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Tuesday, August 09, 2016

Journey as a Full-time Investor - 5 Years On

Dear readers,

How time flies! It had been 5 years since I left my last full-time employment, surviving only on my investment return and some income from this blog via advertisements. It is certainly tough to be unemployed in an expensive city like Singapore, but I did not regret my decision to be a full-time investor. A decision I still stick by to this date.

These 5 years had its difficult days, just like any job. With no CPF contribution, no monthly salary, no medical leave/benefits, no annual leave etc to look forward to every month, it had certainly tested me. However, I am glad that I started investing early and also learn a lot as a part-time investor during my working days, which makes the transition less tough.

For the past 5 years, I have detailed my investment activities every month at this blog. Readers should have an idea on what I had been doing for the past 5 years so I shall not repeat here. Markets had sometimes been quite challenging, but as I have said before, having a process and system in place will serve as a road map for one to navigate through even during those most difficult periods.

I wish to thank all of you out there for your support for this blog. Without your support and encouragement, I would not have come so far. I also wish to thank all those who provided feedback on my investment process and sharing your personal investment experience. I have learn a lot from these sharing so do keep them coming.

Will there be another 5 years as a full-time investor? When I left IT/Engineering, I said - "I didn't leave because it was hard. I left because it was no longer worth it". When I feel that it is still worth it, I will continue this journey. To date, the journey had been worthwhile.

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28 Comments:

Blogger Createwealth8888 said...

Does the Law of Large Number help in your investment strategies to mitigate risks and maintain sustainable income stream?

4:27 AM  
Blogger ghchua said...

Hi Createwealth8888,

I guess so. It had been a strategy that I adopted from the start of my journey and it remains to be so. Do take note that the Law of Large Number is not an equally weighted portfolio. Some stocks do have higher weightage in my portfolio while others have little or no weight. I am looking to slowly get rid of some of these stocks with little or no weight in my portfolio as some of these are no longer meaningful. However, I need to do that slowly as some of these stocks are not liquid and had fallen to a level whereby its market value is very low and it is not worth even the brokerage cost to get rid of them.

4:42 AM  
Blogger B said...

Hi GH Chua

Your portfolio is probably as big as a fund by now and I've also seen you in a couple of AGM that I attend.

When you mentioned getting rid some of the smaller weightage, does that mean you'll start concentrating on a top few rather than owning a lot more now? I understand as a full time investor you will have the time to research so that will not be a problem.

9:49 PM  
Blogger ghchua said...

Hi B,

Not really. I will still own a decent number of companies but will start to get rid of those that are insignificant in terms of portfolio contribution. The strategy remains the same, nothing had changed.

However, for a portfolio that is not equally weighted, naturally some of my top holdings will have a higher weightage and therefore contribution in terms of portfolio performance.

11:09 PM  
Blogger Ben said...

Hi Ghchua

I'm not sure whether you can still remember me. I previously asked you on the minimum amount of warchest which is enough to quit the full-time job and become a full fledged investor. I am glad to confirm that I have just hit your stated figure and can embark on being a full-time investor at any point of time. I have been picking new stocks every month and dividend has been increasing all this while.

As of now, I have not pulled the trigger on ending my full-time employment as there is no push factor, though I can do so at any time of point. Having the option to do so, is great and I must say that being a single, also eases the burden of having to think twice before pulling the trigger. So far, the remuneration obtained from my full time employment goes towards buying the shares/counters which will in turn generate dividends which will be handy when I decide to call it a day for my career.

I will like to thank you for your valuable inputs in your blog and through this blog, I have learnt to decipher things which are important for me and hence choose the appropriate strategy to be financial freedom.

Keep up with your blogging and your blog is definitely one which I will look out for, at least a month.

We keep in touch.

Cheers

Warmest regards,

Ben

7:14 AM  
Blogger edragon said...

Hi GH,

Well done. It is good to hear of positive outcome from investments.
Like you, I also have some insignificant stocks after 22 years of continuous investing in the market. Also, I have retired for 8 years and dividends/returns are sufficient for living and some left over to expand on the portfolio every year since.

Thanks for this update and hope to read more from your blog.

Best regards,
ED.

2:50 AM  
Blogger SJ K said...

