I grew up without much 'financial education'. Other than the need to save, I learnt nothing else when young. Living hand to mouth, I guess things like investing etc did not mean much to my parents. So what to teach to us kids?
But growing up poor made me want to know how people 'make money' and get rich.
When I was accepted to study computer science as major in university, I was required to pick one other major and a minor subject. I picked maths as the other major and wanted economics as minor because of that desire to know how the financial world works. But they refused to let me take up economics. The reason being I did not do economics while in A levels. I appealed personally to the vice-dean of the Science faculty and said that my lack of A level econs should not matter if I was serious about it and willing to work to catch up with others who had head start. But they still refused. They were just 'following the book' and in those days their 'book' was very straight forward.
Years later, the local education system got more flexible after the authorities realised that their universities were not producing the kind of people they expected like young people willing to take risks. I guess if the ones doing the teaching were not even willing to take a risk to let a young man learn something close to his heart, then they could not expect better from the ones they were supposed to educate.
Despite that disappointment, things worked to my favour when I started working in Andersen Consulting. They offered me a job at the start of my 3rd year in uni so I went about my final year knowing a job was waiting for me. AC was considered one of the 'high profile' employers for computer science students then. So I was pleasantly surprised that I was one of only 2 that they selected that year because my grades were not great (only 'B' for Comp Sc) and I was sure many other fellow students had better grades than me. After that I was more relieved when I found that many of my fellow students could not get jobs for 1 to 2 years because of the financial crisis of mid 80s.
[Many years later I figured out why I may have been selected. My final interview was with a new American partner by the name of David Bushman. As part of the interview he had asked me about my parents and family background. I think he favoured me partly out of desire to help me out and for a reason I found out a few years later from one of the local partners. Apparently, AC had studied the profile of their partners and found that they tended to come from middle to lower class background. They reasoned that their less well to do upbringing made them more 'hungry' for success and willing to work harder.
One of my first 'major' assignment was on a project for a small dutch bank (NMB Bank) and that got me really excited. Finally, I got a chance to find out how the money world works! After that lucky break, I was considered a part of the 'banking industry team' and as a result all my subsequent assignments were in the banking industry.
In addition to the good working experience that going from one project to another gives (instead of doing the same thing over and over again like in other companies), AC also had very good staff training programs and materials that I benefited from.]
When I was jobless at 44 and told my family that although I had stopped working I could live off my investments, one of my sisters told me something that I had long forgotten. She said 'do you remember that when young you used to say that you want to be able to retire when you are 40?' We laughed as I said 'then I guess I missed it by a few years'
I started to invest in a significant way only in 2001 when the bank I was working in was in the process of merging with 2 others and many staff were retrenched or expecting retrenchment because some positions had 3 incumbents! The other reason was before that I did not have much savings because I was paying for new house and car in Singapore and some other bad investments in Malaysia. But the main push was my pending retrenchment and the desire to make sure I maximise my savings.
But my awareness of the need for passive income started when I was about 30 when a financially savvy AC colleague who had an MBA said that we could not rely on the salaries our company was paying us then and he would be looking for a new job.
[The background to that was this: One day, both of us interviewed a woman candidate for software sales manager role in AC. Soon after the lunch interview, that resourceful colleague Reuben managed to find out how much the company was about to pay that 'sales woman'. Disgruntled he came to me and said 'did you know how much they will be paying her? More than us. And that is for one who will be hee hee hah hahing with clients while we will be responsible for delivery. I am quitting!' I thought he had a point. True to his words, Reuben left AC a few months after that. Soon after, I was approached by a head hunter for a job in a bank and I took it]
In 2001, the first internet fund or unit trust distribution company in Singapore known as 'FinatiQ' started operation.
The good thing about FinatiQ was they had information on historical performance of the various funds online including charting features which I could use to compare performance of similar funds by different managers over different time horizons (I used 2 and 5 years as benchmark). For e.g. I could compare the different funds investing in India over 2 and 5 years. Thanks to the internet, I could do my research and buy the funds I wanted from office.
The other thing that attracted me was since everything was online and their clients were self-helping themselves, FinatiQ's commission rates were half the usual rates (usual rate is 5% but FinatiQ charged 2.5%). Better still, they were promoting their business by offering 1% rebates in the form of Robinson Vouchers.
In 2001, I had about $200K of cash savings. On top of that, I had some CPF money (CPF allow people to use a portion of CPF funds to buy approved shares and unit trusts) and was expecting a package from my pending retrenchment.
By July 2001, I had used all my cash savings, CPF and my retrenchment money to buy unit trusts investing in China, India and Asia Pacific, and holding on to a few thousand dollars worth of Robinson vouchers!
[There was no way I could use up all those Robinson vouchers. So one day I went to Robinson Orchard and approached other shoppers to exchange them for cash at a discount of 5%. That was an eye opening experience. Some people just dare not exchange despite me assuring them that those vouchers were real and I could stay with them until the cashiers accepted them but they still refused. I guess risk free also some people would not take. An Indian woman wanted more discount, so I gave her 10% off.]
The reason why I bought only China, India and Asia Pacific funds were because I found out that one of the causes of the 1997 Financial Crisis was that investment money had gone out of the 'Asian Tigers' and into those 2 countries! In addition, I also had the view that the US Dollar was a 'bluff' and would fall in value over time (thus no US funds).
However, soon after that Sept 11 struck and the value of my funds dropped by 15% or so. That got me worried for a while.
Fortunately, I was proven right a few years later. By the time I sold them out between Jan and Oct 2007 (just before the crash of 2008) the value of those funds had more than doubled.
2 things triggered me to start selling: the prices of most Asian shares were ridiculously high and Alan Greenspan's 'retirement' in end 2006.
In addition, I started shorting some HK shares in the second half of 2007 and learnt another bitter lesson. With the money from sale of my funds, I used some to short some HK shares using CFDs. In October, the market crashed and I had a book gain of about $200k. But instead of taking those profits I shorted some more! A few weeks after that, the market re-bounced above the previous peak and my holdings went into negative. Out of fear, I decided to 'cut loss' and incurred $200k loss (if I had held on a few months longer I would have made profit eventually when the market collapsed over the whole of 2008 but that is the problem with fear. I was scared stiff of further losses and decided to close position).
Lesson learnt: do not be greedy and never do short selling. If do that and price drop in your favour, take profit and do NOT short some more (at lower price)!
