Student, 21, manages entire family's investment portfolio of $100,000

Student, 21, manages entire family's investment portfolio of $100,000

Just two years after Mr Ong Zi Hao started investing, several of his family members trusted him enough to manage a stock investment portfolio worth $100,000 for them.

Mr Ong has repaid his family's faith in him. It hasn't been a year yet but as of March 9, the fund he manages is up by 1.6 per cent.

Comparatively, the performance of the Straits Times Index, used as a benchmark of the Singapore stock market, is down 2.48 per cent year-to-date as of March 9.

Surprising fact: Mr Ong is only 21.

The first year student at the National University of Singapore's Business School credits his grandmother as an inspiration.

"She invested in stocks and stopped working quite young, when she was about 45. She is close to 80 now. She had a middle income- paying job (as a teacher) but (through her stock investments), she is able to be self-sufficient until now," says Mr Ong.

He caught the investment bug when he was 15 after reading Rich Dad, Poor Dad by Robert Kiyosaki.

"I found it interesting. The book preached a philosophy that is totally different from my parents'. My parents advocated active income, while the book advocates passive income."

Over the last seven years, Mr Ong has read close to 50 investment and financial books.

He says: "I started with something simple and then slowly moved up, to learn about financial valuation of companies."

At 18, he set aside $5,000 to invest - $2,000 from his pocket money savings and earnings from working as a private tutor, and a $3,000 loan from his mother.

BAD INVESTMENT

Mr Ong invested it all in a business trust, which turned out to be a bad decision.

He says: "I was caught up in a 'value trap'. I was looking at undervalued stocks. This stock had a price to book ratio value of 0.4.

"This means you can use 40 cents to buy a stock worth $1. It had a dividend yield of 10 per cent too."

But he later realised that the company was not worth taking a risk with over the long term.

He says: "I was pretty lucky that I got out making a profit."

Mr Ong then looked at CapitaLand Mall Trust, which paid a dividend yield of 5.5 per cent in 2013. As of March 9, it has a dividend yield of 5.32 per cent, based on SGX's StockFacts.

Mr Ong tries to emulate Warren Buffett, an investment guru who would study a company's historical annual financial reports.

So he did the same with Capita-Land Mall Trust. Investing in that stock landed him a net portfolio gain of about 10 per cent for 2013, his best year with it, when it made up his entire portfolio.

He says: "It is a very good dividend stock. The price fluctuates, but not much."

Even when he was serving national service, Mr Ong continued to invest, saving at least 30 per cent of his NS allowance to invest and add stocks to his portfolio every year.

His personal total investment portfolio now stands at $12,000.

Last June, six family members approached him to manage their investments on their behalf.

It started with his aunt, who got him to invest the money she had saved for her children's university education. Her children are aged five and 10.

Mr Ong even prepares an annual report for his relatives. He uses net asset value per share to track the returns of individual 'clients' since the fund is under his own brokerage account.

He says: "I didn't have to do it since they are family, but I modelled after Warren Buffett, who advocates shareholder transparency.

"I told them that there's a lot of risk investing in the stock market. I promise to do my best but I can't guarantee any returns. I'm blessed to have their trust."

Mr Ong's top 3 tips

1. Invest in yourself. Mr Ong Zi Hao quotes one of the founding fathers of the Us, Benjamin Franklin: "An investment in knowledge pays the best interest." Mr Ong has spent more than $6,000 on investment education - live workshops, online courses, books and magazine subscriptions.

2. Read these: The Intelligent Investor by Benjamin Graham and The Five Rules For successful stock Investing by Pat dorsey. Also, Investment Banking by Joshua Rosenbaum and Joshua Pearl, which Mr Ong says is highly technical but useful in learning the three main valuation techniques used by professionals.

3. Create a standard Operating Procedure - a set of rules to follow when investing - and do not rely on emotions.


This article was first published on March 13, 2016.
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