Forget get-rich-quick schemes. Investment coaches Major (MAJ) (NS) Sean Seah and Captain (CPT) (NS) Alvin Chow explain why patience pays.
They thought they could emulate top traders and make big money through the stock market. But their dreams turned into nightmares - MAJ (NS) Seah and CPT (NS) Chow ended up losing $100,000 each.
This happened in the middle of the last decade when stock trading courses were popular in Singapore. The duo, who did not know each other then, were lured by the promise that one could make money fast in a matter of days or even minutes.
"When I was younger, I was very impatient, always wanting to make money fast," recalled CPT (NS) Chow, 32, a former Republic of Singapore Air Force Regular.
The big trading losses kept them grounded, and stopped them from seeking shortcuts.
Starting from scratch
Going back to the drawing board, they studied how world-famous investors like Warren Buffett and Walter Schloss grew their wealth by buying and holding stocks over the long term. They put together their own investment strategies, and today are successful full-time investors.
MAJ (NS) Seah, 34, a former Army Regular, spent seven years building up a stock portfolio that generates an average of $11,000 of passive income each month.
CPT (NS) Chow started his portfolio in August 2013, and has gained 24 percent returns by October 2015. In contrast, the benchmark Straits Times Index (STI) was down by three percent over the same time period. The STI tracks the performance of the 30 biggest companies in the Singapore stock exchange and is considered a barometer of the country's economy.
The duo also runs courses to impart their investment strategies and personal finance knowledge to retail investors.
Different strokes for different folks
Their investment philosophy is similar: invest in a basket of undervalued stocks across different sectors.
But their strategies differ.
MAJ (NS) Seah described himself as a "business collector" who invests in three different types of stocks: dividend stocks, high-growth stocks, and asset-rich stocks.
A dividend stock provides a consistent stream of passive income paid out from the company s profit. Growth stocks, on the other hand, have the potential to appreciate multiple-fold. For example, Apple shares have risen from US$5 a decade ago to US$120 today.
In contrast, CPT (NS) Chow only invests in asset-rich companies that possess valuable assets such as properties and cash. These provide firm backing to the company's shares. Such stocks usually belong to small, unknown companies.
CPT (NS) Chow described his strategy as boring and robotic, using only financial figures for his analysis.
"Most retail investors do not have the business acumen to know whether a business is good or bad. For example, I may not invest in Google stocks simply because I favour Apple iPhones over Android smartphones.
"There are cognitive biases that may cause people to make the wrong investment decision. That s why we need to have a process that is more objective."
MAJ (NS) Seah noted it was a matter of finding a style that suited your personality, adding that his strategy appealed to people who have a passion for investing.
"Try out all the methods to find out which one suits you the best. At the end of the day, investing takes time. If you are uncomfortable (with a certain method), you will give up."
Military families
Both men come from families where military service is a tradition. CPT Chow's twin cousins are Navy officers, while MAJ Seah s father is a retired combat engineer officer.
MAJ (NS) Seah, now battalion 2nd-in-command of 736th Battalion, Singapore Guards (736 Gds), was inspired to sign on during Full-time National Service.
"I saw my officers practising what they preached. They didn't just recite the SAF core values. They talked to the soldiers and did things together. I wanted to be like them, to be a leader with values," he recalled.
CPT (NS) Chow, an Air Warfare Officer (Ground-based Air Defence), also lives by the same values. What he enjoys most about his time in the Air Force are the strong friendships and bonds he had with his buddies.
"Because we went through tough training together, the kind of understanding that you have with each other is special."
