Undergrad building on his passive income

Undergrad building on his passive income

For someone who is barely into his 20s, Mr Arthas Ho is already on his way to being a seasoned investor.

The 22-year-old business and accountancy student from Nanyang Technological University (NTU) has dabbled in stocks, traded in commodities like gold, and is already thinking of ways to create a passive flow of income so he can retire by 35.

6 ways to be a savvy investor

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    Market conditions are unpredictable so a company that has done well in the past may not do well in the future.

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    Nicholas says: “You should at least read the company’s quarterly or half-yearly reports to keep abreast of its current business situation.” This takes time, but it’s basic research that every investor should do.

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    Ordinary investors won’t have access to some markets and those operating in different time zones may be hard to monitor.

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    To determine your investment portfolio ratio, deduct your age from 100. For example, if you’re 30, you should invest 70 per cent of your money in equities and 30 per cent in bonds.

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    “The younger you are, the more time you have to invest, so you can afford to take more risks,” suggests Vikrant Pandey, associate director at UOB Kay Hian Research. The numbers will change as you age, to reflect your falling risk appetite.

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    Anne elaborates: “Markets in Europe are not fully opened up, so you can’t just go online to purchase their stocks; you also won’t have the ground experience to react in a timely manner to market fluctuations.”

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    Your investment portfolio must take into account changing lifestyle needs, says Andrew Chow, head of research at UOB Kay Hian Research.

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    “If you’re planning to buy a house in three years, you can’t afford to lose your capital. Even if you’ve always been an aggressive investor, you may need to switch to more stable investment instruments, like bonds, to balance out your investment risk.”

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    “You’re in the right time zone and place to respond quickly to market conditions,” says Andrew. You won’t have to worry about currency movements either.

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    Before you invest in a company, Nicholas advises that you check the Investor Alert List – a watch list issued by the Monetary Authority of Singapore (MAS) – to notify investors of companies that are not regulated or licensed by the MAS.

This drive to earn more money and create more value from his savings started with his first "business" when he was in primary school.

"When I was (in primary school) my allowance was 80 cents, which was very little... I decided I could double my income. I was good at running and I told my friends 'if you want to learn to run as fast as me, pay me 50 cents and I'll teach you.'

"Some of them were keen to do that so I would spend my whole recess coaching about two to three friends on the best running techniques."

Even though Mr Ho is working to ensure he can achieve a steady stream of passive income within the next few years, like any good investor, he already has a back-up plan in place.

"I have a few options and looking for a job would be my back-up plan. But I'm more keen to work for myself because you can definitely earn more money doing that and you can set your own income, that's the best part!"

Mr Ho has completed his first year at NTU and lives with his family.

His 55-year-old father is an HR manager and his 51-year-old mother is a regional financial controller. He has two siblings - an accountant brother, 25, and a sister, 18, who is in junior college.

Q: Are you a spender or a saver?

I would say I'm more of a saver. I save every dollar that I can, usually about 90 per cent of my monthly income.

That money is set aside to purchase assets that will appreciate in value or produce positive cash flow.

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