The Chinese Way to Wealth and Prosperity

TheChineseWaytoWealthandProsperity
Due to my busy work schedule over the past few months, I haven’t had time to read much. However, a short break over the past few weeks gave me some respite from work, and I managed to spend some time reading some of the books I borrowed from the local library.

The Chinese Way to Wealth and Prosperity by Michael Justin Lee is a study of the financial habits and traits of the Chinese in achieving financial success. It espouses basic yet prudent financial concepts that I believe everyone should consider. Some of these include the importance of education, the value of guanxi, being frugal and start saving and investing early, deferring gratification, investing in real estate, and avoiding gambling which is a typical bad habit of the Chinese.

What caught my attention, however, were three topics that the author shared:

  1. Go Mobile

Being willing to uproot and reroot in another country is a character than many of the early Chinese business pioneers possessed. I believe that this valuable trait – the courage and ability to adapt well to their environment, paved their way to success. They left their home country in search of a better life elsewhere and many achieved great success in the countries where they settled in. This is largely evident in our neighbouring countries in Malaysia, Indonesia, Philippines, Vietnam, and even in Latin America where I stayed for 3 months. The author urges the younger generation to seek out and embrace opportunities far from our own backyard. For those who do not want to venture abroad, he suggests that we invest beyond our backyard in emerging economies beyond our comfort zones to obtain ideal investment returns.

2.  Keeping Debt to an Absolute Minimum

I know this advice is very commonly preached, but the author managed to frame it in a new perspective. Unlike authors like Robert Kiyosaki who preaches that there is a difference between good and bad debt, Lee believes that there are only two types of debt: bad debt and regrettably necessary debt. In his words, “Debt can be appropriate. Debt can be necessary. Debt is always regrettable. But debt can never be truly good.” He views money spent paying down debt as an investment in oneself and a repurchase of one’s human capital. One is buying back his freedom in doing so. I feel this is true as a borrower is never “free”; he is always a “captive” of the lender. Proverbs 22:7 says that, “The rich ruleth over the poor, and the borrower is servant to the lender.”

3. The Power of Mindfulness

In deferring gratification, the author preaches about the being mindful in the process. He argues that deferring gratification need not be torturous, and joy may even arise out of it. It all depends on how one lives his life. “Those who work mindlessly are not being diligent. Those who study mindlessly are not concentrating. Those who live mindlessly are wasting their lives. Therefore, developing the skill of mindfulness is an attempt to become more fully alive in all areas.” One can still be happy deferring gratification and living simply. This is something I am working towards and have experienced more of in the past year, where I look forward to the simple joys of life.

Overall, I would recommend this book to anyone, as the concepts are logical and wise. They are applicable to anyone desiring an improvement in their finances.

 

Purchase of Global Invacom

global invacom

On 07/12/15, I sold off a part of my holdings in Riverstone at $2.27. Having bought in at $0.875, the total gain is around 157%, after accounting for commission charges.

The proceeds have been channelled into Global Invacom, a satellite dish manufacturer at a cost of $0.167. GINVA, as it is called, is more of a turnaround cum growth stock to me. I would say it is more of a speculative position for me than a typical stock in my portfolio. It is currently trading at a high PE of 54.1 due to a bad year, but next year should be better due to a turnaround in orders from major customers. Its customers are launching more satellites, and GINVA is also in the process of designing new products for its clients. Hopefully, all these drip down to its revenue and profits. It is net cash, and its net cash is more than 50% of its market cap. Recent channel checks have shown that utilisation rates in its Shanghai factory (its primary manufacturing site) is back up to 70%- 80%, where previously it was below 60%.

To be honest, this is my first time stepping out of my circle of competence by investing in a tech stock like GINVA. I took a while to read up on its business and only pulled the trigger when I felt compelled by its investment thesis. I approached this trade in the form of probabilities – Heads, I win; tails I don’t lose much. Although my earlier trade in Lian Beng using the same methodology has not materialised, I think this is worth another try. Let’s wait and see.

Disclaimer: The author owns shares in the abovementioned company. The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.

My Insurance Portfolio

insurance&protection

One of my financial goals this year was to get adequately protected with insurance coverage. Recently, I have just added one last plan in my portfolio. I think that my portfolio now is sufficient, but will probably need to review it every year.

Insurance Portfolio

Total Death Coverage:                   $761,000
Total TPD Coverage:                      $756,000
Total Critical Illness Coverage:       $310,000
Total Income Protection:                 $29,160
Total Accident Death Coverage:    $300,000
Total Accident TPD Coverage:       $300,000
Monthly Premiums:                         $201.93 (inclusive of payments made through CPF)

If I was to remove the payments made through CPF, total cash outflow per month would be $167.85. Paying this amount per month for a reasonably large coverage seems like a pretty good deal to me. The reason why my premiums are so low per month is because most of my plans are term plans, and not life plans. To me, insurance should be used for protection and not investment. I included an accident plan as the risk of an accident occurring is higher due to my occupation and also because I am currently riding. In the case of death due to an accident, the total payout would be $761,000 + $300,000 = $1,061,000, and $1,056,000 for total permanent disability (TPD). Income protection plans provides one with a monthly income in the event where he is unable to work due to disabilites. Critical Illness Coverage (CI) provides one with a lump sum of cash in the event where one is diagnosed with any of the common terminal illnesses.

It’s always best to insure adequately to have a peace of mind. If you are looking to increase your insurance coverage, please consult your insurance agent, as I am not qualified to give advice on this issue. And while at it, please do look for agents who have your interests at heart.

 

Thoughts on Life

Lifeisagift
Today, I went to repair my bike which I bought a few months ago. Turns out that the previous owner did some nasty things to the bike which caused a couple of safety breaches and thus incurring a heavy repair price tag. I was pretty upset thinking about the amount of money I had to fork out to fix my ride, as I thought I had gotten a good deal at the price I bought. It affected me all the way home, as I had already spent a considerable amount of money to renew the COE for another 10 years.

At the same time, a couple of comparisons regarding peers in the day made me wonder whether my decision to work in my current industry was the right one. As I spaced out, it suddenly hit me…that I was still alive and well. And that alone was something to give thanks for. At that moment, I felt contented.

Looking back at the year, I realise that I have lots to be thankful for. To be able to continue pursuing my dreams healthily and to have loved ones by my side is something I am grateful for. I have witnessed close friends being mentally incapacitated indefinitely and attended the wakes of others who gave up on life too early. There are also many others who do not even have the same opportunities at life as I do. This is a good reminder for me not to compare myself to others and to stop being too uptight with money. Life is indeed short. Treasure it. Live it.

“You only live once. But if you do it right, once is enough.” – Mae West