Cautious and Steady Wins the Investment Race

Edmund Chua has had his fair share of highs and lows in his investment journey. One key lesson this entrepreneur in his late 40s has taken away from his experience is that he should only invest in things that he has knowledge of. And when it comes to real estate investing, he emphasised that being able to physically touch and feel the property is of utmost importance.

A cautious approach to investing is the right way to go

“I wouldn’t claim to be a veteran real estate investor but I adopt a very cautious approach when it comes to my personal investments, especially when it comes to real estate,” says Edmund.

He adds: “I’m based in Sydney, and till today, I limit myself to local deals as I am only confident of my experience and in-depth knowledge of the local real estate market. And for all the real estate deals I invest in, I personally make a trip to the site, just to ensure that the properties really do exist!”

Two years ago when RealVantage launched the Willoughby project in Sydney, which entailed the acquisition of a site that was subdivided and sold individually as townhouse developments to capitalise on a rare relaxation of rezoning requirements, Edmund saw this as a golden investment opportunity. He made multiple trips to the site to better understand the project and to monitor its progress.

“The projected returns were a net IRR of 25.6% per annum, which to me, was fabulous!” he beamed.

Edmund reveals that some of his friends have derided him for being too conservative, restricting himself to stay within his comfort zone of investing. However, his conviction remains steely.

“RealVantage had successfully launched a myriad of projects in the U.K. and the U.S., not just Australia. However, other than Australian real estate, I have zero knowledge of the global real estate market. Rather than risking the uncertainty, I choose to invest in things that I can see and touch. Call me unadventurous but I am simply not ready to take the plunge to venture internationally,” he says.

What you invest in should be a reflection of your age

Edmund believes that asset allocation by age plays an important role in building a sound investment strategy for retirement.

“Your age dictates how much risk you can tolerate in your investments. I ventured into the world of investing in my early 30s. At that time, I could afford to stomach more risk. But as I grew older, I have reduced the risk exposure in my investment portfolio,” says Edmund, who sets aside 5% of his disposable income for investments, from which he derives monthly incomes.

He reveals that he favours bank stocks for their good dividends and stability and owns shares of financial institutions in the banking and financial services sectors, with small stakes in payment platforms and fund managers. He also invests in an assortment of exchange-traded funds, as well as equities, including stocks of technology companies.

“My best investment is having acquired Macquarie shares. I used to be an employee of Macquarie and was given some shares as employee benefits. And each time the company pays dividends, I reinvest them,” he shares.

In real estate, he has pooled resources with several friends to buy an investment property in Australia, apart from investing with RealVantage. “The plan is to progressively reduce my higher-risk investments and invest more in those with lower risk, once I hit 60,” Edmund explains.

Look far and dive deep

“Always perform your own analysis of a company’s financials, before investing your hard-earned money. It is imperative to educate yourself and understand what you are investing in. This will pay off in the long run.”

Edmund believes that a long-term investment mindset is essential for successful investing, and conducting research that takes a deep dive into your investments is key.

“Always perform your own analysis of a company’s financials, before investing your hard-earned money. It is imperative to educate yourself and understand what you are investing in. This will pay off in the long run. Also, don’t sweat the small stuff or allow yourself to be swayed by short-term volatility. Long-term investors succeed because of a disciplined investment approach that lasts many years,” says the seasoned investor.

Stick to an investment strategy

To Edmund, it is important to choose the right investment, adopt a single investment strategy or philosophy, and just stick to it.

“This is how you gain experience towards building your investment portfolio. You may make mistakes along the way and that is the reason you should not over-commit. Instead, invest in only what you can afford to lose, so that you do not lose sleep over it,” he advises.

He also discourages investors from falling for the recent common phenomenon of ‘FOMO’ (fear of missing out) investing, which refers to the rush to invest in specific stocks, solely based on hearsay or investment trends. “Don’t chase a hot tip, no matter how tempting it is,” opines Edmund, who is also a fervent believer in portfolio diversification.

“You may make mistakes along the way and that is the reason you should not over-commit. Instead, invest in only what you can afford to lose, so that you do not lose sleep over it.”

The book that inspired him to better manage his money and influence his kids

Edmund is greatly inspired by Scott Pape, a renowned Australian author, television presenter, and radio commentator. His book, The Barefoot Investor: Five Steps to Financial Freedom, delves into the fundamentals of investing and the importance of a financial plan to better manage money.

“As this book is full of stories and anecdotes from everyday Australians — singles, young families, retirees, who have applied the simple steps in his book to achieve amazing, life-changing results, I feel that I could very much relate to it on a personal level. That is why I follow what Scott Pape prescribes,” says Edmund.

Growing up, Edmund’s parents did not provide him with any investment guidance, as they were the ‘baby boomers’ generation and advocated the typical ‘save as much as you can’ approach to money instead of investing. But he does not want his children to grow up with this mindset.

“I have a 13-year old daughter and a six-year old son, and have started to inculcate the importance of personal finance to my daughter through an app called Spriggy. This app encourages financial responsibility and independence in kids by developing and building essential skills, such as earning, budgeting, saving, and spending. It also teaches kids how to save and keep themselves out of debt, and learn how to make good spending decisions,” he elaborates.

About RealVantage

RealVantage is a leading real estate co-investment platform, licensed and regulated by the Monetary Authority of Singapore (MAS), that allows our investors to diversify across markets, overseas properties, sectors and investment strategies.

The team at RealVantage are highly qualified professionals who brings about a multi-disciplinary vision and approach in their respective fields towards business development, management, and client satisfaction. The team is led by distinguished Board of Advisors and advisory committee who provide cross-functional and multi-disciplinary expertise to the RealVantage team ranging from real estate, corporate finance, technology, venture capital, and startups growth. The team's philosophy, core values, and technological edge help clients build a diversified and high-performing real estate investment portfolio.

Get in touch with RealVantage today to see how they can help you in your real estate investment journey.

Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.