Coffee Meets Investing

6 Highlights & Questions At The Seedly Investing Meetup 2018

Over the past weekend, we ran our largest Personal Finance community Meetup for the Seedly users and readers. We saw over 140 individuals coming down to MOX for the event to learn about Investing basics and strategies.

Here are some quick facts:

  • Almost 50% of the people who came are from the millennial segment (most have just started working, aged between 20 to 35 years old)
  • We also had a good equal representations of both male and female investors! (unlike most other investment workshops)
  • Overall, we had a solid response for the event which was sold out within days.

Here’s what went down!

I will now aim to do up a quick summary of what was shared – in 6 segments with the best questions which were covered during each segment.

Personal Finance 101 – Kenneth from Seedly

  • Prudent Personal finance is adopting a holistic approach at growing your wealth
  • You will need to cover your bases first before shooting for the skies
  • The best investment is the one that pays you the most when you need it the most (Insurance)
  • Insurance = Your Goalkeeper = Sufficient coverage for the right reasons at the lowest costs

Q1: How much should one spend on insurance based on their age group?

Age group is almost irrelevant. Let me explain why…  A 35 year old Single man who sits at home and plays games all day has a very different liability profile compared to a 35 year old married man with a spouse and 2 kids. 

ETFs and Robo-Advisors – Tai Zhi from AutoWealth

  • It is extremely difficult to predict the market and actively manage your own funds (e.g with Trump, Brexit, Trade wars etc)
  • Almost 90% of actively managed funds get their decisions wrong
  • Over the historical averages, you’ll find that if you had invested in the Indexes (eg the MSCI World Index) you would have outperformed most actively managed funds
  • Robo-Advisors offer a transparent, fuss-free, low cost method of investing for beginners and intermediate investors

Q2: Are ETFs the same as Mutual Funds (Unit Trusts)?

Collective investment schemes, the legal term used by MAS, comprise of:

  1. Mutual funds (unit trusts)
  2. Real estate investment trusts (REITs)
  3. Exchange-traded funds (ETFs).

ETFs are different from mutual fund in the following ways:

  • listed and trades easily on the stock exchange as opposed to not being listed
  • Fund manager typically do market benchmark-tracking as opposed to fund manager who actively engage in stock-picking and market timing

Yes, we had an amazing selection of healthy greens to go along with our kopi.

Portfolio and Age Strategy – Ming Feng from Seedly

  • Our goals change as we age, likewise for our financial targets and aspirations
  • Your portfolio should shift start with more equity (more risk) when you are early in life and shift towards more bonds as you age (less risk)
  • At each age profile you would know that you have different risk appetites due to different liabilities and commitments (eg family, kids, home loans etc)

Q3: Supposedly I’m in my 20-30, with a recommended 70/30 investment ratio, but faced with a bearish market soon. What should I do?

You may want to consider starting with either a 60% stocks 40% govt bonds portfolio or a 40% stocks 60% govt bonds portfolio, especially if that helps you to be psychologically more resilient against a market correction/downturn…Therefore, it is certainly worth the effort to carefully assess your resilience against market corrections (ie. risk appetite) and select a portfolio risk level you feel comfortable with, even in a market correction.

Value Investing Like a Boss – Alvin Chow from DrWealth

  • There are many false investing beliefs in the market with lack of data to prove that they work (eg wearing a red underwear, sticking a coin on calculators, sell in May etc)
  • Value investing is a proven way to look at small cap stocks which are often underlooked by most investors because they are less sexy and non blue-chip – hence undervalued from the onset.
  • The goal is to use the Net-Net strategy to figure out the fundamental price per share of the stock to decide if the stock is undervalued (with a margin of safety of 2/3)
  • Gave examples of Creative Technologies and Qian Hu (fish supplies)

Q4: How do we identify companies that will meet the Net-Net criteria?

Start with a stock screen and find stocks with Price-to-book ratio less than 1. Most stock screeners will be able to have this function. Thereafter, go deeper to figure out the financial statements to study the formula:

Current Assets – Total Liabilities = Cash value (if liquidated)

Cash value / Number of shares = Cash per share 

If (Cash per share) < [(2/3) x Price of share], it is an undervalued stock

Dividend Investing For Beginners – Chua I Min, AB Maximus

  • Dividend investing offers a steady and predictable stream of secondary income for you
  • Examples would include REITs (Real estate investment trusts) and Blue Chip stocks which allow you to build up a portfolio of steady dividend paying stocks
  • You can use the tool to screen stocks which allow for steady dividends
  • For him, her personally prefers to build up a solid dividend base of total invested at $1million SGD, and at 5% p.a conservative dividends, would equate to $50,000 a year, or $4,166 per month passive income.

Q5: What is a good value to measure the price of REITs (as compared to other stocks)?

Dividend yield and gearing ratio. In addition to various qualitative analysis of the REIT.

P2P Investing Introduction – Vikas Jain, FundingSocieties

  • Traditional SMEs can either go to banks to seek out working capital loans or business term loans
  • However at time, these loans are too small for Banks to spend the time and effort to go and assess them
  • P2P is a form of Peer-to-peer (also known as Crowdfunding) for businesses which allow them to figure out a new age financing method for legitimate business to raise quick funds to run projects within 6 to 12 months.
  • Returns so far stand at around 1% per month (as brought up from a community member – Jimmy and defaults stand at around 1.5% of all companies invested so far)

Q6: What happen to investor if the loans been default on P2P lending platform?

This depends on the reason for default. If its just a simple delay in payment you are lucky.

If the company filed for bankruptcy, you might never see your money again. There are thereafter many ways that the P2P platform (eg FundingSocieties) will take to enforce legal action on the company to get payments (eg liquidation).

Conclusion: Valuable knowledge served with aromatic Kopi

As with any other Seedly meetup, we end the day with clear, actionable steps for our community members to take home with them. We hope that you have learnt as much as we did and look forward to seeing you at our next one!

If you want to read all the questions from the meetup event, you can simply head over here:

Seedly Question and answer