Sunday Times: July 22, 2007
ME & MY MONEY
Financial adviser’s advice on investing: Don’t wait
He invests all his earnings, keeping only six months of emergency cash
By Lorna Tan
MR CHONG, WHO HAS ALREADY MADE ENOUGH TO RETIRE, almost did not start the financial advisory firm he co-founded as it was just after the Sept 11 attacks and the then-banker was sitting pretty on several, more secure career opportunities. — PHOTO: MAY LIN LE GOFF
INERTIA is an investor’s worst enemy. It means time wasted and money forgone.
Straightforward advice and hard to argue with, especially as it comes from Mr Joseph Chong, 45, the founder and chief executive of financial advisory firm New Independent.
‘Every year that you delay saving and investing, it becomes worse and worse,’ he says.
He practises what he preaches and ensures that everything he earns is invested, except for three to six months of emergency cash.
He also advises that people should start learning about investing as soon as they start saving. ‘If you don’t do that, the tuition fee becomes a lot heavier. The mistakes made earlier are cheaper.’
As a child, he showed signs of entrepreneurship when he bred fighting fish and sold them for a profit.
Growing up in a family where money was tight, Mr Chong recalls how he was always scrounging around for scholarships. The St Joseph’s Institution student was on one scholarship after another from Secondary 2 until he finished his master’s degree in Germany.
A former Public Service Commission scholarship holder, he worked at the Ministry of Defence for eight years before joining the banking industry.
New Independent was set up in December 2001 with $400,000. It broke even after two years and is enjoying annual revenue growth of 30 per cent. It takes care of wealth management for high net-worth individuals.
He is married with an eight-year-old daughter. His wife, 42, was an investment banker who retired two years ago.
Q What is your approach to money management?
A Sweat at work but sweat one’s assets harder. This is the approach I have adopted since I started work 18 years ago with $2,000 in my bank account. It was already mathematically clear then that just working and saving wouldn’t do it. To be free from the ‘bondage’ of employment, you must invest and compound your money.
Q What financial planning have you done for yourself and your family?
A We have a comprehensive financial plan drafted in accordance with New Independent’s proprietary financial planning system – The NI Concept Plan (a framework which the firm recommends to clients).
Q What about insurance planning?
A This is an integral part of the plan. Generally, except for critical illness cover, all our policies are effectively term insurance plans.
Q When and how did you get interested in investing?
A I can’t quite remember when but I have always been interested in economics, history and mathematics.
Q What’s your investment philosophy?
A I have always believed in the need to diversify globally and across asset classes.
As a survivor of the Asian crisis and the dot.com bust, I am now an even more unrepentant believer. Like a predator on the stalk, an investor has to be patient.
I am quite happy to grind out 10 to 12 per cent annually on my globally diversified portfolio while watching for an opportunity to exploit extraordinary value opportunities. My overall portfolio generates about 25 per cent returns annually.
Q What has been a bad investment?
A It was a silly foray into club memberships in Batam. I wrote off the entire initial $12,000.
Q Your best investment to date?
A My best portfolio call was a play on falling interest rates in Singapore as the Asian crisis abated in 1998. A $35,000 basket of property securities tripled to $110,000 in eight weeks. That’s a rate of return not to be repeated in a lifetime.
Q Any other investments?
A I have a 2,300 sq ft investment property on Nathan Road that was acquired in 1998 for $1.61 million.
Q Why did you decide to become your own boss?
A Being my own boss was never a goal that I strove for. It is often a necessary evil in pursuing an idea or a passion.
Over and above risking my own capital, my partner and I cut our pay by 90 per cent initially to conserve cash.
It was especially tempting for us not to start. The terrorist attacks of Sept 11, 2001 had just happened. We had other more secure career opportunities dangling before us and we had young families to take care of.
But we saw what happened in Britain when Mrs Margaret Thatcher created the independent financial advisers industry in the late 1980s and we were convinced we could succeed.
Q Money-wise, what were your growing-up years like?
A I grew up with three sisters. My father was a civil servant and my mother a housewife. The tight money meant there was no budget for holidays.
Q Any retirement plans?
A I am very fortunate that financially I now have the option of retirement. But it is highly unlikely that I will be exercising it any time soon.
I hope to continue for another 25 years until I am 70 if my health permits, because I enjoy the challenge of what I am doing.
Q And your home is.. ?
A Home is a 1,324 sq ft condominium along River Valley Road bought for $1.08 million in 1998.
Q And your car is ..?
A A Toyota Altis.