Hi Ghchua,

Like Ben, I will like to ask about the minimum amount of warchest that is enough to be a full time investor to make that my goal. Many thanks.

8:15 PM  
Blogger ghchua said...

Hi Ben, edragon and SJ K,

Thanks for all your support for my blog! It is great to hear from you all again. Glad to know that some of you have reached financial independence through investing. I do know some full-time investors who are married and have kids so it is not really a matter of being single or married. It is about the courage to take this route as a full-time investor and the determination to continue despite obstacles being presented in front of you.

For me personally, I have not regretted my decision since day one. Sure, I lose some of the benefits as an employee but I have gained much more, not only in terms of money but also in terms of being able to plan my own timetable and learn new things at my own pace as I go along.

I know there are a lot of critics out there and sometimes it really makes you wonder whether you should give up and go back to full-time employment. I remember one investor approached me during an AGM and asked me why I am not working at such a young age. I replied that I am working now as I am attending this AGM! :)

Certainly, in a competitive society like S'pore, not working for a living is a no-no for most people out there. And as an Engineer with no prior training or working experience in finance or accounting, who am I to dabble in investing, let alone full-time? The undercurrents had been strong to prove me wrong.

However, I told them to judge me in a few years' time. And I am happy to inform them that I have been a full-time investor for 5 years and still counting......

I wish you all the best in your investments and many more years of positive return!

2:26 AM  
Blogger ghchua said...

Hi SJ K,

A lot of people asked me this question, and normally I would answer that in a form of dividend yield. Ignore the capital gain to be on safe side and you will know what amount you need. For example, let's say you need $40K per year and taking a dividend yield of 4%pa, you will need $1 million to start.

Of course, the above is just a very simple illustration. There is really no hard and fast rule. Ultimately, it depends on whether you are confident enough to take this path and how prepared you are. For me personally, I have done part-time investing when I was working so I roughly know what I am going into.

Hope that the above helps.

2:39 AM  
Blogger Unknown said...

Chua, not sure u rem me. I am also an engineer by training. But after graduation I was unable to land an engineering job. Ended up the banking industry took me in. I had no accounting or business or banking training background. To date this year is my 10-15th year in banking. Getting tougher...but just like u, I achieved financial freedom many moons ago while still working in the bank. Every day salaried pay I am treating it as a daily bonus. Such feeling is great and secure although working in bank can be stressful but systemic with a process.

5:35 AM  
Blogger ghchua said...

Hi Unknown,

It is great to hear that you have achieved financial freedom. Yes, if you feel that it is worth it, then you should stay on to your job. You could exercise your financial freedom "option" to retire anytime you like if you feel that it is not worthwhile working for the bank.

I think it is ok to have some stress and hard work. It is common in most jobs out there anyway. The part that I don't like is when I feel that it is no longer worthwhile to do it just for money. Some jobs will become boring after some years, and even if one switches to another company, he might be doing the same old thing again. Yes, you can upgrade your job skills to stay employable in your domain knowledge, but it is still the same specialized job that one is doing day in day out.

Some people told me to acquire some qualification to switch to a new field, like finance etc. But I can do full-time investing without spending time to get a new diploma, degree etc in another field so why do I need to do that? Knowledge acquired through actual investment in the markets beat any qualification.

9:36 PM  
Blogger Unknown said...

hi Chua, it is me that unknown again. thanks for the reply. I agree with you on most of the points. work too long and meetings too long in office can make one retarded. sometimes I switched to another bank because I had the same feeling - it is no longer worthwhile due to various reasons. that the kind of feeling that I dislike when being a salaried employee.

same as you, I dun like studying under a prescribed program/course in hot humid crowded Singapore anymore (after learnt that the way to truly learn is not for that paper, but really learn from whatever I can given the whatever environment) when I can self learn on the job and learn about risk management, investment, etc. in fact, I think paying thousands to get a expensive finance master is really not worthwhile.

7:27 AM  
Blogger SJ K said...

Hi Ghchua,

Thanks for your reply. Sadly, my savings is still really far from the target but having a target is a start. Thks.

10:46 AM  
Blogger Allen said...

Thank you for all the articles and all the ones that are coming in the future. All the best going forward.

