Confessions of an Everyday Investor


08 Sep Confessions of an Everyday Investor

Successful investing isn’t just for the Warren Buffets and Peter Lynches of the world. It can also work for everyday people like you and I, says self-taught investor Lum Yin Peng. The key to success: 1% inspiration and 99% perspiration.

Words by Lum Yin Peng

It happened more than 15 years ago. Like most people, my first foray into investing was without much preparation. My plan was simple then: buy when prices are low, exit when they go up, make a quick buck.

My first investment was in unit trusts. Dissatisfied with the low savings and CPF interest rates, I marched into the nearest bank during a lunch break and hurriedly bought some unit trusts based on the staff’s recommendation with cash and CPF funds. Secretly proud that I was finally doing something to “invest” my money, I also began to buy into tech stocks, which were quite the fashion then. Like most people, I believed in word-of-mouth, picking up stocks that I knew friends or colleagues had bought into.

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I spent very little time on researching what I bought. As a full-time working mom with two young toddlers to take care of, I had the perfect excuse – no time!

Fast forward a few months later, I saw the prices of my investments plunge by about 40 to 50%. I don’t remember much of the names of those stocks or unit trusts I had bought, but I vividly remember how my emotions were swayed by every movement in their prices. I held on to my investments, hoping that one day, I could at least break even.

It ended up being a painful lesson. Thankfully, I didn’t have much money to lose then. I consoled myself: investing was just not for me. I thought that was the end of my “investing journey”. I then did when I usually do when I face a problem: I began reading – voraciously.

Read Stock Investing Books

The first books I picked up, Rich Dad, Poor Dad by Robert Kiyosaki, followed by Cashflow Quadrant, brought about a mindset change in me. I realised that I have been thinking very much like the crowd, failing to invest in the most important thing – my own education. I had much to learn and so I devoured more books and even attended workshops on investing.

At that time, I wasn’t sure if stocks, property or unit trusts were for me. Many books later, it was a series of Warren Buffett books – describing his style of “value investing” – that fully convinced me that I needed to channel my attention into stocks investing.

Despite sleep-deprivation taking care of two very active boys, I continued reading up as much as I could. But many of the books were too complex for a common investor like me. It was then I chanced upon a relatively unknown book by German author and investor, Bodo Schafer, titled The Road to Financial Freedom – Your First Million in Seven Years. His inspiring book spurred me to take concrete action.

The first takeaway I applied from his book was to set up a separate savings account, named the “Goose” Account. Just as in the Aesop’s fable, the moral is never to kill the goose that lays the golden egg. Similarly, one is not allowed to touch the money in this account except for the sole purpose of investment. The recommended target is to set aside 10% of one’s income but I decided to top that to 30% or even more where possible. This ensured that I was investing only with money I was comfortable affording.

Coupled with my own research, the book also convinced me that stocks is the mode of investment that has shown and will show consistent results – in the long run. For this type of investment to work, however, the investor must be prepared to impassively buy well-managed stocks during crises (which comes about in cycles) and hold on to them for at least 2 to 5 years. Something along the lines of what my idol Warren Buffett would preach, I suppose.

My husband and I both agreed we had to build up our war-chest of cash to take advantage of sell-downs in the stock market. So, I went about setting up Excel spreadsheets to track our expenses, stock movements and even our net worth. We scrubbed through all our expenses, saved consistently, and steadily built up our “Goose” Account.

The third and most important takeaway, which Schafer termed “The King’s Road”, was to invest only in quality and strong stocks, i.e., blue chips. This helped narrow down my radar of stocks substantially. We decided to look into stocks of businesses we could understand, such as banks, transportation, and property development. Unlike most investors who endorse asset diversification, Schafer recommends focusing on the quality of stocks. We eventually narrowed down our potential list to less than 10 stocks. We also took the chance to sell away stocks that did not fit our criteria and bought slowly into this new list of stocks.

When the stock market took a sudden beating during the 2001 September 11th crisis, it was the first real test of our “faith”. We started buying more of the stocks we had been eyeing. As there was no odd lot buying then, each transaction was quite a substantial sum for small-time investors like us.

To brace myself, I printed out the STI chart over the past 15 years and wrote under it in uppercase: “STOCKS GO THROUGH CYCLES!” I had to keep reminding myself that that was the perfect time to buy. I held on to the faith that while stock prices may have plunged (in this case due to a largely external, one-time event), companies that are well-managed would eventually see a rise back in their prices.

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Through the crisis, which saw our net worth dip month by month, family life went on. Both my husband and I kept our day jobs, spent well within our means, and had little debt. Our children were too young to know better, and our simple frugal lifestyle didn’t feel like anything out of the ordinary for them. Meanwhile, we were also getting dividends from our stock holdings, which we again plough back into the “Goose” Account.

Some 12 to 18 months later, the stock market recovered. Our net worth rebounded to levels higher than before the crisis. Our methods were finally validated. With some tweaks here and there, our investing methodology has stayed like this even to this day.

The most important thing I learnt – the financial journey of an everyday investor is not a linear learning curve. Learning comes from scattered sources. We make mistakes; we learn again. Coupled with a supportive partner/spouse and huge doses of patience, faith and discipline, investing can work even for everyday people.


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  • Fred
    Posted at 17:39h, 17 October Reply

    I really like this post. At least you succeeded, congrats.

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