It never too late to start ...

CP TEH

Publish date: Tue, 25 Jun 2013, 11:29 PM

http://www.asiaone.com/Business/My+Money/Opinion/Story/A1Story20100405-208511.html

Late starter making up for lost time By Lorna Tan

For years, Mr John Goh's idea of financial planning was to squirrel his teacher's salary into a low-interest bank account. A science graduate from the National University of Singapore, he has been a secondary school chemistry teacher for the past 17 years.

But he has since become a savvy investor too. He said he regretted not knowing how to make his money grow till he was in his mid-30s.

'No one taught me to manage my finances and to invest. My earnings went into my savings account which was paying a miserable interest,' said Mr Goh, 41.

Then his friends showed him how to open a trading account to trade in stocks about six years ago. Since then, he has voraciously read many books on the subject. Author Robert Kiyosaki's Rich Dad, Poor Dad had a particular impact on him.

Inspired, he decided not to depend solely on his job to provide an income, but to achieve different streams of passive income by making his money work harder for him.

His current investment portfolio comprises properties, stocks and land banking.

Taking a leaf from the book of Mr Kiyosaki, who made his millions from real estate, Mr Goh sold his landed property last year and bought three properties, two of which are investment properties for renting out.

He says his is a 'disciplined approach' when property hunting. He looks for homes near public transport like the MRT stations and bus stops that will offer a positive cash flow and that will provide healthy rentals. He will view about 30 units in a chosen area before making an offer.

His wife Jennifer Tan, 39, is also a teacher and they have a son, Joshua, 12.

Q: Are you a spender or saver?

A : I am more of a saver than a spender. I save 30 per cent to 40 per cent of my salary.

TEH : I am not a spender ... but somehow, I do find it difficult to safe up to 30% of my income. If I am talking merely from my salary(main income), I do save more than 30% of my salary ... and I hope I could save up to 80% of my income by next year. My salary is part of my income.

Q: How much do you charge to your credit cards every month?

A: I usually do not charge more than $2,000 a month. A credit card is a double-edged sword. If you do not pay your credit on time, the penalty fee is going to hurt you badly. I have three cards but use only one actively for easy monitoring of expenses. Almost all my bills are on Giro so I do not waste time on the chore of bill payment, and the bills are paid promptly too. I withdraw $1,000 from the ATM twice a month.

TEH : I do not charge more than RM2000 in a month either. I have cleared my credit-card balances and my wife is helping me to monitor the transactions, payment due-dates and such. Yes, I do use credit-card for monitoring expenses purposes ... example, buying items in supermarkets, dinners at some restaurants, petrol ... I need to monitor my expenses in greater details!! I seldom withdraw from ATM and most of the transactions(bills) are on Giro too.

Q: What financial planning have you done for yourself?

Almost half of my money is invested in properties which I believe is the best way to grow my money. Singapore is, after all, a small island with limited land. I also diversify so as to spread out my risks. It is not good to put all my eggs in one basket. About 30 per cent of my money is in unit trusts and insurance. I like unit trusts that have achieved a consistently good performance for the last three years with more than 10 per cent annual returns. I have four whole life policies, three investment-linked insurance plans and one endowment policy. I'm covered by about $1 million on my life and I have a $200,000 critical illness cover. I pay about $12,000 in annual premiums. About 10 per cent of my money is in stocks. I prefer blue chips that give high dividends; some stocks I have are StarHub, Singapore Press Holdings, SingPost and OCBC preference shares. I select stocks with low valuations and high dividends. About 5 per cent is in land banking and the rest is in cash. My target rate of return for my portfolio is 7 per cent.

TEH : I will be hoping to get a good bargain to buy another property in a year or two. Location is everything ... I have a beach-apartment, abandoned ... and not in good conditions!! It is empty, so a liabilities to me monthly ... so, I hope to clear off the loan by year end. It is just a small apartment, for ... I wish to go back to Sabah, living by the beach after retirement. It is not possible to sell the place as the prices have dropped 50%. Yeah ... not all property appreciate in values ... so, I am learning to pick a good one in future. The current one I am staying has appreciated about 40% in past two years.