6:48 AM  
Blogger Royston Tan said...

Hi Chua

I shared the same feeling that you had been through especially we are both from IT/Engineering field. I had been through a hard path like yourself but I worked from a SME to MNC to my own company before turning to a value investor after 5 years of venture failure in IT technology solutions.

Let's keep up our value investing journey. Kam Pa Tei!

Value Investing Singapore

6:34 PM  
Blogger Everlearning said...

Hi ghchua,

"When the going gets tough, the tough get going", how apt it applies to you. Indeed, for the last five years, I believe your readers have learnt more or less from you and your style of investing.

Thanks for your ceaseless effort in answering your readers' questions at the comment section. I gather much information and facts on what other readers faced, although I do not own the stocks, I still can benefit from your advice to them.

I am always grateful that I can fall back on you for some advice if I so needed. May you be rewarded handsomely even you are not holding a full-time job with incentives but undeniably you are working "full-time".

8:13 PM  
Blogger Sweet Retirement said...

Hi ghchua,

I envy how you can leave the corporate world and go into full time investing.

Best Regards
My Sweet Retirement

11:49 PM  
Blogger Ryan Si said...

Hi sir, this is ryan, may i know your strategy of doing it, and what kind of research that you have done, I am new to this market, i hope to have a mentor like you to guide me, I am willing to learn everything. this is my email address ryansi5603@gmail.com / +6592202401. hope can get your reply.

9:00 PM  
Blogger ghchua said...

Dear all,

Thanks for all your well wishes. Indeed, with time and effort, we can reach our destination of financial freedom soon. Hope to share with all of you more of my thoughts in this blog in the future. I hope to write often but only when I have good and new ideas. For now, do read my monthly portfolio updates.

11:22 PM  
Blogger Sweet Retirement said...

Well said Mr Chua. Admire your guts and strength to leave the corporate world and into full time investing.

1:12 AM  
Blogger Ben said...

Hi Ghchua,

Will you be willing to share the following as a full-time investor:

a) Estimated monthly expense.
b) Usual day to day routine.
c) a list of shares which will pay dividend from Jan to Dec.

Thanks.

Ben

8:43 PM  
Blogger ghchua said...

Hi Ben,

Unfortnately, I do not like to share sensitive personal information on this blog. Therefore, I am afraid that your question a) is too personal. But just a general rule of thumb, my monthly personal expense is capped at not exceeding my income from my investments.

As for daily routine in b), I think it varies and it depends on my task for each day. For some days, I might be out the whole day attending AGMs/EGMs/briefings etc. For another day, I might be sitting in front of a computer reading on companies, reports and executing my trades. It is really difficult to give a guideline on what to do everyday. It really depends on what you want to do.

For c), I think you need to visit the SGX website for information. It will be too big a list for me to list out all the shares that paid dividends for every month of the year.

Hope that the above helps.

7:31 PM  
Blogger Ben said...

Hi Ghchua,

Thanks for your informative response.

It helps in my plan for retirement. I understand that some of the requested information is too personal. My apologies if my question may cause you to have some uneasiness.

Thanks again

Ben

4:07 AM  
Blogger NYL said...

Hi ghchua,

I read your posts occasionally because like everyone else, I am curious about how someone can afford to go full-time as an investor in his early 40s. I guess you are a much better investor and saver than most people.

If you don't mind, may I ask you a question about full-time investors? Do you need to pay taxes on your income from full-time investing? I know Singapore has no capital-gains tax and zero taxes on dividends. However, I am not sure if IRAS will treat income from full-time investing differently. Would you mind sharing your experience? Thank you.

6:57 PM  
Blogger ghchua said...

Hi NYL,

Thanks for supporting my blog!

I don't proclaim to be a better investor than most people. However, I do agree with you that I might be a better saver than most people out there. In investing, the most important part is to have capital to invest. There is no point having 1001 ideas if you have no funds to invest.

As an individual investor, there is no capital gain tax and dividends received is not taxable. However, there is tax for trading income so do be careful here. I try not to trade in and out of the market and therefore the holding period for most of my stocks is quite long. Basically, I think if you didn't do much trading, you should be safe from taxes.

