I believe in being focused in whatever I do in life. In my book My Formula, I wrote about the secret of 'money mastery' where I encourage people to have the habit of compartmentalising their monthly income. For me, I will spend 50 per cent on expenses, 20 per cent on paying my mortgage and 30 per cent is saved and invested.
I do not waste my hard-earned money on assets that depreciate, so I don't own a car.
My investment principles:
Preserve my capital
Stay invested despite volatility
Allocate assets properly
Q: What financial planning have you done for yourself?
I keep six months' worth of living expenses in fixed deposits and bonds. The latter are with BlackRock and I parked some money in money market funds. My income- generating assets include hedge funds, regular savings funds, stocks, unit trusts, properties and wine.
I have 30 per cent in stocks, 20 per cent in alternative investments, 20 per cent in regular savings plans (Zurich Vista Fund) and the balance in gold and wine. My stocks include Allgreen, Wheelock and Genting and recently I bought UOB and OCBC.
Overall, my portfolio has achieved average returns of 30 per cent annually in the last three years. Two months ago, I invested in wine. I expect to reap 20 per cent annual returns from my wine investments over the next five years.
Next, I'm considering land banking in Alberta, Canada, where I aim to double my investment in five years.
Q: What about insurance planning?
My policies are a combination of term and whole life. I don't own any investment-linked insurance policy because of my age. As you get older, the mortality charges for investment-linked plans are crazy. I never buy insurance for retirement planning but only for risk- management purposes.
I used to believe that endowments are good for savings but in fact the returns are far below inflation. My annual premiums are around $30,000. I'm insured for at least US$2 million (S$3 million) on my life and I will top it up to US$5 million by next year.
Q: What's your investment philosophy?
My investment philosophy is simple: Be a good steward of your money. My investment principles include preserving my capital, staying invested despite market volatility and proper asset allocation.
Q: Moneywise, what were your growing-up years like?
When I was 14, my dad, who was the sole breadwinner as a cab driver, became bedridden due to a terrible car accident.
Due to the huge hospitalisation bills, my family got into debt.
Perhaps that was when I started dreaming of being a millionaire.
I learnt to be frugal and a good steward of the money I made. Now I make sure that I save 30 per cent of my monthly business income and invest it.
Q: What has been a bad investment?
In 1994, I bought a BMW 7 series for $228,000. It was sold for $145,000 two years later. In 1996, I bought a Mercedes E200 for $160,000 and sold it for $70,000 after 18 months. I lost RM1 million (S$420,000) in Malaysian stocks when the firms I invested in de-listed during the Asian financial crisis in 1997.
Q: Your best investment to date?
My best business investment is in my own independent financial planning business under IPP. The set-up and expenses exceeded $250,000 but today its value is more than $1 million.
I also have a training and consultancy outfit, www.thomasthecoach.com, where I invested more than $50,000 and its value today is $250,000.
I have a stake in Web construction provider www.clik-a-site.com, where the invested amount was $50,000 but the current value is $2.5 million.
Q: What's your retirement plan?
I achieved financial independence last year, so I consider myself retired, which means I can choose to work instead of having to work.
To me, retirement or financial independence means having a fully paid-up home, 12-month savings and three to five income-generating assets as a passive income.
My net worth is now more than $1 million.
Q: And your home now is...?
I'm living in a 3+1 bedroom condo in Punggol which I bought for $450,000 in 1997. Since then, the value has risen to $750,000.
This article was first published in The Straits Times on November 16, 2008.
