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Thursday, 29 January 2015

Daring to go big pays off for remisier

Daring to go big pays off for remisier

25 January 2015
Rachael Boon
The Straits Times


Once former engineer Charles Chua sets his mind on something, he goes for it and goes big.

When he was retrenched in 2008, he grabbed the opportunity to pursue a life-long interest in investing and eventually became a remisier in December 2009.

"When I became a remisier, I told myself this is going to be my last choice, there's no way out. When I first started out, I gave seminars and worked hard to acquire clients," says the self-employed remisier with Phillip Securities.

At the same time, Mr Chua, 42, fine-tuned his own money-making strategies, moving from speculating in products such as penny stocks to long-term investing in firms like real estate investment trusts (Reits).

"I started speculating in June 2006 and was making quite a bit of money - up to $180,000 - and got hooked," recalls Mr Chua.

"When the financial crisis came, I was caught (in it). I started speculating because of one of my ex-colleagues. He predicted the prices for Hyflux so accurately I thought he was able to read tea leaves, but it ended sadly."

Mr Chua had enough of speculating and, after analysing the potential returns in Reits, he decided to sell his executive condominium (EC) in Bishan and place 90 per cent of the sales proceeds into property trusts.

His efforts paid off and he netted a six-figure gain from the investment.

This allowed him to invest in opening a beauty salon with his wife Pinky Gooi, 36, who has been in the industry for almost 20 years.

The salon - Skinn in DjitSun Mall in Ang Mo Kio Central - recently expanded into two units at the mall.

The father of three girls aged 16, five and two, describes himself as someone who is focused and would do whatever it takes to make his dreams happen.

He believes that the Singapore market will remain challenging, owing to external factors such as the "weakness in oil prices, slowing growth from China, euro-related issues and more".

Mr Chua adds that the drop in oil prices needs to stabilise before the market here improves.

"The Singapore market also needs to attract better-known stocks to be listed here, to gain better recognition globally," he says.

"Formula One was mulling over a listing here and it created so much buzz and excitement but to no avail in the end."

As a remisier, Mr Chua also welcomes the reduction in board lot sizes from 1,000 to 100 shares, a move that makes it easier to invest in blue chips.

"It's good for the investors, especially the young ones because they have a chance to accumulate good stocks at an early age."

He adds that if the change increases trade in blue chips, it would "actually help to lower remisiers' risks (of defaults from clients)".

The risk is greatly lowered when it comes to trading blue chips compared with penny stocks, he says, adding that "the three-stock saga (namely Blumont, Liongold and Asiasons) has underlined the risk of trading penny stocks".

Q: Are you a spender or saver?

I'm more of a spender, and only put 20 to 30 per cent of my income into investment capital and spend the rest.

But I spend on rent, car instalments and such, which are not charged to my credit cards. I know I spend a lot, so I have to make a lot as well.

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

I charge about $4,000 to $4,500 every month for my expenses, which are mostly for my family.

Q: What financial planning have you done for yourself?

I save 20 to 30 per cent of my income every month as investment capital for stocks. The rest is used for expenses, insurance and holidays. Right now I'm into oil-related and e-commerce stocks. I feel the oil collapse is with no fundamental basis, and e-commerce will probably be the next big thing, at least among the young.

I'm holding only two stocks, Alibaba and Keppel Corp. I don't like to spread my funds everywhere. I'm very focused.

When I'm bullish on a particular stock, I will go into it substantially. I prefer companies like these, that will still be around five years down the road. But there's no guarantee.

I'm no longer in Reits, but when I retire eventually, I'd like to invest in them to earn passive income.
I previously invested in stocks such as SingPost and OCBC.

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

I have three siblings. I'm the youngest. We had a very simple life. My dad was a civil servant and my mum was a cake shop assistant.

We were living in a two-bedroom Housing Board flat in Holland Close.

All my three elder brothers and I were sharing one room, and having a room to myself then was a fantasy. I had my first fast-food burger at the age of 12. That was how simple life was.

My mum is a saver and my dad was a spender. He's already passed away.

Q: How did you get interested in investing?

I was speculating in US options, S-chips and penny stocks before December 2009, and lost about $60,000.

It was only after I became a remisier that I started to analyse the potential returns from Reits.

After getting burnt, I had to be extra cautious so I chose Reits. When I decided to take that leap, I needed the funds so I sold off my Bishan EC.

I decided to do it because of my analysis of the market.

Reits were quite bullish from 2012 until June 2013, when (former US Federal Reserve chairman) Ben Bernanke made a remark that the bank would start "tapering" its QE (quantitative easing) programme.

That was when the Reit market came down by up to 40 per cent, but I had already sold off my investments some time in May 2013 and made a six-figure sum.

When I put my funds into Reits, I had a five-year horizon.

But since I was already up by 40 per cent, I decided that if the market was going to react negatively to any QE cuts or interest rate increases, I'd choose to go out (of the market) and stay on the sidelines.

I reinvested my funds into three areas from there: a three-bedroom condominium, a beauty salon with my wife, and other stocks.

After the lessons learnt when I had a speculative mindset, before buying any stocks, I ask myself if a company will still be in existence five years from now. Offhand, if the immediate answer is a 90 per cent yes, I'll commit financially.

This is in line with one of Warren Buffett's investing principles. I read about some of the things he has done... he has never written a book himself, some are written on his behalf.

After I answer the question and settle on a stock, I go into the technical analysis of it and read the quarterly results.

Q: What property do you own?

I'm getting keys for a three-bedroom condominium unit in Farrer Road soon, and I'm probably going to move into it in March.

I bought it in February 2013. I liked the place and it would be good for my younger children to go to a school nearby.

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

A BMW car that I bought seven years ago. I think it's the most extravagant not because of the value but because it's a depreciating asset. Luckily for me, my wife is not into jewellery.

Q: What's your retirement plan?

My wife and I would eventually like to have five beauty salons and maximise the potential of every individual outlet, and to invest in Reits to earn passive income.

When you reach a certain age, you don't wish to have such a challenging adventure in stocks any more and prefer to put your money into something that is less volatile. But the returns with lower volatility will be quite fixed.

Q: Home is now...

A rental condominium unit near the salon in Ang Mo Kio.

Q: I drive...

A BMW car.

WORST & BEST BETS

Q: What is your worst investment to date?

I have a speculative mindset, which eventually led me to lose $60,000 in US options, S-chips and penny stocks.

I just wanted to make a quick buck but I realised that with a speculative mindset, I was more emotional than rational.

If I did not stop, things could have been worse.


Q: What is your best investment to date?

My wife - because of her, we have a beautiful family and the recently expanded beauty salon Skinn, and I have the energy to focus on my stock investments.

I also learnt how to use the knowledge of others and books. I've learnt one very important lesson from books, which is to be very afraid to fail and that makes me do all things possible to not fail.

I was inspired by the book Lee Kuan Yew: Hard Truths To Keep Singapore Going. Mr Lee was very afraid Singapore would fail. He described Singapore as "an 80-storey building on marshy land".

I'm now reading it for the third time to always remind myself to do all things possible to not fail.

I've learnt so many things the hard way after getting the golden handshake.

rachaelb@sph.com.sg

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