But I do know some individual investors who like to set up a company to hold their shares. If you do it this way, then yes, everything is taxable including dividends, gains from divestment of shares etc.

8:17 AM  
Blogger hyom hyom said...

Hi ghchua,

It's been a long time since we last communicated.

I am glad to read that you are doing well after 5 years in your new career. If a person is able to retire in his late 30s and still survive well after 5 years, he is a "winner" in the eyes of most people. I am particularly glad to see you doing well since you are a fellow engineer. Sad to say, engineers are perceived as "losers" by many in Singapore today. Naturally, I feel proud when a fellow engineer becomes a winner. While the career may not be worth it (as you wrote in the header of your blog), the training was definitely worth it. Problem-solving skills, how engineers think about approaching a problem, working around the constraints to fix a problem, achieving the best trade-off, are universal skills. I am sure your engineering training helped in your investment success.

I remembered you had a grand-parent to support financially. How is she doing? Aged people are actually more expensive to support than kids. I know of very few grand-children who financially support their grand-parents. I respect your filial piety.

All the best to your wealth and more importantly, your health.

6:24 PM  
Blogger ghchua said...

Hi hyom,

Indeed, it had been quite some time since we last communicated. Hope that all is well on your side.

To reflect back, I think markets had been kind to me since I embarked into full-time investing. We have not seen a crisis for the past few years yet and markets (in particular in the US) had enjoyed a good run lately. Which means, my full-time investing portfolio had not been "stressed tested" under the worst case situation yet. As with most Engineers out there, when we do design, we need to put in tolerance which means looking at the best and worst case situation. Evidently, markets had been good for the past few years and those who took risk to invest heavily in the stock market had been rewarded.

However, I do believe that good times will not last forever and we need to plan for winter too. Since I have experienced financial crisis before, I will maintain a more cautious outlook when building my portfolio. What this means is not to chase stocks that had gone up a lot and try to consolidate and focus on more undervalued ideas. While these ideas might not perform as well as others in the short term which markets are bullish, I do believe that it will provide a platform for me to weather the downturn better when it comes.

I do agree with you that aged people need more support financially but also emotionally as well. This meant that you need to be there to support them as well, as and when they need help. I am glad that not being in a full-time job offers me this option to manage my own time as well, and this helps in terms of getting them to medical appointments, dressings and sometimes even bringing them to emergency department in hospitals as and when needed.

Yes, I do miss life as an Engineer but no regrets. I still think that a corporate life as an Engineer is not worth it. No doubt, it was hard, but at the end of the day, you have to ask yourself whether it is worth doing the hard work. I guess you are in the best position to make a decision so I won't be able to advice you. I am in this investment journey not to prove to anyone that I am a "winner" or "loser", but just to send a message to fellow Engineers out there not to be afraid to make a switch. You can do as well (if not better) in a different field as well.

11:25 PM  
Blogger hyom hyom said...

Hi ghchua,

I hope you are not the only care-giver and have siblings to share the burden of looking after the aged family members. If they fall sick together at the same time, the amount of stress and work can break the care-giver.

The U.S indeed had a good run since 2009, particularly Nasdaq100. For the Singapore market, it was not that smooth-sailing. There were bad years in 2011 and 2015. I guess your engineering training helped you design a portfolio for the Singapore market that can withstand the worst-case scenario well. It is a difficult trade-off to choose how much to invest to take advantage of the bull market but not too much in case the bear comes clawing. We are no strangers to choosing the optimum trade-off. It is a familiar problem for engineers.

Corporate life as an engineer is not financially worth it in Singapore. Fortunately, there are other pleasant aspects about engineering. There is the intellectual reward when the Eureka moment strikes and you suddenly thought of a solution. The feeling is as shiok as making money in the financial markets, though the money has more practical use. When you fix a bug or implement a useful feature and see people benefiting from your work, that is emotionally rewarding. I do not get this feeling of creating something useful from my investing activities but it would be hypocritical to deny that making money is better, especially when one is not yet rich. Ghchua, perhaps when you become rich enough from your investments, you can consider switching back to engineering for leisure. That's what I intend to do. Do personal favourite pet projects or hire smarter engineers to do it. The emotional satisfaction is much higher.

4:07 AM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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