Coffee With FFN and Pauline


Pauline graduated from the Nanyang Technological University with a Master of Arts (Instructional Design and Methodology). She is a certified facilitator for “The 7 Habits of Highly Effective People – Introductory for the Associates” and a certified Image Consultant by the First Impressions UK. She is currently the Director (Education & Training) with 8 Investment Pte Ltd, focusing on the design and development of Value Investing programs. In 2012, Pauline published her 1st value investing book titled “Value Investing for Women”.

FFN: At what age did you get started in investing? 

Pauline: I started investing properly when I was 32 years old. Before that, I was merely speculating.

FFN: How did you get interested in investing and who inspired you to get started?

Pauline: I started buying unit trust through my financial planner since 2000.  The result from my unit trust from 2000 to 2009 was -40%.  I was very upset with this result and thought enough is enough.  I felt I should take responsibility. Thus, I went to source around to see how I could improve my results as I had lost nearly half of my hard-earned savings over past 10 years.

In Jan 2010, I heard Ken Chee, Founder of 8 Investment, talk about Value Investing.  I was bought into the idea after the one hour speech by him. After hearing Ken’s speech, I signed up for his Millionaire Investor Program (MIP) in Mar 2010.

Value Investing changed my whole idea of what investing is all about.  Not only that, Ken corrected my thinking about investing in equities.  I had been brought up with the idea that those people who trade in stocks are gamblers because that was how people around me behaved. They all speculated in stocks and saw relatives losing their fortune in the stock market.

After the program, I worked hard to speed up my learning curve as I was very eager to make back my 40% losses.  The more I studied about Value Investing, the more confidence I gained and more interesting it became.

FFN: What was your life like before investing and how is it now?

Pauline: My life before investing was like any other typical Singaporeans. Since young, I worked hard in school to gain myself an entry to the local university.  With a degree, I found a decent job in the public sector, got married and my life has been work and family. And since I did not have any investing knowledge, I decided to outsource this job to my financial advisor, only to realize that it was more expensive to outsource than to get myself educated.

FFN: How do you choose which stocks to invest in? What are some of your strategies?

Pauline: I practice a 3R concept: Right Business Model, Right Management and Right Valuation Price i.e. the business has an excellent business model, run by management with integrity, and the market price offers me 50% discount from the valuation price.

I have a systematic strategy for investment.  Investment strategy is not just about investment but also money management strategy.  This is the strategy I use:

  1. Allocate my income into different jars

Financial Freedom (Pay Myself First) – 30%

Education – 5%

Play – 5%

Charity – 10%

The last 50% will be used for your daily expenses such as transport, insurance, food and children’s expenses.

Expenses – 50%

  1. Cover myself with hospitality and accidental insurance
  2. Accumulate 6 months’ worth of living expenses
  3. State the criteria I want for my investment:

The company that I invest must have a 15% growth in business and minimum 5% dividend yield.

  1. Create a list of companies that meet the 3R and your criteria
  2. Create my baskets for investment

Basket 1: 30% of the Financial Freedom Account

For any companies which are undervalued regardless of market situation.

Basket 2: 30% of the Financial Freedom Account

Invest when there is a mini crisis. During this period, some of the companies that might be overvalued when the market was bullish have thus became undervalued. So this would be a good time to invest in these companies. This is also the time to allocate more funds or reinvest the dividends from those companies that you have invested in with the first 30% because the buying price is more attractive now.

Basket 3: 40% of the Financial Freedom Account

Invest when a major crisis happen, e.g., subprime. You never know when it will happen, maybe 2 years later, 5 years later or even 10 years later.

Every month, the 3 baskets will be topped up. For example, if I save $1,000 every month for financial freedom account, I will allocate $300 to basket 1, $300 to basket 2 and $400 to basket 3. The above method which I practice ensures that there will always be funds available for investment even during the crisis periods.

  1. Monitor by reading quarterly and annual reports, and attend AGM
  2. Sell when my investment criteria no longer hold for that stock

FFN: What are some of the stocks in your portfolio currently?

Pauline: As of Mar 2013, they are CapitaComm Trust, Boustead and BreadTalk.

FFN: Where and how do you look for companies to invest in?

