I didn’t always like my accounting courses. In fact, business combination in fifth year literally caused me nightmares. My blockmates slash former dormmates can attest to that. But there was one subject I felt I was particularly good at – accounting for investments. It was part of the BA 114 series in third year. I enjoyed it. I thrived at populating bond amortization schedules including accounting for premiums and discounts. And we didn’t even use Excel then! If that was any indication of where I’d end up years later, well thank goodness I did well. At the very least, that gives me a little bit of confidence that I know what I’m doing.
Fast forward to today, I’ve been working in the funds industry for over eight years. It’s been mostly a love-hate relationship but I’ve come to appreciate a fundamental lesson out of it. If you are not investing your money, you are losing money. Inflation rate will always outpace your savings account’s annual interest rate.
I didn’t always feel so strongly about investing. When I started earning from my entry-level job, I was just happy to be able to buy what I want. While my grandparents made sure I didn’t grow up wanting, they didn’t spoil me either. So true to Maslow’s hierarchy of needs theory, I had to meet my physiological needs first and foremost. The realization of how important investing is only came to me at the end of my stint in Hong Kong about three years ago. I had a mandatory pension contribution that my then employer matched. I was free to direct my pension however I wished. Without putting much thought to it, I decided to allocate 50% to a fund tracking the Hang Seng Index, an index comprising the 50 largest companies listed in the Hong Kong Stock Exhange, and the other 50% to a fund tracking one of the Chinese indices. Every month for two years, my contribution was allocated that way. By the time I withdrew my fund, I was surprised to learn that I had an average net return of roughly 20%. But I wasn’t following the market then, if I had, it wouldn’t really have been so surprising.
It was quite riveting to see money you’ve worked hard for not go to waste. Since then, investing just became part of my routine. Even if it’s not for much. In hindsight, it’s also probably one of the main factors why I’ve adopted certain minimalist principles. I now always think twice about purchasing and consuming things because investing the money might pay off better in the long-run. It could pay for things and experiences that will truly bring me joy.
We don’t often talk about things like financial literacy because maybe we feel it’s taboo, or maybe some of us are just trying to make ends meet. But for those of us whose life circumstances allow us to make comfortable money decisions, we certainly should not shy away from asking and learning. At the height of global lockdowns last year, I made a convert out of my best friend Dann. We now have exciting conversations about standing our ground while Bitcoin prices continue to shock our faint hearts. “Hawak kamay!” we said. We had a bad case of FOMO few weeks ago when crypto prices were skyrocketing so we dove in. I think we’re still barely out of the red. Dann decided he’d rather stick to ETFs and mutual funds, I concur.
I realize I had mainly talked about investing in the stock market. But investing comes in many other forms. I’m also a proponent of investing in life insurance as well as having a good health insurance coverage. There’s nothing more disheartening than seeing your savings depleted because of unplanned health emergencies. Investing in real estate was something that I’ve always felt unnecessary considering I didn’t really know where I’d end up but my grandparents have always coaxed us into buying land, even just a tiny bit. I didn’t see the wisdom to it then, but with property prices continuing to rise, it now seems unwise to not jump at an opportunity to buy should there be one. Diversification is key. Don’t put your eggs in one basket as the popular saying goes.
At the beginning of last year, I set a goal to reach a certain amount in net assets at the end of the same year. Suffice it so say, the pandemic helped catapult my net assets to reach my intended goal. I wasn’t spending much. My humble investment portfolio comprising about 70% of my net assets is up 11% life-to-date. Some investments that I’ve held for quite some time have generated hefty returns, others are still gaining steam. My heavy exposure is in Asian, particularly China, and US markets. This week was a bad week for global stocks but I’m in for the long-term so I don’t normally fret.
My life is somewhat nomadic. I have moved a lot. In a way, my choice not to settle in any one place (even though I see myself in Singapore medium to long-term barring any change in circumstance) have led me to recognize alternative life choices that suit me. I don’t like being tied to unnecessary financial obligations. Ergo no house with a mortgage, no car and no kids. Hence majority of my net assets are highly liquid. I want to travel long-term some time in the future. I want to semi-retire in 10 to 15 years. My financial goals are aligned to the kind of life I’m gearing towards. I guess it’s not very conventional. But I never have been! Je suis nomade!