By Lorna Tan, Senior Correspondent
Despite his background in finance, Mr Tan Kah Tee, former chairman of local insurer Asia Insurance, mistook minibonds for bonds.
The result? He lost the $30,000 which he had invested in Lehman Brothers, which collapsed spectacularly last year.
His other investments, however, have thankfully been much safer.
Mr Tan, 58, graduated from the London School of Economics with a bachelor's degree in economics with honours in 1973.
With the encouragement of his late father Tan Eng Chin, the former managing director of Asia General Holdings, he pursued a second degree in actuarial science at the City University in London and graduated in 1980.
Asia General Holdings is the parent firm of both Asia Insurance and Asia Life. His late father was chairman of the two subsidiaries before he became chairman of the parent firm.
After obtaining his second degree, he worked in an insurance broking firm in London for a few years. In 1984, he returned to Singapore and joined Asia Life's actuarial department. He became general manager in the 1990s and was appointed chairman of Asia Insurance in 2004.
Asia General Holdings was sold in 2007 for just under $1 billion to Japan's Tokio Marine & Nichido and renamed TM Asia.
Mr Tan is comfortably retired and pursuing music, his first love. He takes weekly cello lessons and is an accomplished pianist.
His wife Catherine Teo Poh Hong, 57, retired recently as a senior programme officer at the Agri-Food and Veterinary Authority of Singapore. They have no children.
Q: Are you a spender or saver?
I have had a good saving habit since I was young. During the first 10 years when I was working, I couldn't save a lot as I was paying my car and housing loans. After they were taken care of, and my career had stabilised, I was able to save more than half of my income.
Q: How much do you charge to your credit cards every month?
I have three credit cards, and my bills average $5,000, which I settle fully each month. I withdraw $2,000 cash from the bank about once a month.
Q: What financial planning have you done for yourself?
My portfolio comprises life insurance policies, bonds and properties.
I have three regular savings endowment plans, of which two matured about five years ago. The last one is maturing next year.
My bonds are from SIA, the banks, Singapore Power and blue-chip firms. Their annual returns average 4 per cent to 6 per cent. I go for blue-chip firms with regular coupon payments. These are relatively risk-free and I can sleep well at night. I have no kids so I'm not concerned about leaving a legacy.
My brief encounter with unit trusts was not very satisfactory. I invested $10,000 of my Central Provident Fund money in a fund 10 years ago and managed to break even. I don't like the fact that expenses of unit trusts are high, and I still have to pay the fund manager whether the fund is performing well or not.
Q: Moneywise, what were your growing-up years like?
My father, who was a very wise investor, was also very frugal. He had two wives and 14 children to take care of. Whatever he recommended for the company was what he would invest for himself. He invested in bonds and blue chips like Singapore Press Holdings (SPH) and HSBC.
He taught me to be thrifty. He would always comment on whether he got value for the money he paid for each transaction. He never wasted or spent lavishly. As kids, we had very few toys to play with. I am the 10th child.
Working in Asia Insurance as a manager, my father slowly accumulated shares over the years. He became the largest shareholder about 20 years ago. He died in 2001 at 86. My mother is a housewife.
Initially, we lived in a terrace house at Everton Road which was rented from the firm. When I was seven, we moved to a 10,000 sq ft two-storey bungalow with a built-up area of 4,500 sq ft in Sennett Estate.
Q: How did you get interested in investing?
I was chairman of Asia Insurance, but running Asia Life as general manager.
The life insurance business is an investment business. Life insurance companies survive by having good investments so there is enough money to provide for death and maturity claims. It got me interested in investing.
I had hands-on experience on where to invest the life fund, which comprised premiums paid by policyholders. We managed the fund very conservatively and stayed clear of derivatives and high-risk bonds and equities. Instead, we invested in a lot of bonds and blue chips like SPH.
Q: What property do you own?
I currently own four properties, and I have bought and sold two other properties - the Teneriff and Mendon Spring.
I bought a 1,500 sq ft unit at Asia Gardens in Tanjong Pagar in 1986 when I got married for more than $300,000. The current market price is $1.7 million. If it goes en bloc, I should get more than $2 million.
In the mid-1990s, I bought a 1,076 sq ft unit at Northvale in Choa Chu Kang for $600,000. Its value has remained the same.
I also own a 2,500 sq ft penthouse in Adam Park, Bukit Timah, which I bought in 2007 for $1.6 million. It is now worth more than $2 million.
I live in all three properties. Which one I will stay in depends on my programme for that day. The penthouse is near my cello teacher's place so when I have practice, I stay there. It currently houses my two baby grand pianos.
Last month, I bought a 1,292 sq ft unit at Central Green in Tiong Bahru for $1.2 million. I just sold my 1,055 sq ft unit at Mendon Spring in Pasir Panjang. This was bought two years ago at $775,000 and sold for $728,500.
I bought a 3,000 sq ft unit at Teneriff in Sixth Avenue for $1.2 million in 2000 and sold it for $2.9 million last year.
Q: What's the most extravagant thing you have bought?
In 2004, I bought a beige BMW 545 for $317,000. I wanted to see what it was like to drive a big-litre car. I sold it this year for $90,000.
Q: What's your retirement plan?
I retired in 2007. I have been financially independent for a long time. Our monthly expenses do not exceed $7,000 a month. In my free time, I give free maths tuition to my friend's daughter, I e-mail and I am learning to play the cello.
Q: Home is now...
The apartment in Asia Gardens, which is my matrimonial home.
Q: I drive...
A light-brown Volkswagen Passat CC.
Lessons from a frugal father
'My father, who was a very wise investor, was also very frugal. He had two wives and 14 children to take care of. Whatever he recommended for the company was what he would invest for himself. He invested in bonds and blue chips like Singapore Press Holdings and HSBC. He taught me to be thrifty. He would always comment on whether he got value for the money he paid for each transaction. He never wasted or spent lavishly. As kids, we had very few toys to play with. I am the 10th child.'
MR TAN KAH TEE
WORST AND BEST BETS
Q: My worst investment to date...
It was my $30,000 invested in Lehman Minibonds distributed by Maybank in 2006.
The terminology used to describe the product in the advertisement was 'minibond', so it gave me the impression that it was a special bond with higher interest that retail investors could buy.
It turned out to be a derivatives product. I didn't read the prospectus. It had a 5 per cent payout in the first year. I received a letter from the bank stating that I would not be compensated.
Q: My best investment to date...
My life policies and properties. So far, they have not failed me.
I bought a 3,000 sq ft unit at Teneriff in Sixth Avenue directly from the developer for $1.2 million in 2000. It was sold for $2.9 million last year. If Asia Gardens, where I have an apartment, goes en bloc, it is likely to be my next best investment.
This article was first published in The Straits Times.