Pauline: I look within my circle of competence, i.e. the business that I understand. Also, after joining MIP, there is a network of investors where we will share with one another when we unearth undervalued companies.  The network helps. I unearthed Transpac Industrial via the MIP network. I sold this stock off already as it was way overvalued in early 2013.

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

Pauline: Two major mistakes I made were:

The first major mistake was the unit trusts I bought over 10 years. The lesson I learnt was that it is important to have financial education.

The second mistake I made was in a shipping company that I invested. It was a cyclical company and I did not know the company well, bought it when the cycle was quite high.  I sold it off at a 50% loss in 2 years.  Fortunately, the rest of the 6 stocks I invested have a good percentage return. Overall, my portfolio is still very healthy. The lesson I learnt was that I needed to understand more about cyclical business and that diversification into different types of businesses is essential. Just to highlight that diversification is not about spreading all your money into 20 to 30 stocks. And this mistake was different from the first mistake.  For the first mistake, I do not know how to cut loss and was at a lost what to do.  But this time, I know what went wrong and was able to make a decision.

FFN: What psychology do people need to succeed in investing?

Pauline: I heard this from my other investment mentor, Clive Tan, co-founder of 8 Investment: “You are right not because others say so. You are right because the facts and reasoning are right.”  I remember my aunt, who has been trading in stock market for 20+ years, warning me not to touch the stock market during Euro Debt Crisis.  While, clearly I did not seek her advice because I was clear what I was doing and fear did not set in even though I bought during crisis.

FFN: How has the investor in you evolved over the years?

Pauline: The transformation for me is great.  From a novice investor in 2009,  who knew nothing about the equity market to making value investing a hobby in 2010 to making it a full-time career, inspiring others to take charge of their financial health. And from 2011 onwards, I have touched lives through talks and a book that I’ve written, “Value Investing for Women”.

FFN: What advice would you give for beginners who want to start investing?

Pauline: Seek the right financial education or get a credible mentor to mentor you before investing.  The major loss in investment is not only the monetary loss but the time loss to compound the money.  You can make back your money but you cannot buy time back.  It is very painful to realize that I made a mistake only after 10 years.

Also, I would like to correct this thinking for beginners because I used to have this thought.  Many people thought they are investors by putting money into an instrument for long-term and praying hard that the price will go up in future.  That is speculating, not investing.

FFN: How was your experience writing a book, especially for women?

Pauline: Doing research was fun. It was then stressful to write. It was also tedious to check through my work. However, it was very rewarding when I saw women coming to my talk because they were inspired by my story.

FFN: It can be said that women are generally not interested in investing. They rather leave it to the men (their husbands or partners). What is your take on this?

Pauline: I agree with you.  Many women generally are not interested in investing.  That’s the reason why I decided to write a book “Value Investing for Women” to encourage more women to take charge of their financial health.

FFN: However, it has been said that women generally are better investors than men as women do not over trade and are not overconfident of their skills. As a person of the fairer sex, what are your thoughts?

Pauline: Yes, I think so too. I think I’m a good example.

FFN: Which female personality do you look up to and why?

Pauline: My mum.  She’s someone who will do the best for her family, including sacrificing her life.

FFN: What do you think is the biggest misconception people have about money?

Pauline: Just save and put the money in fixed deposit because the interest and principle are guaranteed. They do not know that with inflation now at about 5%, the loss is also guaranteed!

FFN: What is the one thing, in your opinion, do people need to succeed in investing?

Pauline: Be humble to learn from a credible mentor.

FFN: How did your personal financial planning change after a big change in your life eg. marriage, having kids, buying a house, buying a car?

Pauline: I do not own a car, live in a HDB where CPF pay for it. So my financial planning only needs to make sure that I am not a financial burden to my kids in future.  I make sure I can live purely on passive income when my physical body does not allow me to work for an active income.

FFN: What are the habits one must follow to have a sound financial life?  

Pauline: Firstly, pay yourself first. Secondly, live within your means. Thirdly, learn the proper way of investment. Lastly, take action to compound money at least at a rate higher than inflation.

FFN: A parting shot for the readers?

Pauline: Seek continuous education, join credible network and take action!

Author: Sudhan P

I simplify investing concepts to help you navigate the stock market jungle.

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