[Investing Made Easy] The beginning of my investing journey in Singapore, back in 2016
Beware: "These stunts were performed by a trained professional, don't try this at home!"
Before we start
In my last post, I explained how to make easy money for people living and working in Singapore, up to S$200 per month.
I’m using a combination of free financial services provided to us by financial institutions. I’m simply making use of all these free tools, at our disposal anytime, anywhere.
As a rough guideline, you’ll be able to make:
S$50 / month if your salary is S$5,000
S$100 / month if your salary is S$10,000
S$150 / month if your salary is S$15,000
S$200 / month if your salary is S$20,000
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Now, Back to the Main Topic!
How did I kick off my investing journey in Singapore, 5 years ago?
Well, it was… Messy ! Not chaotic, but I learned investing the hard way: trying one thing, making mistakes, trying something else, making different mistakes. I thought it would never stop!
But something I was really happy about: I would never make the same mistake twice.
What motivated me to start investing in Singapore?
In order to qualify for the retirement benefits in France, you must contribute to pension for 42 years, or if I put it a different way, 168 quarters.
In my situation, when I left France for Singapore back in 2014, I only accumulated a shy figure of 12 quarters, i.e. 3 years.
Meaning, if I want to qualify for the full retirement benefits in France, I need to work for 39 more years, from the moment I get back to work in France.
But looking at the demographical unbalance, i.e. aging population and young professionals leaving France for better opportunities abroad, I believe the requirement of 42 years will get stretched out to 43, then 44 years, and so on and so forth.
In 2016, I asked myself so many times “If I go back to France now, I would have to work at least until 66 years old. And how much will I get 39 years from now?” No one knows.
Since I had (And still have) no plan to get back to France that soon, there was only one solution: Build My Own Nest Egg in order for me to Achieve True Financial Freedom!
But How?
As you may expect, answering this question is not that simple. But I will guide you the best I can, in order for you to join me on the way to Financial Freedom.
Actually, by giving me nothing*, Singapore gave me the Best Gift Ever : the capability for me to become wealthy over the long run.
*I’m not a PR, so got no CPF
“Why did you decide to invest from Singapore instead of France?”
Ah! Finally an easy question, I like that! Guess what: Tax!
Singapore has a Dream Tax System: there is no tax payable on
Dividends/interests
Capital gains/profits
In France, to make it simple, there is 30% tax payable for both of the above (Called “PFU”)
“What was the very first instrument you invested in?”
Another interesting question! As a French, we are being told our whole life that:
Investing in the Stock Market is bad and super dangerous
“Don’t do it! Are you crazy or what? Investing in the Stock Market?! To lose all your hard-earned money?!”
Actually, I kind of get it now when you have a look at the French stock, called “CAC40”.
It is still down 25% vs 2000
But also, still down 20% vs 2008
But isn’t there other countries out there?
You should never ever invest in risky investments: “In bonds we trust”
“Ah le bon fonds euros qui va bien”
“It yields 1% p.a. but I’m my capital is guaranteed? Let’s go for that option!”
“If you are willing to take some risks, there is only one product that is made for you. That will make you a landlord, or sort of one, owning paper real estate”
Yes, you got it: REIT (“SCPI” for the French readers. Actually, technically it is not even “SCPI”, but “SIIC” for Sociétés d'Investissement Immobilier Cotées, thanks to my best mathematician once again)
So guess what was the very first product I invested in? S-REIT, aka Singapore REIT.
“But which platforms did you use to do so?”
I won’t list down all the different trading/brokerage platforms available in Singapore, because this is not the aim of my newsletters. There are many websites already doing so. On top of that:
Singapore being a country mainly providing financial services, this is really the jungle out here. I would take days to list them all down! But to give you rough yet accurate figures, there are a total of 1,000 companies in Singapore providing financial services:
Financial Advisory: around 600
Insurance: around 400
I want to stand out from all the other websites whose goal is simply to provide a list of instruments/tools/platforms that they never ever tested themselves. How to know what is good or bad if you never tried it yourself?
I want to share with you my thought process, and how I ended where I am today: on the way to Financial Freedom
I don’t want to spend time on something that is not worth it. I will explain in another newsletter what I mean by that… Teaser!
But I’m willing to share with you briefly what I chose to start with, and why.
It all started with… POEMS!
Why?
I was looking for the platform having the lowest trading fees back then.
I didn’t care using CDP SGX or POEMS’ own custodian in order to store my shares, as long as the trading fees were the lowest
What did I buy and why?
I wanted to buy a fund tracking the S-REIT index, because I wanted to diversify, yet not buy the 30 different individual REITs stocks 1 by 1. It would have been too costly, in term of time and money!
