time to read my blog postings and provide their valuable comments.

One of my readers commented that “dividend investing” can also make you rich. Whilst I agree that investing in fixed income, be it stocks or unit trusts, is considered a source of side income, it does not really make you “rich”.

In my personal context, being rich means to enhance one’s wealth substantially. Dividend investing may provide additional fixed income but it also have its risk – decreasing stock prices and liquidity problem.

I still believe that the best three ways to become rich in Singapore is to invest in property, do business and work in the sales line.

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Three ways to become rich in Singapore

What are the three ways to become rich in Singapore?

Many of us will agree that the cost of living is very high in Singapore. This is especially so during the last few years when the rate of inflation increased rapidly. In spite of the global economic downturn, unemployment rate remains low in Singapore.

But most Singaporeans struggle with the rising costs, as their salaries remain stagnant. Henceforth, most of us are concerned whether we would make enough money to retire comfortably in our twilight years.

Stock Market
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Recently, me and my good friend were lamenting the rising cost of living in Singapore and pointed out that the same bowl of $2.00 noodle sold in the hawker stall now costs $2.50 or more. That would represent a 20% increase in prices and we were left wondering how an average salaried Singaporean can cope with this sort of inflation.

We came to the conclusion that to beat the inflation and get out of the rat race, we need to be rich. And there are mainly three ways to get rich [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Investment Principles

For the past few days I have been doing spring cleaning and happened to flip through my investment notebook. I went through some of the interesting lessons learnt during the period 2007-2009.

The collapse of the Lehman Brothers really change the investment world forever and the old strategy of holding stocks for the long-term for capital appreciation may no longer works.

In view of this, we need to equip ourselves with well-planned strategies to protect and grow our wealth. In 2009, I had made three guiding principles for investment.

Invest in myself
Many people, myself included, tends to chase the money and invest in everything under sun (stocks, ETF, property,gold, unit trust, etc). Everything, except themselves. We may not realize that our knowledge, ability and skills are the most precious assets that enable us to make critical judgement calls to generate income through jobs, sales, investment and business activities.

Henceforth, most of us tend to neglect investments on acquiring new knowledge or skills. I had told myself that I must acquire or gain new mastery of knowledge in niche areas like precious metals and real estate investment trusts.

Gold and Silver Bullion

Invest in health
As cliche as it might sound, health is really wealth, this is especially so in an expensive society like Singapore. Many Singaporeans slogged hard in their 20s and 30s, neglecting their health and ended up suffering in poor health in their 40s and 50s. Most of them rely on their family members to help them cope with the hefty hospitalization bills and medical fees.

I made a resolution to eat healthier food and jog at least twice a week.

Invest in family and friends
Making money is important but what is the point of winning the world but losing your soul? Family and friend supports …

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ACE Startups

For startups, resources is important. To this end, the Action Community for Entrepreneurship (ACE) announced on 19 Jan 2012 it will be providing funding, networks and mentorship to 500 startups in an effort to promote entrepreneurship in Singapore.

Under this new programme called Ace Startups, Singaporeans and permanent residents who are first time entrepreneurs can receive up to $50,000 in a one-off grant for their startups. One interesting aspect of Ace Startups is that applicants older than 26 years old are eligible for this funding.

The grant will be disbursed in a co-matching basis – 70% provided by ACE Startups and the remaining to be committed by the applicants. Approval process takes about 6 weeks and applications will be evaluated by a panel team of venture capitalists, angel investors and entrepreneurs.

The aim of this fund, estimated to be $25 million, is expected to help startups become sustainable businesses. While this support for startups is heartening, it is far more important to have a feasible business plan and workable idea. After all, the funding will not be sustainable if the startups consistently burn cash and have insufficient income.…

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My Investment Notebook

I started my investment journey more than 10 years ago when I was serving my National Service. Back then, I had bought 2 lots of Unisteel using my brother’s account and I remember I had invested about SGD2000. It was a small amount of money by any measure but I found it memorable because this investment kick-started my wealth building journey and led me to create my first investment notebook.

Unisteel was a listed company that specialized in producing fasteners and screws for computer hard-disk drives. By and large, it was a successful investment as the stock price increased consistently throughout the years. I sold my shares in Unisteel before it was de-listed and had went on to invest several other shares in the SGX.


Although my experiences with Unisteel was a positive one, I had my ups and downs with other stocks. Nonetheless, these battles had provided me valuable investment experiences.

Throughout the years, I had kept a little blue notebook to capture down my various “victories” and “defeats”. To me, investing in stock is like being engaged in a war. You have to prepare and research well; devise strategies and tactics to win the battle. Of course, choosing the right generals (stocks) is crucial as well. Nothing beats the thrill of finding a multi-bagger and the anguish of owning a “falling knife”.

