Money FM 89.3 Interview @ Asia Square

I am going to start off by sharing a personal story of mine…

Many people know that it wasn’t my intention to start my company, 10x Capital Pte Ltd.

After leaving my previous job. I had a lot of free time and this caused me to start this blog called Kelvestor.com. I did not expect too much from this blog however I’ve gotten overwhelming email exchanges from all of you.

I also started to conduct small training on separate weekdays. It got so serious that my weekday evenings are jam-packed from Monday to Friday. While it was fruitful, I was exhausted. I cannot go on doing this because I want to sleep early too.

It became a personal dilemma of my own. When I became a full-time investor, I wanted to live my life without worries and just do my own thing. I struggled a bit because doing business is not easy and I have the staff to feed. Fortunately, my friends came to me and asked me to share what I do on a daily basis then structure it into a course.

I didn’t have high hopes that it would work out because while I am an investor, I don’t have much experience leading a team. I am thankful this GIM is flourishing well and we do take time to take care of one another as well. It gives me so much motivation when we know that we’re helping each another out. Nothing is going to stop us from sharing and doing more for our community members.

For last week (16 – 17 March 2019), we completed training another batch of investors! We will spend the next two months to nurture and cultivate close relationships with our GIM members!

Thank you so much for your support and we won’t take all of you for granted.

Now, let’s talk about the main topic! We were also privileged to be invited by Michelle of Money 89.3FM to do another radio show LIVE! It happened yesterday.

Here are some of the Q&A we’ve prepared for the session and I hope it will help to inspire all of you to take action!

How much money do you need to get started?

Jonathan Ang: My first trade cost me only $500, and I think there’s really no reason why someone in Singapore can’t invest. You could easily earn $500 by working part-time, teach tuition, or drive grab. If you set your heart to do it, you will definitely do it.

Kelvin Seetoh: 6 years ago, I started investing in stocks by buying an SGX-listed company HupSteel. It is a company listed with approx $1,140. In Singapore, the minimum lot size is 100. For the USA, the minimum lot size is 1. For example, if I am keen to buy Facebook shares, it takes US$160 to buy one share. For Singapore, to buy 100 shares of Best World ($2.30), it is S$230. It is an illusion that you need a huge amount of money. Start small and gain your confidence in investing!

How should I get started? How to save more money?

Kelvin Seetoh: I think the simplest is to open a brokerage account because if you do not have a brokerage account, there is no way you can buy any stocks. In fact, opening an account is free and there are absolutely no charges at all.

To save more money is very simple. Before you spend a single amount of money from your monthly salary, ask yourself this question, how much you want to save? Because what I realised people spend first and save the remaining that is left.

What we should do is allocate a certain percentage of our salaries to savings first then spend. This concept is called PAY YOURSELF FIRST.

Instead of going for a holiday, go to a developing country to do volunteer work and you’ll soon realise that we do not need much to be happy and a lot of our purchases may be unnecessary.

For eg, instead of choosing to spend money on Starbucks, ask yourself this question, is this important to me? Is it possible to just drink water or buy normal coffee?

But I realised saving more money is possible but not very realistic long-term. You can be very miserable because you’re giving up on some pleasures. The key is learning how to increase your income level through job promotions, doing drop shipping, or giving tuition.

Jonathan Ang: I think the best way to get started is to invest with an amount you are absolutely prepared to lose. Sometimes, when the stock drops by 5% after doing your homework, you will be shaken. What I always advice my friends to do is to invest in a stock, let it sit there for 6 months, observe how you feel when the stock price goes up and down, and from there, you can cope with volatility better.

As an investor, do you monitor the news daily?

Jonathan Ang: This is an interesting question. You see, some of the news are actually opinions and not facts. Just look at the numbers of articles that say that the market crash is coming since 2013, if you were affected by that, how much would you have missed out!

I’m not saying that a crash won’t come, but rather, no one will ever know when it will come. So what I do is that I will monitor the quarterly results posted by management and monitor that closely. Just a quick analogy as to what I’m saying, for example, for McDonald’s, what has the trade war got to do with McDonald’s earnings? No one cares about the trade war, they will keep going to McDonald’s to buy their fries and burgers.

If we look at McDonald’s during the 2008 recession, they actually earnt more money, but their stock prices were punished. I always like to ask people, if you were the owner of McDonald’s, during the recession, if your business earned more money, but people are putting a discount to your business just because of news, would you sell McDonald’s? If your answer is no, then why would you sell your stocks when your company is fundamentally good?

When we buy a stock, we are buying part-time ownership of a business. There’s no difference btw owning a stock and owning the entire biz. It’s funny, we are seeing 2 same things, but 2 different behaviours.

Where do I get sources of financial data to analyse a company?

Kelvin Seetoh: As an investor, I am always bombarded with a lot of information from everywhere but later on, I realised that knowing where to pick the right information is key because it eliminates a lot of noise and irrelevant data.

When I can pick information, I am able to make better decisions. Now, I focus on 3 websites. For a start, I highly recommend visiting SGX websites, they provide very useful stuff such as the ownership of the company, the financial metrics such as profitability ratios and profits growth. Visiting the company’s website and downloading their investor presentation slides may also provide lots of insights into the business.

Another favourite site of mine is Morningstar. I find their website to be very investor-friendly, they provide us with more than 5 years trend of numbers which allows us to check the consistency of the company’s revenue and margins. It’s my number 1 website that I go to.

What are the most important financial metrics?

Jonathan Ang: Choosing a company is like choosing a life partner. It’s like a marriage.

Earnings:  Do you want to marry a partner who earns more money every single year?

Debt: Do you want to marry a person who earns 10 million or 20 million? Now, if I were to tell you if the person who earns 10mil every year has zero debt, while the person who earns 20 million but it has 100million worth of debt, who would you want to marry now?

Cashflow: Now, what if I were to ask you, do you want to marry a person who earns 10mil and have 1mil in the bank or a person who earns 10mil but have 100mil in the bank, who would you choose?

That is why cash flow is important, some businesses can earn a lot of money but have poor cash flow due to weak money collection and they take a long time to collect their money.

What are some investment books recommendations?

Kelvin Seetoh: I struggled with this because there are so many books that I’ve read over the course of 5 – 6 years? Were there books that did not contribute very little to my growth? The answer is yes.

Right now, I want to shortcut by sharing 3 books which made me the most money because I learned such a great deal and it was so easy to implement.

The first book is called One Up on Wall Street. You know, I was always taken aback by those top fund managers and wondered if I could ever generate good returns like them despite being a retail investor. Reading the book, it gave me concrete examples of how a class of school kids were able to pick ordinary stocks that outperformed the market and fund managers. I was very surprised. It gave me the confidence to start investing seriously.

Secondly, I think “Common Stocks and Uncommon Profits” is another fantastic option. It is one of the books that world-famous investors Charlie Munger and Warren Buffett recommend too. In the book, I was able to learn how to identify what makes a business thrive and it allowed me to focus on companies that demonstrate growth potential only.

Finally, Pat Dorsey’s “The Five Rules for Successful Stock Investing”. It taught me so much about understanding each industry and it made me realise there is much money to be made in certain sectors.

Hope all of you enjoy our interview! I was a bit nervous… haha!