Time really flies…

I realise that lately, I’ve been saying this very often and I suppose that this shows that time doesn’t stop- only we do. Fortunately for me, one of the things that I haven’t stopped doing is investing. By far, this has been the most rewarding activity that I’ve done on a consistent basis- that first love for video games has basically died and recent attempts to revive that interest haven’t been too successful.

Anyhow, I’m about to reach the eight-year mark of my investing journey and while eight years of one’s life isn’t a very long time in the investing world, it’s long enough that you see people come and go. In my case, starting from the Global Financial Crisis (GFC) of ’08/’09 meant that at first, I saw many people leave. And in recent years, I’ve seen many more people, who were only at the tail end of primary school (for overseas readers, this is basically when kids are 11-12) during the GFC, starting to take an interest in the stock market*.

So how I done? These eight years have been fantastic, to say the least. I started out with a tiny four-figure amount and now I’m well into six-figures. I’m not debt-free- we still have a sizable amount of the mortgage on our home left but the way we’ve structured it basically allows us to get paid for borrowing the money.** We could easily pay off the mortgage but it doesn’t make sense to.

My returns have been fantastic but that’s not because I am a superinvestor from Graham and Doddsville. I would like to think that I am, but the truth is, I got lucky. I started working, and therefore earning decent money (by decent, I mean your regular Singaporean university graduate starting salary of $35,000-$40,000 per year) to invest in a stock market that was beaten down so bad that there couldn’t have been a better time to start. I also got lucky that one of the first paths I’ve discovered in investing was value investing and knowing how to value a business has turned out to be the right path to be on. That’s the first factor.

The second factor is that I’ve set things up so that my current self has less of a chance to screw things up for my future self. How? That’s basically by automating the amount of savings that goes into my investment accounts. I know this is less than rational because if I were truly homo economicus, money is fungible and shouldn’t be separated in different “accounts” but humans will be humans, and we have our behavioural faults, so this is the best way to encourage good behaviour- automate it.

In fact, in doing so, one will come to realise that one really can do with less. For example, let’s say that every month your salary of $3,000 gets credited to your account and you set the account to automatically transfer $2,000 to an account that you only use to invest. You would then be forced to live on about $30 per day which, to be honest, is a lot. As your salary increases throughout your 20s and 30s, you keep increasing the amount that goes to the investment account.*** Of course, once your portfolio hits a certain size, you’ll realise that savings do very little for the returns on your portfolio but I think the practice of learning to live and be happy with less is crucial to any one looking to either a) retire young or b) retire well. Some people reach the official retirement age of 62 and probably still can’t retire well. And if they look back on their lives, I would say that a fair proportion of them would blame their past selves.

The third factor is my environment. If I didn’t have a family that was able to comfortably put me through school (it also helped that I didn’t have to head overseas for my university education) or a wife that agreed to me having an account where I basically sock cash away and invest money, things would be a lot harder. Case in point, I have a friend who’s around my age and just gotten the keys to a million dollar condo. Before that, he was paying off the mortgage for his parents’ place up till just a few years ago. He has a young son (which typically means expenses galore for the next few years) and just bought a car. Both his wife and him are your average civil servants so their earnings are upper middle-income, at best. Given the scenario above, I would say good luck to him because it looks like he’ll only have resources to start thinking about his retirement when he’s in his 40s.

As for me, going by current projections, I’ll have what the 80s/90s bankers call “f*ck you” money when I’m in my 40s. I can only imagine the joy of being in that position in the not-too-distant future.

So, to conclude, my eight years in investing have been a fantastic journey so far. I’m glad that I attended that talk by Robert Miles on Warren Buffett that one day in 2006 and it’s days like those that really makes all the difference- unexpected and life changing.

This journey will never end.


*Notice that I use the word “stock market” instead of investing. Many new participants in the stock market that I’ve met fall into the “speculator” category that Benjamin Graham famously defined in The Intelligent Investor.

**Not everyone is able to do this. We are in very rare company on this count. Basically, the interest on our compulsory savings account, which we use to service the mortgage, is higher than the interest rate on the loan. So, we don’t have to pay for any part of the housing loan using cash and while the bank was smart to add that the cap would only last for eight years, we ‘out-smarted’ the bank by paying off a huge down payment on the home so that our mortgage would last for only eight years.

***Actually, a smarter and more hardcore way would be to just set a fixed sum that goes into a spending account. That way, whatever salary increases or bonuses you get along the way gets automatically put to investing.