Painful lesson from paying off varsity loan

		Tue, Jan 19, 2010 The Sunday Times
By Lorna Tan, Senior Correspondent A banking officer since she left school, Ms Janice Poon, general manager of wealth management at Standard Chartered Bank Singapore, is closely attuned to how investors behave and how they shouldn't. The latter is something that keeps her up at night sometimes. 'People do not learn from past crises. Investors have a short-term investing mentality and they are still chasing the next best idea or fund. They need to learn to diversify and stay in the market,' said Ms Poon, 37. She gave the example of a customer whose idea of diversification is to split his investable amount of $50,000 into different China funds, something which she deemed risky as the investment is concentrated in one country. She is a strong advocate of investing regularly rather than in one lump sum, which was a strategy that Stanchart drummed into its customers when the markets tumbled early last year. The rationale is that if one is regularly investing during a financial crisis, the cost of entry is lower and investors can accumulate units at lower prices. This will augur well for them when markets eventually rise. A bachelor of commerce graduate from Murdoch University in Australia, Ms Poon joined the currency department of a local bank in 1995. She left it in 2000 to join a foreign bank here as head of product management. She quit in May 2006 to take a 10-month hiatus to be a homemaker, before embarking on her current job at Stanchart. Her husband, 38, also works in the financial industry and they have a daughter, Caitlyn, six. Q Are you a spender or saver? I am generally a saver although I do reward myself every now and then. I save about 60 per cent of my income plus almost all of my annual bonuses. The last couple of years have been anomalies as my husband and I were preparing for our new home and the motivation to save became even stronger. Otherwise, I would invest a part of my savings. Q How much do you charge to your credit cards every month? I have five credit cards, one of which is a supplementary card from my husband. I typically put most of my spending on one card so that I can consolidate all my rewards points or smart dollars. Apart from the last few months where expenditure has been higher, I typically charge an average of less than $2,000 in total. There are times when I forget to do so, but I pay off the bills in full promptly each month. I visit the ATM once a fortnight and each withdrawal is typically between $100 and $300. Q What financial planning have you done for yourself? I invest in unit trust funds, stocks and bonds. Twenty per cent of my investment is in Asian equities, another 20 per cent in global equities, 30 per cent in bonds and 30 per cent in life insurance. Apart from insurance, I manage my investments myself. I have a will and I'm reviewing my insurance plans. Q Moneywise, what were your growing-up years like? I have a younger sister. When I was growing up, Mum was a teacher and Dad was in the insurance line. They had always been strict about spending although Mum would bend the rules when it came to books and anything educational. Mum always said that she would provide for whatever we needed, not we wanted. So I saved for my 'wants'. We lived in a three-room HDB flat in MacPherson. The hardest and most indelible lesson I learnt about money was when I returned from Australia where I had gone to university. My parents had taken out a loan for most of the fees required and I had to start repaying it as soon as I began working. My parents, as much as they love me, remained firm in not bailing me out. I had to really budget carefully and make sacrifices in order to make the payments. For five years, almost 70 per cent of my then monthly salary went to making these payments. In hindsight, this really helped me learn about budgeting. It's easier to say this now, but it was a painful learning process. Q How did you get interested in investing? I first started with investing in currencies in the late 1990s as it was an area that I thought I was familiar with - I was working in a foreign currency fixed deposit unit in a local bank then. While I did make modest profits, it caused me many sleepless nights when I would be worrying over currency movements overnight. My next investment was in a unit trust fund, and then penny stocks and initial public offerings - none of which panned out for me. The hard lesson I learnt then was that I had to do research myself on what I wanted to invest in. Today, this continues to be the approach I have towards all investments. Q What property do you own? I own a two-storey terrace house in the East Coast. The land size is about 2,400 sq ft. I bought it for $1.3 million in the middle of 2008, to be near my daughter's primary school. It was valued at more than $1.5 million late last year. It took me one year to reconstruct and build on the existing 37-year-old structure. I spent around $200,000 on the renovations, excluding furnishings. Q What's the most extravagant thing you have bought? My black Yamaha baby grand piano which cost $19,000. I bought it in August last year and I painted the living room black and white to match the piano. No regrets though because playing the piano relaxes me. Q What's your retirement plan? Both my husband and I are not spenders so we would have savings for our retirement. We have enough in insurance policies, both life and medical/critical illness plans. My own investments took a beating last year and I intend to invest more through regular savings plans. This will help smooth out the ups and downs of the market and take the pressure off having to guess when the best time to invest is. In our golden years, when our daughter is self-sufficient and we are loan-free, I reckon we will need up to $5,000 a month. Q Home is now.... My terrace house in the East Coast. Q I drive.... The family car is a black Volkswagen Golf GT TSI. Q What has been your worst investment to date? The stock of a company which was in the shipping industry. This was a sector that I had absolutely no clue about and I bought the stock only because I thought I had read some positive news about the company, not understanding that the news was possibly all priced in already. The stock plunged shortly after I invested and continued to languish. It took me nearly two years to break even. This was almost 15 years ago. The amount was small, about $3,000. Q And your best investment? I can say my best investment has been currencies in the late 1990s. Incidentally, they were also my first investment. The investment amount was small. I started with less than $10,000. The currencies I dabbled with included USD, GBP, AUD, XEU (a trading currency that preceded the EUR). I did make a fair return with currencies, between 20 per cent and 25 per cent over 18 months. But I had sleepless nights when I would be watching currency movements overnight while not being able to do anything about it. I realised I could not take that kind of excitement when it came to investing. This article was first published in The Straits Times

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