Don’t learn from me.
In July 2021, thinking I was smart, I promptly transferred $10,000 to a friend to invest in crypto, and promptly lost everything.
Every dollar of that $10,000 was gone.
You may be reading this wanting some practical advice on how to grow your own money in Singapore. It is hard to know how to grow your money, especially with all the advice available today on the Internet.
But this article is different. We try to build you a method that works for you, rather than a generic method.
Remember the self-assessment you have to do before buying any investment products in Singapore? It’s an attempt to help you understand what you want.
Without that, you may not be able to match your personality, to your investing style. Sam Phoen writes a great book on the subject of personality-driven investing. You can borrow it here if you’re based in Singapore.
This idea of an individual investor style is something that will help you to decide what kind of instruments you want to use to grow your money in Singapore.
For example, if you’re a cagey crab that’s
- Quick to take profits
- Wait for losses to turn around
You may well be disappointed by your investment results.
What’s more important is for you to play to your strengths, rather than your weaknesses. If you were someone who’s extremely anxious about getting quick wins, you may profit better from trading, rather than investing.
This may help you over the long run by inching up your small wins, which may eventually gather to larger ones.
For goodness sake, stop sitting on your ass when you’re losing
You may wonder why we talk about losses when we are talking about growing your money.
But Warren Buffett, one of the world’s greatest investors, once came up with two rules for investing.
- Don’t lose
- Follow rule number 1.
As much as it can be sexy to follow what the crowd does, and celebrate the big growth in your money, what matters more is your avoidance of loss.
Cutting fast or adding to your position, especially when your stocks have fallen between 20 and 33% (calculated by Lee Freeman-Shor) as the best time to materially adapt.
DATA POINT: A 33% limit
A loss of 33% requires a 50% subsequent return to break even.
My findings show only 11% of the winning stocks (101 in total) that my top investors made produced realised returns of more than 50%. Only 21 of investments analysed realised a return of over 100% – 1% of the investments made.
Lee Freeman Shor, The Art of Execution, p42
This can be very difficult to do.
Especially when you’re losing. How do you sell when you’re losing?
Doing something when you’re losing is much better than doing nothing. Either you decide to sell, or you decide to add.
Doing nothing is the worst thing possible. In 2018, I bought Sino Grandness, a Chinese bottling company. In July 2019, it started falling precariously over concerns that it had failed to meet its debt obligations and repayments.
I held on, despite the concerns that were raised.
Eventually, I exited in Apr 2020, with a loss of more than 90%.
But you may say,
What if I don’t have money to add to the position?
What if there are better stocks to buy, than adding to this particular position?
Then you should clearly sell out your position, and find a better position to get.
How to grow your money
Now that we have covered the basic principles, let’s now look at what you can do to grow your money.
Automate your saving into a regular savings plan
If you left saving to chance, you would not have any money left.
After all, when you see that much money in your bank, you would be tempted to buy more things, rather than save. Over the past 6 years, I set up a $200 savings plan under the DBS Invest-Saver, which automatically buys $200 worth of an exchange traded fund.
It has helped me to grow a stable dividend base, much better than simply putting this under a fixed deposit.
Build a good defence with cash and REITs
Think of yourself as building a football dream team. Who do you want on that team?
But more importantly, how are you going to help the team to shore up its defence? Thinking in this way helps you to build a defensive vanguard that can help you weather the storm, in the worst conditions.
We all know that cash is a good goalkeeper.
But REITs, especially quality ones, can be a helpful way of preserving your income. Because REITs have their values tied to physical property, this means that the underlying asset base is sounder than most others.
Especially here in land-scarce Singapore. But not all REITs are created equal. The better quality ones are those that are backed by sovereign wealth funds in Singapore, including:
- Capitaland (Ascendas used to be an independent entity, but is today under Capitaland, after its merger in 2019)
REITs can thus serve as a healthy base to build upon, especially with its physical asset backing.
Ensure your midfielders are a good blend of income and growth
I quit my job this year. Yet dividends paid me a total of $2277.71 since January this year, an incredible sum, considering a total investment of around $50,000.
But beyond just having income, it also matters that you have attacking midfielders, that can grow fast.
Stocks which ride on physical products or property have also done well in this market, with both Propnex (a property broker) and Hour Glass (a luxury watch retailer) having preserved their value much better.
My main thesis this year has been:
- Invest in stocks which transact luxury, discretionary products, which will tend to do much better as the rich search for ways to grow their wealth, and which is less affected by the recession market
If you want to grow your money in Singapore, finding growth tech stocks would be difficult. Rather than trying desperately to find the next growth stock, why not invest in the stocks that are primed to profit in this market?
Here, my personal conviction is that mid-caps will have a much easier time going 2 or 3 times, rather than the large-cap DBS you may have been used to. But once again, it depends on what you’re looking for.
Push your strikers to attack
Growing your money in Singapore doesn’t necessarily mean you only need to invest in Singapore. Investing abroad is also an option. But here, with the whole US market at your feet with discount brokers like Moomoo, what should you choose?
I believe that the big will grow bigger, and that it will be increasingly difficult for the small cap in a market such as the US to grow into a 100-bagger. With the competitive nature of digital technology today, the real outliers may come in industries that have yet to be touched by the Big Four of Amazon, Facebook, Google, and Apple.
In his book, ‘Post Corona’, Scott Galloway points out that the ‘disruptability index’ lies greatest in industries that have changed little in the last 40 years, such as healthcare, and higher education.
Finding the strikers that will score you the next 100-bagger, will be tough though.
Keep to the basics, if you’re not that good yet.
Forget the fixed deposit, liquidity matters
Cash is king in this environment.
As much as UOB can tempt you with their 2.3% fixed deposit rate, liquidity helps you to ensure that you have the firepower to add to your growth instruments.
Don’t try to be clever
I know you’re smart.
But don’t be too smart.
Searching for the next big thing can be sexy and attractive, but it may not be as sexy as seeing your money compound year on year, at a 10% rate.
That would bring you much greater wealth than losing 10% year on year. Sometimes in life, you don’t have to make great decisions all the time.
Just find the easy decisions, and invest in them.