INVESTING was never really at the top of Calvin Yeo's agenda, until he left Singapore for his undergraduate studies in America.
The initial "culture shock" for one who had not given much thought to financial planning previously soon turned into wonderment at the novelty of ideas propagated on campus.
"There were a lot of ideas being thrown up. They were always about how to create value," Mr Yeo said. And apart from academic grades, the "ability to generate ideas" was high on the agenda of students, he explained.
This kicked off his financial awareness which, interestingly, was further fuelled by an interest in motorcycles.
"I saw a big opportunity in motorcycle accessories of a certain brand, and eBay was a good place to start with minimal amount of capital," said Mr Yeo. Importing machine parts from China and storing inventory in his home, he soon grew his initial sum of a few hundred dollars by several fold.
In 2003, he started investing in stocks and fixed income instruments, shifting his focus to real estate and dividend investing for passive income when he returned to Asia in 2008.
He is quick to dispel the notion that real estate investment involves speculation. "For me its about value investing. I invest in assets which are undervalued at a specific point in time."
"Speculators don't care about the value, only whether price can go up in the future," says Mr Yeo. "They are betting on the future, and borrowing a lot more than they are comfortable with."
Last year, he started a blog (investinpassiveincome.com) to share how he acquired over a million dollars in assets before the age of 30. His posts on financial planning through passive income assets now draw a monthly readership of 15,000 to 18,000.
"There are a lot of people who don't really understand anything about financial planning or investing. Most of them are speculators; whether in stocks or property, they all have the speculative mindset," he said. Hence his interest to introduce investment in assets that create passive income - dividends from stocks, interest from bonds, rental from properties.
Beyond that, he aims to educate people on how to plan astutely and set financial goals with the broader perspective of making their money work better.
Q: What kind of financial planning do you have?
A: Now, my asset allocation is about 70 per cent in property, 15 per cent in stocks, 5 per cent in CPF, and about 10 per cent in cash. Actually property initially was 30 per cent, and the majority was stocks and bonds. I calculate asset value as market value minus debt, so when property values shot up tremendously, some more than doubled, they formed the bulk of my assets. I have more than 10 properties in Malaysia and two in Singapore.
Q: Do you spend more or do you save more?
A: I save a lot more. To me, I'd rather have the money growing at 10 to 20 per cent a year, and when I'm all ready to spend the money I don't have any worries. I do take time to relax, and take a holiday no more than once or twice a year. Also, I try to get better quality merchandise, like clothes and shoes that can last me a long time. It's a bit like value investing! You buy assets which retain their value.
Q: How would you describe your risk appetite?
A: I would say conservative to moderate. When the market is up, I'm usually more conservative. When the market is down, I become more moderate to slightly aggressive. To me, it's about timing. When everything is expensive I prefer not to chase, and just enjoy passive income to build up my capital, but when things are cheap I follow Warren Buffet's theory to be greedy when everybody else is fearful.
Q: What has been your best investment so far?
A: I bought two landed houses, each 2,500 square feet, in Mont Kiara, Kuala Lumpur, which is an expatriate area. I bought them in 2009 during the crisis for less than a million ringgit each. Now they have more than doubled in value, to about RM1.8 million (S$734,500) each. With RM200,000, I've made about RM900,000. That's about a 400 to 500 per cent return. I don't think you can get that from any asset cluster other than property.
Q: What has been your worst investment so far?
A: During my university days when I was still trying to figure out my investment strategies, I played around with forex trading, index trading, futures trading. I did technical analysis, trying to time the market to buy and sell shares and currencies within the same day. That didn't turn out very well. I lost a few thousand dollars and that was it. I tried to look at the charts and observe the trends, but really, it's speculative. I'm not a gambler, I can't take that kind of stress - sitting there not knowing whether your price will go up or down.
Q: Any tips to share from your experience in investing?
A: I like income investing. I invest in assets which produce income. I try to buy them when they are cheap, when they are undervalued, so it's like a combination of two strategies. The reason why I choose income producing assets like properties, stocks and bonds is that they produce cash flow. Without having to sell the assets, you continue to make money year after year. And that's important, because you can compound the cash flow over time - a very powerful tool. Over many years, compounded returns can be a lot more than the sum of returns.
Q: What are your long-term investment goals?
A: To continue investing in income producing assets. I'm also running a business to help people plan financially and invest their assets, through private consultation as well as my website. I educate them on investment, or investment management.
Q: Any advice to aspiring young investors?
A: I see many overly ambitious young people, dissatisfied with figures like 10 per cent returns on their investment. You have to be realistic. You're still young, you can still work. As you work, you can slowly build up your capital; if you save $500 a month, after one year you have $6,000, after two years you have $12,000. And through investment it will grow, and when the time is right you buy a property. It's a privilege given by the Singapore government, everybody should make use of it. Start young, start investing in income assets even though it seems very little. Over time, it builds up.
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