Money is a means, not an end in itself...

Published on Jan 05, 2014

... says ST's Goh Eng Yeow, who has compiled his investment columns into a book

By Rachel Scully

There is no magic formula to growing your nest egg but shrewd advice coupled with common sense can work wonders, as senior correspondent Goh Eng Yeow demonstrates regularly in his Small Change column in The Sunday Times.

The columns, which appear every two weeks in the Invest pages, have been compiled into a book, Small Change: Investment Made Simple.

Its 30 chapters range from how thinking positively can pay off to the need for an investment strategy for all seasons, and the dangers of letting emotions cloud your judgment.

While the book captures Mr Goh's investment philosophy, it also covers ground not usually addressed by financial observers.

He sets the tone in the opening chapter by reminding readers that chasing after material riches means nothing if you lose something money cannot buy, namely health.

The former physics teacher and remisier has three decades of experience in the stock market.
Q: What do you hope readers can pick up from Small Change?

You talk to any financial expert and you find that half the time, what he says sounds like gibberish. Worse, he may try to sell you a fiendishly complicated financial product which promises you a high return without fully explaining the risks involved.

But when I was an undergraduate at Cambridge, my professor stressed time and again that there are simple ways to solve even the most complicated physics problems.

In this book, I hope to adopt the same approach and offer some simple ideas to get to the heart of a tough financial issue while cutting out the unnecessary distractions which cloud an investor's judgment.

The book is a celebration of the lay investor who has prospered by applying simple logic to his investments. For instance, my car mechanic bought Citibank shares during the global financial crisis when its price plunged below US$1. That was a time when well-paid fund managers fumbled and lost their way. His investment has since quintupled.

Q: Many investors are driven by greed and end up speculating, rather than investing. What advice do you have for them to safeguard their interests?

It is difficult to fight the temptation of greed. At the back of our minds, we always find this voice telling us - just this once - as we watch our friends and colleagues make big bucks on some loss-making penny stocks while we watch like fools wishing we'd also joined in the fun.

But the problem is that once we get sucked in, we tend to make a bigger and bigger wager until the inevitable crash occurs, and we find ourselves nursing a whopping loss.

That is why I find that the most successful investors do not seem to be driven by the desire to make money. All of them share a common trait: They seem to be at peace with themselves and the world, and they generally enjoy what they are doing.

Above all, they know their limits and they do not put money into stocks - or for that matter, any other investments - which they know nothing about.

Q: How do you recover from a bad investment?

We all have our disasters in our investments. It is easy to dwell on them and moan about our losses. But this is counterproductive.

It is better to treat bad investments as part of the learning process. Rather than be depressed and disheartened, I ask myself: What went wrong? How can I prevent myself from repeating the same mistake?

So each time I consider buying a certain stock for the first time, the same question will surface: Is it good value? Can I see myself still holding it in five years?
That is how to turn a disaster into a big winner.

Q: What is the most useful advice in your new book?

What got me started on this book was a touching e-mail from a reader. She wished that more middle- class families could adopt the prudence that I promote in the Small Change column as she described the bliss her family enjoyed with their simple lifestyle.

Those who have tasted the sweetness and bitterness of life would appreciate that money is a means and not an end in itself. It is important but it only matters up to a point.

Apart from aiming to maximise our investment returns, we should try to make the most of our lives before it is too late. Above all, stay active and healthy.

rjscully@sph.com.sg

Small Change: Investment Made Simple is priced at $15, inclusive of GST. It will be available at all major bookstores and on www.stpressbooks.com.sg from Wednesday.