It is through all these battles that I became a better and wiser investor. The little notebook contains my various thoughts and reflections made throughout the process of investing. It has served me well and honed my investment experience. Do you keep an investment notebook as well?

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Funding options

I was doing some research on funding options for entrepreneurs in Singapore and decided to blog down some of my newly-acquired knowledge. We have often heard about angel investors, venture capitalists, seed funding and incubators. Many question and wonder the roles, involvement and motives of these various categories of investors with regards to the development of enterprises. Hope this article can bring some form of clarity.

Basically there are two ways an entrepreneur can obtain funding: either through debt financing or equity financing. Debt financing is usually secured against certain assets and the creditor has the power or rights to demand repayment of any money owed, should the company be forced to close down. On the other hand, an equity capital involves the exchange of shares in the company for funds. The equity investors bear the risk of losing their investment should the company failed or benefit through participation in profits. Below are some common form of equity financing:

Angel investors
Angel investors are private investors who are wealthy individuals looking to park their excess wealth into new ventures. They usually provide capital for commercial start-ups, in exchange for equity or convertible debt and they typically invest between $25,000 to $500,000. Angel investors are usually very experienced investors with a lot of contacts and business experience and majority of them look to benefit from tax relief, which varies in different countries.

Venture Capitalists
Venture capitalists (VCs) are usually corporate firms looking to invest in start-ups, in exchange for equity in the company. VCs invest from $500,000 upwards and usually demand greater control of the company, as compared to angel investors. This is because VCs invest with the end-point in mind and they expect quicker and higher return on investment; henceforth, they are often more demanding and aggressive in order to …

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Wrap fee for CPF Investment Scheme

From 1st July 2012, the CPF Board will subject wrap fee charged for CPF Investment Scheme to a maximum of 1% per annum.

A wrap fee is an ongoing fee charged by financial advisors for providing bundled services such as advisory, brokerage and administrative fees. It is typically levied monthly or quarterly by liquidating a small portion of the investment. Currently, CPF members who maintain wrap accounts for their CPF Investment accounts are charged up to 1.5% annually by their advisors.


Since 2006, CPF board has been progressively implementing new measures to lower the cost of investment and enhance the quality of funds under CPF Investment Scheme. This new measure should bring cheers to retail investors as high costs may potentially erode investment returns over the long term.

Such development is in the right direction and will go a long way to encourage more Singaporean to invest responsibly using their CPF funds.

Under the CPF Investment Scheme, you may invest in CPF-approved unit trusts, bonds, endowment policies and gold products, after setting aside $20,000 in your Ordinary Account. If you wished to invest using your CPF Special Account, you need to set aside $40,000.

But before you start to invest your CPF monies, it is important to examine your risk tolerance and your financial situation. For example, you may not tolerate short-term fluctuation in your investments because you may need your CPF monies to finance your house or children’s education fees.

Do note that the interest rates offered by CPF are virtually risk-free. Thus, if you do not have the confidence to beat the interest rates, then it is best to leave your CPF monies in your Ordinary and Special Accounts.

Always remember that your CPF fund is meant for your retirement needs. It may not be wisely to invest …

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Guidelines for Writing a Business Plan

Before you take the leap into the path of entrepreneurship, it is essential that you done the homework and write a business plan. As cliché as it might sound, if you fail to plan, plan to fail.

Having a good business plan will provide you a clear business objective and an organized way of looking at all the important aspects of your business. Most importantly, it will provide you a crystallized view on whether your business idea can be successfully implemented.

Business plan

A well written business plan will also come in handy, when you are looking for funding from potential investors (venture capitalists or angel investors). Key elements of it should focus on:

Stating/defining the problem
Your plan must define the problem which your business is addressing and not just stating your business idea. Nobody will be interested in a business idea if it is not solving a problem and is impractical. The plan has to be precise and easy to understand for layman (nobody likes to read a long-winded business plan filled with technical jargon, especially bankers and venture capitalists). Focus on how and why your business can deliver and solve the problem.

Market size and industry trend
Define the estimated market size and industry trends, dynamics and customer landscape. Describe and list your competitors, including substitutes. Highlight your competitive strength and the barriers to entry which will help to reduce competition.

Commercial viability
Explain in details how the business is going to make money, revenue source, volume growth and gross margins. This section is also a good place for forecasting both revenues and expense totals for the next five years. A good business opportunity with scalability should show double digit positive growth per year, and revenues projected to $20million or more within the next 5 years.

Marketing, sales, and

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