Tue, Jan 20, 2009
Founder of personal development firm Mind Edge and performance coach Alan Yip, 45, loves to trade in shares and invest in properties. But that is how he lost his hard-earned savings during the Asian financial crisis, so he is more careful now.
A Hong Kong citizen who is a Singapore permanent resident, Mr Yip became interested in property investing when he was working in Indianapolis in the United States as a computer programmer in a utilities firm.
'I was able to buy properties without any down payment so I became a property investor. At one time, I had eight landed investment properties in Indianapolis, Greenwood and Bloomington. I only had to make sure that the rental income from these properties covered the mortgage payments and maintenance,' he recalled.
In the US, it is possible to buy resale properties without a down payment as certain financial bodies allow mortgages to be transferred from seller to buyer without the need for bank approval.
The eight properties yielded a combined monthly rental income of US$2,000 to US$2,500. When he sold them a year after he was posted to Singapore by a chemical technology firm to set up its Asia-Pacific operations in 1996, he pocketed a profit of US$80,000.
This buoyed his confidence in properties, and fuelled other purchases when his siblings in Hong Kong roped him in when they bought three retail shops and a condominium in 1996.
'I was reckless in managing my money then. I didn't even ask for the details of these property investments and simply wired them the money, which amounted to about $150,000,' he said.
When the Hong Kong property market headed south during the Asian financial crisis a year later, they were forced to sell the properties at a loss and Mr Yip never got his money back.
In the same period, he lost another $100,000 from his Singapore, Malaysian and Hong Kong stocks.
In 2003, Mr Yip started Mind Edge with borrowed funds of $50,000. The company, which reaches out to students, parents and corporate entities, now generates an annual revenue of more than $1 million. This year, the firm with 17 staff plans to expand to Malaysia, Indonesia and Thailand.
Mr Yip is married to housewife Karen Leong, 31, and they have a daughter, Tiffany, four. His first book FUNtastic Parenting, on parenting, will be launched next month.
Q: What are your money habits?
I'm definitely a saver. I have separate bank accounts for different purposes. Every month, I put 10 per cent each in savings and stock investing. Another 10 per cent goes into an account meant for vacation and fun and 5 per cent is for my personal development such as the purchase of books and videotapes and attending seminars. I'm totally obsessed with improving myself. The rest of my income is for household expenditure, allowances for parents and wife, and insurance.
Q: What financial planning have you done for yourself?
I have primarily invested in Singapore stocks, properties and my business. I've been trading stocks since I arrived here in 1996.
I used to be crazy over share trading, doing my own analysis with information from books, newspapers, annual reports and journals.
Now I don't follow the market every day. I accumulate and hold. Currently, 70 per cent of my stock portfolio is in blue chips like Singapore Exchange, Keppel Corp, Wilmar, ST Engineering and Dairy Farm, and 30 per cent in small caps like Man Wah and Cacola.
On average, I achieved respectable returns of more than 20 per cent per annum.
Q: What about insurance planning?
I have a whole life policy with HK$1.8 million (S$345,000) in coverage and two term life plans, one of which includes critical illness cover. The total coverage for the term life plans amounts to nearly $850,000. I pay about $13,000 in annual premiums.
Q: What's your investment philosophy?
Value investing, which is the investing style of gurus such as Mr Benjamin Graham and Mr Warren Buffett. That means buying at good value and holding for the long term for appreciation and dividend yields.
Q: Any other investments?
I invest in properties as I want to build up a portfolio for passive income. In 1992, I bought a 0.4ha piece of land in Bloomington, the United States, for US$75,000 and built a 2,200 sq ft home where I lived when I was in the US.
It is now generating a rental yield of 10 per cent a year and the house is worth about US$100,000 (S$149,000).
I have three investment properties in Singapore. In June 2006, I bought a 614 sq ft condo in Kallang for $447,000 and in January 2007, I bought a 969 sq ft, two-bedroom condo in Siglap for $739,000. I also own a 1,350 sq ft home office condo in Buona Vista which I bought in March 2007 for $1.08 million. The first two properties will be ready for occupancy by this year while the third will be completed by next year.
I still own an ice-cream parlour business in Bloomington which I set up with my savings of US$70,000.
I also have a collection of 15 oil paintings by Vietnamese, Thai, Australian and Chinese painters.
Q: Moneywise, what were your growing-up years like?
We were a family of seven living in a small 200 sq ft government flat in Hong Kong. I was the fourth child. My father owned a small furniture business. But he was not a good businessman - he was Mr Nice Guy to his employees, who took advantage of his leniency. I spent a lot of time observing how he dealt with his customers and employees and that is why I decided to be an entrepreneur.
My mum was my first mentor. A worker at a toy factory, she instilled in me the values of dignity and perseverance. She never complained that we were poor and we never borrowed any money although we didn't have enough food at times.
To earn extra money, my siblings and I would paint plastic toys like dinosaurs and skeletons at home, earning 50 Hong Kong cents for a pack of toys. We learnt the value of working hard and saving the money.
Q: Your best investment to date?
There are two. First, my investment in Mind Edge. I set it up in 2003 with borrowed funds from balance transfers. I had to make cold calls for the first four months and when I had no business then, it was really worrisome especially as Karen was pregnant with Tiffany then.
But I persevered, and Mind Edge has since grown to be a viable player in the field of memory training, optimal learning and peak performance technologies, with annual revenues exceeding $1 million.
Second, it's investing in myself. With continual personal development and enrichment, I have become one of the few trainers here who can charge more than $1,000 per hour. My market rate is $1,500 to $2,000 per hour.
Q: What personal development tips do you have?
I'm where I am today because I made the choice and the commitment to be the best I can be. I urge all to do the same, especially now during the downturn.
Be relentless in upgrading your own skills. Success is not something we pursue...It's something we attract by becoming an attractive person and by being positive. Be mentally tough, optimistic and hungry for knowledge.
Q: And your home now is...?
A 2,200 sq ft, four-bedroom penthouse in Kembangan which I bought in October 2007 for $1.02 million.
Q: And your car is...?
A silver Subaru Forrester Turbo.
This article was first published in The Straits Times on January 18, 2009.
