“I read with great sadness and anger that yet another retail investor has lost his hard earned savings,” financial investment coach Adam Khoo posted on his Facebook page on 21 April 2019.
“This 70 year old investor invested his life savings of $250,000 into Hyflux Bonds because his financial advisor told him it was ‘very safe’ and ‘sure to make money’. In the end, the company is going bust and he is left with less than $7,000.”
Mr Khoo posted the photo (below, apparently from a Chinese newspaper) with his post.
Thousands of investors who had put their money in Hyflux, a water and power company, face the prospect of having their investments wiped out as the company runs into serious financial trouble and seeks court protection.
The spectacular fall of the Olivia Lum-led public listed company is a lesson in investing which many people should heed. And that lesson is a time-tested one: always study and research the companies you intend to put your money in first, no matter how highly they are praised or touted to be the next big thing.
Never just depend on your financial adviser (or anyone else) to tell you which investment you should put your money in. ONLY YOU should make that decision, and the only way to do so intelligently is to know how investing works and what it entails.
It is often said – quite correctly – that most people lose money investing in the stock market. One of the main reasons why this is so, I suspect, is because few take the time to read, to study, to do research and find out the state of the company he or she is interested in.
As Mr Khoo posted on his Facebook page, in dramatic fashion:
“I keep telling people that they should NOT invest their hard earned savings in ANYTHING unless they have the proper knowledge and skills in the financial markets. Investing without knowing how to invest is SUICIDE!!!!”
Some may feel that financial research – having to read companies’ financial reports, or scrutinise the balance sheet, the cash flow or the income statements – is too tedious and labour intensive and time-consuming.
They frown at finding out what current ratio is, what equity ratio is, what exactly is meant by price-to-earnings ratio, to look at historical cash flow of a company, or its operating activities, its debt and things like this.
But if you are putting your hard earned money into the company, money you have spent an entire life accumulating, wouldn’t you want to make sure you are keeping risks to the minimum? And that the only way to do this is to make informed decisions?
Of course, there are no 100% guarantees in investing, but you do want to ensure that you have done your due diligence.
So, how should you go about learning these things?
As a first cheap and easy step, visit the libraries. They have books on investments which you can borrow. Some of my favourite libraries for this are the community libraries at Nex in Serangoon, the library in Geylang East, and of course the Central Library in Victoria Street.
If the books you want are unavailable at the moment, you can make a reservation for them via the NLB app. (Download from the Apple store or from Google Play.) A reservation fee of $1.55, which you can pay with your EZ Link card, applies.
Another avenue is to visit the bookstores, with the best being Kinokuniya in Orchard. It has shelves of investment books. You can also purchase them online via Book Depository (my preferred go-to online bookstore because its books are cheaper and delivery is prompt), or via Amazon.
There are also e-books you can read for free, such as through this website: https://www.pdfdrive.com/
But what books should you read, as a beginner?
I am no expert in this and can only recommend what I have read myself, or books which I feel may be suitable.
Locally, you can check out Mr Khoo’s book, of course. It’s called “Winning the game of stocks!”. Others would be “The Traders’ Blueprint”, and Mano Sabnani’s recently released book, “Money Secrets”.
These books are written for relatively easy understanding.
One of my first and still my favourite investing book is by Morningstar’s Pat Dorsey, titled “The Five Rules For Successful Stock Investing”. (Also check out Morningstar’s 3-volume workbooks.)
There are many books you can (and should) look up. All you need to do is to do some searching online, but the above-mentioned ones could be good to start with.
Besides reading books, you can also sign up for some courses. (I wouldn’t advise spending thousands on commercial courses for now. There are cheaper options which would give you a good initial grounding as well.)
For example, you can access the MySkillsFuture website to see some of these courses, which include those run by the Singapore Stock Exchange (SGX) itself, or by the universities. These investment courses are often sponsored (by the organising companies) and subsidised by Skills Future. So, you don’t pay much (if any) out of pocket.
There are many ways to invest, depending on your personality or investing style, or your goal or purpose in investing, and so on. Find out the answers to these questions and you will be way ahead of those too lazy to put some effort into how to grow their money. Those who want to make a quick buck without effort. That is the sure way to lose all your money.
Yes, you can make money in the market – heck, many people around the world have gotten rich doing so. That is not the issue. The question is whether you are willing to put in the effort to become one of them too. If you are, good on you! If not, then your chances of losing your little nest egg is high.
So, don’t be the latter. Spend some time and effort learning how to invest. It is worth it. And it is what masters like Warren Buffett would also advice.
**DISCLAIMER: The writer is not an expert in investing. The above article should not be taken as any recommendation or advice in investing. They are mere suggestions on some avenues you may want to check out to enrich your knowledge of investing. You MUST make your own decisions when it comes to financial investing, and nothing in this article should be taken as financial advice for your investing purposes.