I will never buy unit-trust, tho I do have investment-linked insurance policy. Well, I m only paying about RM5k annually for my annual insurance premium. Perhaps, I should consider to increase that when I am not so financially tight? Yes ... as most of my money is in stock-market, I think I need to shift into longer time frame investment(like buying Maybank) with good dividend yield and growth, while put some funds for riskier instruments. I m re-balancing my funds again ... as July is coming, time to re-structure my portfolios. Cash is placed in ASB, which giving up to 7% per annum, compounding it for past 7 years now, and recently opened a second-line(took a loan from Maybank at less 5%, and to placed in ASB ... earning 2% 'free')

Q: Moneywise, what were your growing-up years like?

A: My mother was a housewife and my father was an odd-job labourer. I am an only child because my parents were very poor and could not afford to raise another child. They paid $40 a month to rent a room in an old shophouse next to the current Bugis MRT station. But my teenage years saw things improving. My parents bought a three-room HDB flat at Rochor Centre, and they are still living there. Since childhood, I have learnt that money is not easy to earn and I must cherish what I have.

TEH : My parents are hawkers ... earning not enough to support us kids(6 of us). We were very poor ... and luckily my aunts 'adopted' us since we were young. Yeah ... since young, money is hard to come by ... and I always feel I m the unlucky ones. Never really learn to earn, save, invest ... till I was married and total broke(in debts too). I changed my whole financial mindset ... to see me through difficult times, and to make lives better for my kids. They are my motivators!!

Q: How did you get interested in investing?

A: I was in my mid-30s. My friends showed me how to open a trading account to buy stocks. I then started to educate myself on investing, and read many books on it. The books that had a great impact on me included Rich Dad, Poor Dad by Robert Kiyosaki; The ABCs Of Real Estate Investing by Ken McElroy; Automatic Millionaire and Start Late, Finish Rich by David Bach; and Managing Your Personal Finance by Dennis Ng.

TEH : I started to open a trading account when I was 41. I was totally blind and with zero-knowledge. Today, I am still a novice(advance level?) and learning to trade-invest better. Yes, I read many books and also attended many many talks. Knowing the 'right' circle of people could help a lot too.

Q: What property do you own?

I got married in 1996 and bought my first home, a three-room HDB flat at Rochor Centre for $250,000. It made sense as it was very near my parents' flat and they helped to take care of my son. I 'lost' $50,000 when I sold my flat in 2002 for $200,000. But I took the opportunity to upgrade and bought a one-storey, 2,000 sq ft freehold terrace house in Sembawang Hills estate at a low price of $820,000. In April last year, I applied what I learnt about property investments and leveraging and sold my terrace house for $965,000 to free up cash. I then bought three houses. One was a 21/2-storey, 2,900 sq ft corner terrace in Sembawang Hills estate, bought in April for $1.43 million. The current market value is about $2.2 million. I bought, also last year, in September, a 2,662 sq ft penthouse unit at Nuovo in Yio Chu Kang for $1.18 million. It is being rented out at $4,600 monthly. Finally, in January this year, I bought a three-storey, 3,200 sq ft terrace house at Century Woods in Marsiling for $1.14 million. It is next to the Singapore American School and should fetch a rental of at least $5,500 when construction is completed. I made sure that my home loans are on fixed rates and my investment properties must be able to attract tenants easily, to generate a positive cash flow. This simply means that the rental income that I get is more than enough to pay the bank loan so there is sufficient buffer.

Q: What's the most extravagant thing you have bought?

A: It was the 10-day family vacation trip to Canada two years ago that cost me $10,000.

TEH : I have not earn enough to give my family a RM10k trip, but I do make local-trips such as to Penang. I have not bought anything much at all ... perhaps the most 'expensive' thing I spent on is this pc I am using now, my work-station. It costed me about RM5k.

Q: What's your retirement plan?

A: I will not retire fully. Having too much free time is not a good idea. When I have a monthly cash flow of $5,000 from my rental income, dividends and interest from my investments, I will consider semi-retirement in my 50s. I will become a financial literacy educator or property agent. I'll also be more active in church ministry. Hopefully, I will have grandchildren to look after as I like to spend time with children.

TEH : I will like to give market-talks ... giving trading-educations(for free!!). i will continue to blog(I know I will) .. read more non-financial books ... and perhaps, do some charity work(forming groups etc etc). I know I will not sit-down still waiting for days passing me by ...

Q: Home is now...

A: The corner terrace in Sembawang Hills estate.

TEH : A 930sq feet apartment.

Q: I drive...

A: A silver Nissan Latio.

TEH : A 1.3 Proton Saga(3 years old)

This article was first published in The Straits Times.

This article motivates me to look into my own personal financial situation.

TEH

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