So I bought Phillip Singapore Real Estate Income Fund, the only REITs funds available back then.
But after a few months, the S-REITS returns were not that great, and I got an itch
I wanted to try something riskier than REIT
“What is happening to me?!”
“What’s wrong with me, am I getting crazy? Ain’t I thinking like a French anymore?”
So I ended up opening another platform: DBS Vickers & a CDP SGX account
Why?
I wanted to buy Blue Chips, that for some reasons I was not able to trade on POEMS because of some account limitations (Don’t ask me why…)
If you want to know the list of all the Blue Chips in Singapore, there is a dedicated website for that: https://www.sgx.com/securities/stock-screener
What did I buy, when and why?
Singtel, April 2016, influenced by friends and acquaintances: “Singtel is a great company! If you buy that, you’re safe. It will never go down. And they are not only in Singapore so in buying them, even though it is only one single stock, you are diversified. They own few ISPs and Telcos over many countries, such as Thailand (AIS), Australia (Optus), India (Airtel), Philippines (Globe) and even Indonesia (Telkomsel). Trust me, nothing can go wrong.”
Have you had a look at Singtel’s share price a few months down the road after my purchase? Ooooops!
Guess what I did next?
Hello MayBank KE Trade!
Why a third one? Do I like to complicate things?
Not at all, but I found out (better late than never) that DBS Vickers had crazy high trading fees, so I was looking at the trading platform having the lowest trading fees
And at that time, it was MayBank KE Trade. Back to storing shares in its own Custodian Account.
What did I buy?
Through MayBank, I only had access to Blue Chips traded on the SGX, so I started to buy individual stocks. Since I got disappointed by Singtel, I went back into buying REITs, but this time, it was individual ones: Ascendas & CapitaLand Mall Trust
Annnnd I got fooled once again with what I thought were wise advice. And I bought OCBC shares: “OCBC is too big to fail! Singapore financial system is way too powerful and got a strategic location across Asia. You should buy! I did and I made so much money” are the kind of things I heard and somehow believed…
“And this is how it got really messy… My investments were not going anywhere”
In retrospect, what happened and why?
I had no plan, no strategy: I was shooting everywhere
I didn’t assess any appropriate level of risk
I didn’t diversify: I was only investing in the Singapore economy, which is way too small
I was trying to time the market and tried to guess short-term market directions
This is just impossible, no one can ace that
My trading costs were skyrocketing
I had to maintain, monitor and manage 3 platforms: it was way too complicated and very difficult to keep a proper track record
Again, fees were too high
These platforms were (and still are) shitty and not user-friendly
It is way too time-consuming to have a daily look at all your stocks. It can easily take hours each day when you start trading a lot. On top of that, you’ve got a full time job, so how can you perform well at work if you are - trying to - take care of your finances.
My advise?
"These stunts were performed by a trained professional (aka me), don't try this at home!"
Let me be upfront: if you’re not a trader, working in finance, or in a hedge fund, forget about being successful at stock picking. You will fail. That’s the only thing you’ll be able to do.
“You’re wrong, I am not from a finance background but I am super successful at stock picking, I made +30% yesterday!”
That’s exactly the issue:
You believe you are successful at timing the market and stocks picking but actually you are not.
You made +30% yesterday, this is another issue: your growth is not constant. My questions are simple:
How many times did you try before making this hit?
How much did you lose before making this hit?
How much did you “invest” in this hit?
I’m pretty sure you know the answer of all the above questions… And they are not great.
I could also ask you “Where is your track record?”, but I’ve been hearing too many people not having one. I always got the below answers:
“Hmmm I prefer not showing it man…” Is it too mediocre? Probably
“Well, I've got too many apps that I use to invest, it's quite tough to maintain a proper track record to be honest" Hmmmm... Okay. Excuse not accepted!
Personally, I prefer having S$100K invested at a 10% yearly rate, rather than loosing S$10K before making a hit of +30% overnight, with S$1K invested…
You will never ever hear me say “I made +30% yesterday” because I’m not looking to make a hit, I’m in the stock market for the long run.
In which category do you stand?
“But how did you do at the end? Did you make or lose money?”
All the above happened in a span of 2 years, from early 2016 to end 2017.
One thing I’m happy about? I didn’t lose money. Well, that also means that I didn’t make money but hey, do you know Warren Buffett’s most famous saying?
"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."
Sure, I didn’t make money, but from that moment onwards, I was really determined to make things right. And I knew that “When there is a will, there is a way!”
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*Disclaimer: “Investing Mad(e) Easy” newsletter is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. More info here*