You are never too young to start investing, as financial adviser Glen Ho well knows, given that he dipped his toe in the water while still a teenager.
Mr Ho, 27, hit the market the month he turned 18 by opening a brokerage account where he immediately started directing his savings. "While all my peers were studying hard for examinations, I decided I wanted to spend my time on investing," says Mr Ho, who is self-employed in the financial planning industry.
A bachelor, Mr Ho spent the first five years experimenting with stock trading, starting off with about $5,000.
He reaped inconsistent results and then switched to value investing in 2014 with a starting amount of $10,000. Value investing is an investment strategy where investors pick stocks that trade less than their intrinsic value and that the market has undervalued.
"I decided to start on value investing soon after graduating from university. I had gained inspiration through attending several programmes by two teachers, Sean and Kenyuan, who taught me the benefits of value investing. I have learnt a lot from their experience," says Mr Ho, a business administration graduate from the University at Buffalo in the US.
"My mother achieved financial freedom by the age of 48. Everyone around me talked of being financially independent as a dream, but I had a real-life example right in front of me. From a young age, I knew that financial freedom is possible," he adds.
With his mother as a benchmark, Mr Ho is already charting his path towards achieving financial freedom sooner rather than later. "I hope to be on a par, or achieve an even better record than my mother did. I aim to become financially independent by 40."
Worst and best bets
Q What has been your biggest investing mistake?
A My worst mistake was not checking what I was investing in and blindly putting money into unknown hands. I was scammed before I was 18 years old. I had saved US$5,000 with my brother, and we invested in an alternative investment scheme with a promised cash payout of 5 per cent a month.
We had found out about this investment through a friend, and decided to proceed with the investment even though we had no knowledge of it. In the end, we received cash payouts only for the first three to four months.
However, I believe that this experience was a blessing in disguise. It was a good lesson that taught me from a young age that one should always have control of one's own investments.
Q And what has been your best investment move?
A To invest in myself. Till now, I have spent about $20,000 of my savings to attend courses related to investing or personal development.
I believe this is the best form of investment. From these programmes, I can easily gain years or even decades of experience from the mentors.
Q Moneywise, what were your growing-up years like?
A I grew up in a single-parent family. My mother set up her own business selling apparel. In her early days, she abided by the principle of saving, then investing. Since I was young, she had taught me the value of money. My family does not spend money unnecessarily.
Q How did you get interested in investing?
A I saw the importance of investing as my mother had repeatedly said that investing is a must rather than a choice. When I was in secondary school, a book I had read, Rich Dad, Poor Dad by Robert Kiyosaki, also taught me the value of building passive income and got me interested in making investments.
Q Describe your investing strategy.
A I use value investing and options investing strategies. Usually, I hold my options for one month. I hold my stocks for six to nine months.
I believe in investing in the long term. More importantly, investing is a form of passive income. I do not have to spend too much time monitoring the stocks. I spend about 30 minutes on options investing per month.
I prefer value investing and options investing to trading stocks. In value investing, I know exactly what I am buying and I could assess the businesses. This gives me greater confidence and assurance. In trading, however, I only know the prices.
I rarely use technical analysis, except for the support and resistance concept. I frequently use the analytical tools at Morningstar. I also use stocks screeners.
Profit-making consistency is an important metric I use when investing. I invest only in businesses that make profits every year. Also, I always keep a lookout for the price-earnings ratio of the stocks.
Other aspects I take note of will be return on equity and cashflow.
Q What's in your portfolio?
A All of my investments are in stocks and stock options - 90 per cent is in US stocks and stock options, while 10 per cent is in Straits Times Index (STI) exchange- traded funds (ETFs).
I have a collection of six to 10 US stocks worth about US$11,000 (S$15,200).
I spent the last three years consistently investing several hundred dollars in STI ETF. I believe strongly in the potential of STI ETF as its annualised return has always been 6 per cent to 8 per cent a year, and I am certain that its value will continue to increase in the next 15 years, due to factors such as inflation and population growth.
The STI ETF is a basket of stocks of the top 30 largest companies in Singapore. Investing in it is a safe choice for me as it is unlikely the whole market will collapse, compared to a single business.
I also handle three accounts concurrently that are worth about US$140,000 in total. Two of the accounts belong to my family members but are managed by me. Every month, I save about half of my working pay for investments, and pump money every three months into my personal account. The total amount of money in that account has grown from $3,500 to about $25,000.
I bought Banco Macro in November 2016 at an average of US$70, after finding out about it through a stocks screener. It is under an Argentina bank. The profits are growing consistently at a very rapid rate. Its earnings per share (EPS) is very consistent. The EPS grew from 62 cents in 2007 to $9.64 at the end of 2016. By May, I had already earned 25 per cent. I have kept it for more than six months because I believe in its long-term growth.
I have also invested in Planet Payment (PLPM), which is a small company. I have always been interested in Visa and I believe in its long-term growth. I use options to own Visa instead of stocks. My friends introduced me to PLPM after they found out that I invested in Visa. Afterwards, I checked out PLPM's financial outlook and read its reports to find out more about its growth.
That was when I concluded that it has very high growth potential. PLPM works like the gateway of Visa, and a bridge between Visa and merchants. I bought PLPM in the form of stock options on April 14, at S$5.57. In one month, I have already made 7 per cent in profit.
Q What does money mean to you?
A Money is an important asset - I consider myself a super-saver and I will spend only on what I need.
Q What are your immediate investment plans?
A I am always focusing on Visa and ETFs, especially S&P 500.
I will continue to save half of my working pay for investments per month and invest the sum every three months. Additionally, from the US$140,000 in my three accounts, I have already used about US$60,000 in investments.
I will always stay invested, but currently I use less cash. The rest of the cash in my accounts will be kept on standby.
I have been more inclined towards oil stocks these two years. Since oil is under recession, I believe it is a good time to invest.
Q How are you planning for retirement?
A I have not planned for retirement yet, but I have started to plan for financial freedom.
My profits from the stock market are quite consistent.
I make on average about $1,380 per month from investments alone. I aim to make about $4,000 monthly, which will allow my passive income to exceed my expenses.
This will set me in the right direction of becoming financially free by my target age.
Q Home is now...
A I live with my mother and younger brother in a condominium in the east.
Q I drive...
A I don't drive. I prefer the convenience of Uber.