It’s been close to seven years since I officially started investing so I thought I’d take some time to look back on my portfolio. The purpose of this is not to brag but as a form of encouragement to those who are hesitant about getting started in investing because they are wondering if it will pay off or; for those struggling with money issues, my story may hopefully give you a ray of hope that even in Singapore, with our crazy housing prices and car prices, there is possibility of more than just “getting by”.

I’m not going to disclose exactly how much I have now but let’s just say that it is in the six-figure range. Just for the record, my portfolio excludes CPF monies (which is now nearly zero thanks to purchase of a home), my personal spending account and my joint account with my wife for which the monies are meant for household expenses. My wife and I could pay off our mortgage entirely but that’s another story for another time.

Based on my records…

I started in August of 2007 with just $6000 and I only owned 1 counter (which is still in my portfolio) which took up almost 25% of my portfolio at that time . Also, I didn’t own another stock until some 3 months later and the next purchase came another 2 months after the second purchase. Anyone with any semblance of memory will remember that third quarter of 2007 was pretty much the worst time to start investing as the Global Financial Crisis basically started taking hold around that period and everything pretty much went downhill up till March 2009.

On hindsight, I might have seemed kind of daring to have up to 25% of my portfolio in just one stock but if you look at it from a portfolio perspective, I was actually pretty cautious because I was only 25% in equities and 75% in cash. Even after the third purchase, I was only 50% in equities and 50% in cash.

Another amazing thing that I did was that I saved 10% of my income (just a paltry 60 bucks when I started) and that habit of constantly adding to my portfolio has continued up till now. If there’s one thing anyone should teach their kids, it’s this.

Sadly, my record keeping was terrible (what can I say, I was new to this and not very savvy) up until the beginning of 2011 where I started to evaluate my portfolio on a NAV basis so as to remove the effects of any new additions of cash. In other words, I started measuring my true investment performance.

I’m also pretty fortunate that I’m not a risk taker by nature so I think I found the right philosophy in value investing which made me look at the stocks of companies that deliver free cash flow, pay a decent dividend and are relatively debt-free. And of course, I only buy them when they are on offer at a good price (which is to say, not very often). Whoever it was from the NUS business school that invited Robert P. Miles to give a talk on his book, you have my thanks because that was my introduction to the world of investing.

What also helps is to find people much much smarter than you are. Value Buddies is my favourite resource for the local (Singapore) markets. Some of the guys on the forum are so amazing at analysing a company that I can’t believe that most of them do this on a part-time basis. To learn about the basics from ground zero, there are a few good resources out there. I highly recommend Investing for Beginners,  Investment Moats and Joshua Kennon’s blog (he’s the contributor to the Investing for Beginners site). I think David Kuo on Motley Fool Singapore does a decent job too. But beware, there are some hack jobs out there too that pass off for experts when they really are as clueless as you and I.

I’ve been tempted to make quick gains too. I tried trading a stock once and it didn’t work out because a) trading doesn’t suit my temperament and b) the more I read about the rules behind technical analysis, the more I think it’s much harder work than investing. I’ve never gone back to trading a stock since and my performance has been just fine. Some people are born traders while others are not. I’m in the latter camp.

I don’t know where the market will go from here- despite the recent rally, the STI looks reasonably cheap based on my favourite measure- the PE10 and retail participation has been dwindling in the local market which basically says stocks in Singapore are unloved at the moment. However, the S&P 500 has been touching new highs and while valuations there are certainly not in mania mode (with possible exception of tech stocks), they are certainly not cheap enough to provide a level of comfort.

In sum, these are the lessons I’ve learnt over seven years:

1) It’s never too young or having too little to start. In fact, the younger the better.

2) Stay invested (for the most part) to let compounding do its magic.

3) Buy quality and buy cheap (if possible). NEVER buy it expensive.

4) There’s never a bad time to start. In fact, starting in 2007 with so little may have been a good thing.

5) If you are not so good at investing (like I am), you’ll still get spectacular results* if you have a good plan (regular additions to the portfolio, reinvesting dividends etc.).

6) Find your style in investing that works for you. Some people may go really far down into the details like analysing exactly what assets are there on the balance sheet and how much they are worth while others, like me, use screens to help filter out more companies before going through the financial statements.**


*I did a quick calculation for the period that I started using NAV as a measure and my investment performance is just average (roughly 10-12% per annum) but once I included the fact that I saved money regularly, the portfolio return was more than legendary. Of course, the effect of regular savings on the portfolio will taper off eventually as regular savings growth is limited by the increase in one’s wages and for most people, wage growth is probably ho-hum.

**This is important because you don’t want to find yourself having not much of a life because of your dedication to investing. While it’s important to know the company inside out, we have to face the facts that as an investor with limited resources and material, we will always know less than the people sitting in the boardroom, making the decisions. Therefore, we need to ask ourselves if drilling down into the details is going to be worth the extra alpha (if any).