How to invest and be rich in Singapore

Hi sgwealthbuilder,

I read your blog post on how to start building wealth from young and I enjoyed it thoroughly it helped me to understand more about investing and how I should go about developing myself as an investor.

However, I realize you tackled the situation for young investors who have yet to start or are interested to start. Hence, I was hoping if you could share with me your experience or some wisdom on what a young investor who has some knowledge, capital and owns a few shares already. I really would like to know whats the next step of vision and many blogs do not really touch on this category of ‘very young investors who accidentally started before reading financial blogs’.

I’m sorry I have yet to introduce myself, I’m a young army boy just turned 19 and saved up just about 12k and invested about 8k into Suntec Reit and FCT a couple of months ago. I do plan on purchasing gold because I like the feeling of holding my assets and I am aware of the benefits of having gold (cheap during economic booms and recovery, which are happening soon I think?). 

I noticed you mentioned you do not normally give advice to people since you are not a financial adviser and such but I hope you could guide me somehow as my parents and close relatives do not invest and I’m the first to venture into this ‘taboo’ world. 

Warmest Regards

A young army boy

After pondering for some time, I decided to write a reply to the above email written by a “young army boy”. This is because I noticed that there is a growing trend of Singaporeans investing at a young age nowadays.  As market novices, if you do not receive the correct guidance and adopt the wrong approach, you are going to end up paying a lot of school fees to Mr Market. After all, the investment journey is not a one-way ticket to financial freedom and depending on how you play the game, there is no guarantee that you will become rich in Singapore. Along the journey, you are surely going to encounter a lot of hits and misses. How you manage these highs and lows will shape your financial destiny.

First of all, I must congratulate the writer for starting his investment journey at a young age. In my previous article, I have emphasized on how important it is to start the journey early, so I am not going to reiterate this point again in this article. Instead, I will focus on what this young investor should do next. In my opinion, he should ask himself why he chose these two stocks in the first place.

Make no mistake, these are two rather good stocks. In fact, I have been monitoring Suntec Reit for quite a while but had not take up any position so far because I am still not very sure on how real estate investment trust works. Many financial bloggers and investors claimed they know the business model of REITs well, but I suspected otherwise.

In 2009, the risk of bankruptcy in Singapore REITs became very high because of falling asset values caused by lower forecast on occupancies and rentals. This caused banks to shun away from giving loans to REITs and as a result, the Monetary of Singapore had to intervene to prevent the situation from worsening. So the moral of the story is to research on the company before you invest in its stock. I hope the young writer has done his research before investing in the two stocks. I used to do the research on the companies after investing in their stocks, which was the wrong approach. There are many techniques of stock-picking and it is important that you develop your own investment style.

My advice to “young army boy” is not to be so obsessed with money and make money-making the biggest pursuit in life. Money is just a means to an end and when you leave this world, you cannot take it with you. Many Singaporeans put so much focus on our social status, material comfort and wealth that sometimes we do not even know what are our interests and goals in lives.

As an army boy, you have a lot of spare time, so do a lot of reading on various topics besides investments. Cultivate and nurture the habit of reading. This will broaden your knowledge and make you a better person. This is because as you grow older, the knowledge that you have picked up along the way will enable you to think critically and view things from different lens. If you are really very interested in investing, I suggest you read up on value investing, risk management, portfolio investing, insurances and personal finances.

Actually young investors are very blessed nowadays. You can get almost any information from the internet. If you want to research on a listed company’s recent performance, you can just download the quarterly report from the stock exchange’s website. If you want to know more about insurances, there are loads of information available online. Our parents did not have such privileges in the olden days. Technology has indeed changed the way we invest. So I would say there are no good or bad investors, just lazy or hardworking ones.

The recent YouTube clip by Stephanie Koh on why she is not proud to be a Singaporean have caused a national stir and made many Singaporeans frowned at the remarks made by her. I am not going to dispute her views, but I thought she has chosen a path less taken by many Singaporeans, who prefer the more conventional way of making a living – get a good education and secure a job with good income.

Even though she might not succeed in becoming a successful artiste eventually, at least she gave it a go and tried her best. How many Singaporeans can claim to have done that?  Right here is a girl who knows what she wants in life and dare to fight for her dream, so I am going to give her credit for that. A girl like Stephanie will survive in any countries, be it Singapore, Taiwan or Australia. You can tell that she is street smart, independent and know her purpose in life. On the other hand, I have seen many young Singaporeans muddle through life and don’t even know what they want to achieve in life. Unlike Stephanie, many Singaporeans don’t take ownership of their lives, choosing to blame their parents for every single failure in their lives. How can you be rich in Singapore if you don’t make the extra effort to make a difference to your life?

To be rich in Singapore, you need to have vision, strategy and character. You must have a road-map, or at least an idea of what you want to do to be considered a successful investor. Investing in stocks alone will not make you rich. You need to develop defense mechanisms against disruptive events in your life, such as loss of job, illness, accidents or even investment losses. Sometimes these are unforeseen events beyond your control but you are obligated to help out financially (e.g. hospital bills for your loved ones). So don’t be naive and dismiss the importance of making contingency plans for unforeseen expenses.

Similar to a football team, you cannot just have “defenders” and a “goalkeeper”. To win the game, you must also have “strikers” and “midfielders” to score goals. Your career, investments and passive incomes will be your sources of incomes to build your wealth. Your opponents may be strong, but if you selected the right players and coupled with the right strategy, winning the game will be a piece of cake. But of course, to be a successful football manager is not easy, because it takes character and loads of experience. Start building your investment blocks and enjoy the process.

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Magically yours,

SG Wealth Builder