Businessman makes money work for him

Founder of Stolz group of companies has always been enterprising, even back in his junior college days. -ST

Fri, May 28, 2010
The Straits Times

By Lorna Tan, Senior Correspondent

Mr Mark Tan learnt the value of passive income from an early age. He was in Nanyang Junior College when he got his friends to work for his father's firm, unloading containers during the school holidays. For making the introductions, he was paid $10 per person per day. By recommending several friends, his 'income' easily exceeded the daily pay of $50 he would have earned from doing the job himself.

It is no wonder then that the 35-year-old turned to being his own boss after working as an employee for eight years. After he graduated from the Nanyang Technological University in 2000 with a mechanical engineering degree, he worked as a design, project and sales engineer at three engineering firms before joining his father's company, Aircontrols, as a sales and general manager in 2005.

As father and son had different approaches to running the business, the younger Tan decided to venture out and founded Stolz Engineering in 2007. Stolz supplies cooling towers to commercial projects like Gardens By The Bay, Suntec City, Raffles City and One Raffles Quay.

His father was in the same business but was supplying to the industrial sector. He wound up his business last year.

Mr Tan did not stop there. In 2008, he set up Stolz Transportation, Stolz Holdings, Stolz Logistics and Stolz Trading.

So far, he has invested about $3 million in his businesses. From just seven employees, his businesses now have a staff strength of 50 and the group's average current turnover is between $12 million and $15 million. Stolz has offices in Singapore and Malaysia, and Mr Tan plans to venture into China and Vietnam later this year.

Having achieved financial success, Mr Tan wants to inculcate in his staff the virtue of 'giving back' to society through fund-raising projects. The group raised funds during the President's Challenge F1 Charity Lunch last year. Its next project is to sell old newspapers collected over a weekend in a chosen neighbourhood and donate the proceeds.

Mr Tan is married to Ms Stella Gwee, 33, who is a director at Stolz, and they have a son, Xavier, four, and a baby daughter, Andrea, born last month.

Q: Are you a spender or saver?

I strongly believe we should spend, but wisely and effectively, so that we can make money in turn. Perhaps it could be because my father was a businessman that it was instilled in me early that we have to invest money to make money.

When I was an employee, I would try to save $1,000 out of my $4,000 monthly pay. I would invest my savings in shares to make the money work harder for me.

Q: How much do you charge to your credit cards every month?

I use the Amex Centurion and UOB Infinite cards. Both give me such good rewards that I choose to use them instead of cash when I spend. Moreover, the bills provide a summary of my spending so I can keep track. My credit card bills amount to $30,000 a month, which I clear at the end of each month. I normally draw $1,000 from the ATM and it would usually last a week or two.

Q: What financial planning have you done for yourself?

Besides medical insurance, my key staff and I are covered under the company's Keyman Insurance with a sum assured ranging between $250,000 and $1 million each.

My finances are split into 40 per cent in business, 30 per cent in properties, 20 per cent in equities which include foreign exchange and shares, and 10 per cent in cash. The company is growing and thus the bulk of my finances is in it. When it comes to stocks, I adopt a buy and hold approach as they are long-term investments. I like stocks with good dividends and growth potential. I have about $100,000 invested in stocks and they include Citibank and Healthway.

Q: Money-wise, what were your growing-up years like?

I grew up with a younger brother and sister. My father was a businessman and my mother, a housewife. We lived in a 4,200 sq ft, two-storey, semi-detached house in Serangoon Gardens. Although my family was well-to-do, we were taught the value of money since we were young.

When I was in secondary school, I had to submit a budget sheet for my monthly allowance to my father each year. The budget would be proposed based on my expenses on meals, stationery, books, bus fares and so on. I tried to increase the bud-get every year but my father would always question the validity of the increment.

During secondary school, I was already familiar with the term 'inflation' and I always used it to try to convince my father that 'the increased cost of living' should justify a higher allowance from him, but he wouldn't buy my argument. I learnt instead to look out for opportunities to earn more money.

Q: How did you get interested in investing?

The idea of investing is to use money to make more money. I started my first investment when I was in university in 1997 and bought initial public offerings. Then it eventually grew into stocks and shares. My second and biggest investment was setting up Stolz. I also believe in property investments because of land scarcity.

Q: What property do you own?

I bought a 5,000 sq ft semi-detached house in Serangoon Gardens for $2.2 million in March last year. Its value has gone up by $600,000 since then. I also own a 6,000 sq ft freehold office in MacPherson. I bought it for $750,000 at an auction in 2007, and it is now worth more than $1 million.

Q: What is the most extravagant thing you have bought?

It was a dark red Hermes Birkin bag which cost $13,000. I bought it for my wife in 2008. It was to show my appreciation for her support of my business venture. I needed capital when I first started my business and had to downgrade my car and sell whatever luxury items I possessed. She supported me then by giving up her jewellery and other luxury items, including her favourite Louis Vuitton bag. When my business began to make a profit, I bought the Birkin to replace that bag.

In 2008, I also bought a pair of Patek Philippe watches, costing $48,000, for my parents. That was for my mother's birthday. My father isn't a very romantic man so by buying a pair, I hoped that it would help introduce romance to them.

Q: What's your retirement plan?

I believe a combined monthly income of $10,000 would be necessary, while $20,000 would be comfortable, in our golden years. My retirement plan is to accumulate my investment portfolio, which should have sustainable returns and long-term capital appreciation.

Q: Home is now....

My semi-detached house in Serangoon Gardens.

Q: I drive...

I'm chauffeured in a black BMW 750Li for my work commute and I own a black Mercedes S class for my family. For pleasure, I drive my red Ferrari 360 Modena on weekends.

 WORST & BEST BETS

Q: My worst investment to date...

I invested in initial public offerings (IPOs) without doing any market research during my university days.

Because of my lack of understanding of company fundamentals, some of the IPOs that I invested in did not go the way I expected.

I lost a few thousand dollars over a few months in 1999, which at that time was a big damage to me. I can't remember which stocks they were.

Q: My best investment to date...

It is the 5,000 sq ft semi-detached house in Serangoon Gardens for which I paid $2.2 million. The market value has since gone up by another $600,000.

This article was first published in The Straits Times.