When it
comes to managing money, my philosophy is always to give as much as you can
afford to those in needs. Firstly, give to the church and Christian organizations.
Secondly, to charitable organizations that provide medical cares and those that
helps the poor. Thirdly, I will render support financially to any of my
relatives. This is my way of laying up treasure in heaven. (Matt 6:19,21). As
such, I don’t really have a lot of savings, never more than $50k as emergency
fund. But I am not concern about “rainy days” or having lay-off from my job as
I believe God, Jehovah Jireh is my provider when I am really down in need.
19 “Do
not store up for yourselves treasures on earth, where
moths and vermin destroy, and where thieves break in and steal. 20 But
store up for yourselves treasures in heaven, where
moths and vermin do not destroy, and where thieves do not break in and steal. 21 For
where your treasure is, there your heart will be also.
But as I get
older and near to retirement age, I realize that soon I will be out of job and
out of money. $50k can probably last less than 2 years with frugal expenditure. Facing with this reality, I need to think of what happen when
this day come in a few short years. Then in 2014, Pastor John Koe came to
preach in Riverlife Church. He talked about how God helped him to invest in the
stock market. This was the first time that I heard about preacher talking about
stock investing. To me stock investing is equivalent to gambling. Yet, here is
a pastor who is still investing in stock. This became the turning point –
perhaps the stock market is the place to provide another income after
retirement. And so the journey to understand and learn about what stock
investing is all about begun in December 2014:
Stage 1: Stock market =
Casino
The stock
market is a risky place. That is what I used to believe. You just put money in
and hope the price will go up. It all sound so random and luck. So, it is best
to be avoided. But as I started to read more about trading and investing in the
stock market, I find that there are actually technical analysis that help you
to know how the market moves. Being an engineer and having acquired a technical
and analytical mindset, the casino imagery of the stock market began to
dissipate and risk can be managed through careful analysis and understanding of
stock price action. I am still learning …
Stage 2: Stock market = dividend
money tree
I also started read about
how other people invest their money. One of the common ways is through
dividend. You buy a company and the company give you money yearly, half-yearly
or quarterly. Hopefully, the dividend continues every year and even grows
bigger.
2 very inspiring
investors using dividend method as passive income are:
Lady you can be free: http://ladyyoucanbefree.com/
A Singaporean stock
investor: http://singaporeanstocksinvestor.blogspot.sg/
You will be amazed how
much their dividend is every year. And they are just in mid forties. I encourage
you to learn from them if you want financial freedom.
And so, I started to buy
blue-chip stock. Sure enough I began to get dividends and got excited. But when
the dividend comes, the stock prices of the companies dropped and continue to
drop with no upside. I started in early 2015, when the Singapore stock index is
the highest, close to 3200. It reaches the highest at about 3500 in April-May
2015. And so, growing a dividend money
tree is good only when the Stock index and stock prices is near the bottom. Or
else, you have to continue to manage it when you buy at the peak prices like I
did. After suffering some losses, I need to think what I should do. What should
I do when the price drop? Through common
sense reasoning, I should sell my shares. And when it stabilized at the low, I
bought it back. This way, I still have my stock and made money due to the
sell-buy price. After trying it out a few times, it seems a good strategy for
falling stock prices that I hold. That forces, me to learn more about stock
trading rather than stock investing. And so, putting the paper losses aside, my
journey to stage 3 began in end 2015.
Stage 3: Stock market = treasure field or minefield
My initial experience of
stock trading is like finding treasure, looking for stock that look good and
will be moving up soon. Occasionally, the technical analysis shows that it is
moving up and so I found treasures. Sometime though, the price move against me
and it is like stepping on a minefield. Making losses always hurt and create
fear to continue in the stock market. Thankfully, my gain is always greater
than my losses and God has been good in my learning journey so far. But I
believe the stock market is not about finding treasure and avoiding minefield.
There has to be a more systematic approach of entry and exit from the stock.
And so my journey of learning continues to stage 4 in mid-2016.
Stage 4: Stock market = oceans with varieties of
fishes
Actually, the stock
market is an ocean with many types of fishes and sea creature. These are the
different types of stocks – companies, REIT, ETFs and the common one that I
familiar. The rest, I am still no interested. Just like catching fishes, there
are many ways to trade the stock market. At this moment, I am still using a “line
and hook” to trade with tiny bait, so to speak. I need to build confidence.
Some stocks are easy to catch. Their up and down are so easy to see. Even if
you made mistake, just wait for it to correct itself and move up again, so long
as you never buy at the 52 week price, which I always avoid, having learn the
mistake from 2015 when I first started. In fishing in the stock market, I need
to control my emotions and follow closely to the technical chart. Sometime, my
emotion got me excited when the price is falling I quickly throw my line and
hook to buy. That is when I caught a “falling knife” and got losses. These are
the time where I made losses. Otherwise, I am pretty OK. My trades are still
very very small because of the lack of confidence. Also, my target is to exit
those lose stock made in 2015 which I am still holding. So it became a
stumbling block to move forward.
Be Financially Free
I wish I had learnt all
these in my younger days. All it takes is actually 20 years to be financially
free. Think about it, if you start working at the age of 25, earning $2.5k a
month, you can actually retire at the age of 45 – 50. For the first 5 years,
one should save about 20 to 25% of his salary. He should also learn all he can
about stock investment and trading. After 5 years, with the knowledge and
saving, he can then start to do some investment when the stock cycle is
conducive to go in. Youth has the advantage of time.
There are 2 resources God
has given to all of us, if you are born healthy. They are time, and your life. Firstly, always keep
yourself healthy – eat well, exercise, sleep and rest. Next use your time to
grow in wisdom - learn, experiment, increase knowledge and skills. Once, you
have the knowledge and skills in almost anything that you set your goal in, you
can then launch out to achieve it with your healthy life.
And with that I leave you
a good verse from the Bible to chew on it:
15 Be very careful, then, how you
live—not as unwise but as wise,16 making
the most of every opportunity, because
the days are evil. (Eph 5: 15,16)
Agape
