Last Saturday, I was privileged to be speaking on stage with veteran bloggers.
There’s so much wonderful insights that reminded me of why and how I invest. What struck me was investing is also about making forging new friendships, keep on learning and of course, and lastly…
..making sure we grow our money safely and profitably.
Here are six timeless lessons I’ve learnt after speaking on stage at MooFest 2023…
1. There’s no overnight success
“Investing is a marathon.” Dawn Cher, SG Budget Babe said, “…you want to be net positive with your returns.”
My take is, investing is a long journey, no matter how fast or slow we take, we make sure to keep going, and finish the race. That means, investing is all about the long term — there’s no overnight success.
What’s more, with our longer lifespan, our investments are also probably the only asset that could last us till we die.
With a long runway, we can be patient growing our capital, instead of looking for the next fancy investment. We give ourselves permission not to be so hard on ourselves if we make investing mistakes. What matters is focusing on our OWN financial goals — investing is so personal.
Sure… others may come ahead of us and make even higher returns. But we don’t have to follow them and risk falling into the trap of the “quick rich game”.
There’s no perfect way to invest, only a progressive way to invest over the long term.
That brings me to my next lesson…
2. Pick a suitable investing strategy
When I started investing, I tried many complex “hedge fund strategies” — some worked, some didn’t. I could do it because I was single and had more time for myself.
Today, I’m a dad with two kids. My time is spent enjoying with my family. I have to be efficient with my investing strategy that suits my lifestyle.
I used to invest heavily in “restructuring”, “spin-offs” and arbitrages in my earlier investing journey.
I now invest things that don’t require pouring into thick stacks of legal documents and prospectuses. Instead, I look for investments that are easy to understand – dividend dominators, growth compounders, durable blue-chips and stocks that are simply just unpopular by the market.
This way, I spend less time monitoring daily share prices and focus on what I also love doing – time with my family, writing my blog, finding NEW stock ideas and radio.
Like what Timothy Ho, co-founder of DollarsAndSense.sg said — every investor has their own style of investing. We need to know what stocks and strategy that best suits our own lifestyle investment objectives, goals and needs.
Then we know how to best allocate our money and time to building a portfolio.
Like what my wife says… life should be exciting, investing should be boring.
3. The safest way to invest — diversification
One of the biggest mistakes I made last time was investing tens of thousands of dollars on a US stock. Despite management’s sweet talk about a turnaround at the corner, it never happened.
The stock continued to plunge over 60%…
.. and heck, lost a lot of money.
Since then, I learnt a painful lesson – no matter how much research I do, no matter how convicted I am, I can still be wrong with my stock ideas.
Thus, the safest way, in my opinion, is diversify across different stock sectors and countries. Perhaps, as our wealth grows bigger and bigger, it also makes sense to spread your money across different asset classes – like bonds.
4. Knowledge is really power
Not all Singapore REITs are the same. That’s what I learnt from Lim Jun Yuan, writer of The Singaporean Investor.
While the entire Singapore REIT sector hasn’t been popular with higher interest rates, this makes it a perfect opportunity to buy Singapore REITs today — and that’s only by having a deep working knowledge of how to analyze REITs.
For instance, by wearing the lens of financial analysis, we can pick Singapore REIT shares that have been down in the dumps but these high-quality REITs have such strong financial health — high interest coverage, manageable gearing ratio and and don’t have much debt to repay over the next 2-3 years.
Having a strong working knowledge allows us to better wade through the market for stock bargains.
5. No one takes care of your money better, other than yourself
When I was a young analyst, I remembered following an RM (or banker), for a lunch meeting to help her client review her portfolio.
I flipped through the portfolio, and I was surprised at what I saw.
The portfolio held so many junk bonds that have $0 value — or simply defaulted. No wonder the client’s face was so black when we arrived at the restaurant.
But when I looked closer, I realized these bonds already had many problems — negative free cash flow year after year, heavily in debt and little cash on their balance sheet. It doesn’t take much effort to look through the financial data.
The client didn’t know better and listened to the wrong advice many times.
Ultimately, I learnt no one takes care of your money better, other than yourself.
6. Keep investing simple
Investing doesn’t have to complex.
It doesn’t mean reading complicated “technical charts”, keeping up with the market news every day, or following ALL the stocks in the world. Actually, we don’t have to follow the latest “AI craze”, or have an opinion about Tesla/Elon Musk.
Keep investing simple by looking at what matters for our own investing portfolio.
For me, I look at durable businesses that can grow over time and pay dividends, businesses run by good management, paying a sensible price and doing nothing about it for the long term.
My final thoughts
As I wrote this post, I learnt there are two types of income – active income (from our salary, business and so on) and passive income (stock portfolio).
Investing is about deploying our active income into our passive income portfolio to boost the accumulation of wealth to meet our financial goals.
Through learning these lessons, I better aligned my investing principles as a full-time investor.
When our active income starts slowing down, we use our passive income to provide for our retirement safely — build a financial safety net and provide the shade for ourselves and our family.
And growing that seed into a tree and a big share takes time…
And no one can build that for better, other than yourself…
Sometimes, investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan