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How did STE who is married with children retire at age 44?

Monday, June 22, 2015

It has been a while since STE last wrote to me. STE is now enjoying his early retirement and has generously decided to share some thoughts with us here:

Hi AK ,
Yes , is me , STE. I have stop working since end last year and still on “sabbatical leave“ till now (it might become a “permanent leave without ending date“ haha ..
Escaping from 9-5 working environment is really something different and is a big change for me and my life style. Now, I have more time with my kids and doing more exercise (be more healthy now, I guess less stress also partly contributed to my better health, I used to have migraine and gastric for long time, but after almost 6 months after staying at home and doing nothing, all these medical symptoms seem gone. :)
Well, I thought of sharing my latest financial portfolio and some thoughts on investment strategies. 
My friends wonder how am I going to survive without a job for past 6 months. the answer is, yes, “Passive income through long term investment.“
Allow me to tabulate my “passive income“. Since day 1 of my investing journey, I like dividend very much, you may notice from my earlier post, the share I brought in early days on Malaysia stock market for counters like “Perlis Plantation / BJ TOTO/ PB Bank / Oriental Holding / Tan Chong / Malakoff /BAT etc “ were those with high Dividend Yield and good fundamentals.
Dividend Matters:
To show the importance of Dividend in process of wealth accumulation through investment, I would like to append below table. YTD accumulative Dividend and Qtrly dividend I received. I kept record on all the dividend I received since day one of my investing journey.

  • Current Qtr dividend range from $40-50 K and total accumulated dividend is hitting $ 1 MIL soon
  • About 42 % of total profit from our portfolio came from Dividend Income .
  • Notes : Jump in dividend collected since 2009 was due to fund transferred from my Malaysia’s share portfolio and house since we decided to convert our citizenship. I was really "Lucky" as mentioned in my previous post on your blog.
  • Notes : Quarterly dividend seems smooth out from early 2015 after Asia Pay TV change to pay their dividend on Qtrly basis.
Does size matter? Definitely. To have such amount of quarterly dividend, one needs to have quite substantial amount of portfolio but look at the chart, everything must start with “small steps“  and remember “Rome was not built in a day“. "Gamba Teh"!
What is your CAGR  and “power of compounding “ …

I think all the serious investor need to know what is their own investment CAGR. Well, our portfolio manage to achieve 11.13 % for past 17 years. Gone through various market cycles … dot com/ SARs/ 911/ GFC / etc. I hope my portfolio could sustain in next crisis.
Since market’s long term return on investing was around 8-9%, sorry, I have taken some of your money from market. Based on quotes from the book  “The incredible shrinking Alpha“, ”Alpha is a Zero-sum game (before cost ), meaning that for some investors to generate Alpha, they must exploit the mistakes of others“.
Picture worth more than thousand words :
Other than two investment strategies I have shared previously ie "Margin of safety" and "Mean Reversion vs Market Cycle", I would like to share few pictures which I deem important for all serious investors.
< On Market>
< Andre Kostolany: "Psychological create 90% market ">

"I can calculate the movement of the stars, but not the madness of men.” , Sir Isaac Newton
"Investors want certainty, and we cannot give them certainty. We can give them high probability; we cannot give them certainty" by Charles William Hamilton

Note: Of course, one needs to know how to avoid the “pit fall“ of investing in “hot or hype“ stocks from time to time.
< Sun Zhi : Know yourself , Know your enemy (market ), hundred battles, hundred wins.> 

< On Forecasting :>
Warren Buffet : “Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”
< Short term vs Long term >
  • Short term is full of noise and volatility, only long term will show result.

When we invest in property or setting up own business, we could afford to wait for years to see the result, but our expectation change when we invest in stock. We buy today and hope the price will increase much tomorrow.
Patience. Wait for the durian to drop.
< Investing during Crisis time >
Investing in crisis time can be really rewarding and it has shortened my journey to Financial Freedom. I still hold most of stock I bought during crisis which gave me double digit Yield on cost.
Warren Buffett: 
The incorrect lesson often preached that volatility is a proxy to Risk is dead wrong. Volatility is far from synonymous with Risk. Volatility can create opportunities or risk at the same time.

I am holding approximately 20% cash now. I was 100% fully invested 2 years ago. Since then, I have taken some money off the table and keeping my dividend received as War Chest as well.
I always look at CPF money as “investing in triple A rated bond“. I’m not using any of my CPF money to invest at this moment but I will use that once crisis hits same as during GFC.
AK’s idea of maximising our CPF-SA account is absolutely right. $25K of interest p.a (both me and my wife ) is really a good money to accumulate in next 10 years before we hit 55 . By then , we would have more than $1 MIL in our CPF accounts combined. This is another cushion in case market crashes drastically. Not forgetting the "power of compounding ", the CPF returns around 3% average (combine OA/SA/MA) is good money in the long run.
Last but not the least, on <Money Management and Life style >
As I mentioned in previous blogs, our lifestyle is rather simple and I’m staying in a HDB flat and eating at hawker centres or cook our own meals. With current our dividend income, we still could save up to 60% from total dividend amount. I think that is another cushion in case market crashes and dividend drop by half. I guess we still can survive .
Even before we talk about investing, living below our means and saving the difference for investing is the most important or key to Financial Freedom .
Cheers to all and I hope all could have smooth and wonderful journey to achieve your own financial freedom (and knowing how much is enough in your life).
NOTE: I think some readers did ask me on what books I recommend to read in previous blogs where I failed to answer that time. Below is a list of books I would recommend for all the serious investors. One may notice that I would recommend more Market History and Psychology as compare to Economics or pure Finance / Stock analysis. As I mentioned before, Market is 90% of people and 10 of Economy. And History repeats itself without fail.
- END -
I am sure we get a bit tired of hearing the same old stuff from AK all the time. So, thanks to STE for sharing. Much appreciated. Some points STE made are great reminders for me too.
So, make some time to meditate on what STE has shared with us and maybe read a few of the books he has listed too. Go to a nearby public library or do a bit of charity by buying pre-owned copies from BetterWorldBooks.

We also want to remember what Charlie Munger said before:

"It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities." Charlie Munger

Oh, most importantly, congratulations to STE on his early retirement and improving physical health!

Related posts:
1. "Patience is the hardest part..."
2. Mystical art of wealth accumulation.
3. STE's story: Millionaire Next Door.
4. STE's story: Investment strategy.
5. STE's story" Personal finance.


Cory said...

That's a portfolio of 3-3.5 Millions. Dividends accumulation can be scary when we look back.
Yeah nice portfolio size.

Singapore Man of Leisure said...


Thumbs up!

Since most readers would not read beyond your quarterly dividend... I'll like to echo your act of honesty:

"Since market’s long term return on investing was around 8-9%, sorry, I have taken some of your money from market. Based on quotes from the book “The incredible shrinking Alpha“, ”Alpha is a Zero-sum game (before cost ), meaning that for some investors to generate Alpha, they must exploit the mistakes of others."

Please give chance!


EW said...

Congratulations STE..
Wow $40-50K dividends per qtr.. that's amazing! Based on your life style, i think u can retire liao..

I am 41, my dividend per year is around $40K-50K range. I am aiming to retire by 45 :)

My job pays well, but it's too stressful and takes up a lot of my time. I took a 3 mths sabbatical leave last year to spend some time with family. It was a good break. Waiting for the sabbatical without end date ;-)


Sanye ◎ 三页 said...

Congratulation to STE for the achievement! Your story is both inspiring as well as encouraging. Dividend income of 40~50K per quarter is indeed impressing.

I can't agree more with the statement "Even before we talk about investing, living below our means and saving the difference for investing is the most important or key to Financial Freedom." I remind myself constantly to do that.


STE said...

I read your blogs with much interests especially on those " very chimology " analogy ! Haha , on the part of "Alpha" ,, very the " Pai Seh " ,,but I think "God " is giving us the equal " chance " and time ( each one of us have 24 hrs to draw from the bank ) no more ,no less ,, sometime is up to us as individual ,, wheather we are ready to graps the opportunities when it strike ,,,good luck n all the best to all ,, in fact ,, I m more than happy if everyone would get market return if all goes for Indexing ... Let the Alpha shrink ,,, haha

Hi EW,
Yap ,, working life is rather stressful indeed,,, please ensure to take more sabbatical leave as " soul searching " ,,,sometimes 休息是为了走更远的路!cheers!

STE said...

Hi Sanye,
I'm also very much impressed by your " portfolio " and enjoy reading your blogs,, yes ,, cash flow n money management is very important for one to achieve FIRE ...guess we have seen many celebrities who went bankrupt even with huge wealth accumulated during their " famous time "... One really need to recognize what lifestyle we want and determine how much is " enough " ,,, is rather personal n each one have their own dream on way of living during retirement ,,,but sometimes , too many choice also giving us problem of " Paradox of Choice" where one fail to make rational decision !!
Cheers ! Wishing all to achieve their " own way " or FIRE!!

qook said...

I really enjoyed reading STE's story. I think this is my favourite guest blog series on ASSI. It is truly inspiring and awe-inspiring, starting from humble beginnings and hard work (working even on weekends and holidays!). This post is my favourite so far because it really demonstrates clearly the power of compounding returns/dividends. Charting STE's journey, I can see that he took 10 years to reach dividends less than $10k/quarter, but within the next 5 years managed to supercharge it to $50k/quarter! I am but a fraction of STE's progress so far and probably much less capital at disposal, but I think his amazing journey really shows what the power of consistent saving and investing for dividends can do. Gambatte!

qook said...

By the way, STE would you care to share what % of your income were you putting to investments during your early days? I realised that actually to achieve $10k/quarter dividends within the first 10 years is massive!!

Ana said...

Very inspiring.

I saw on ASSI's FB some comments that STE is a Malaysian so he had access to cheap housing in Malaysia, unlike Singaporeans... I think all of us have equal chance- because if I use the same logic, then HK people must have it really bad! Instead of blaming our own lot, make the best out of it. The stories of ASSI and STE only shows that it is possible to have early retirement. In fact, there are many other cases which are not reported. Of course, in order to retire early, one must be able to want to let go of the material comforts of corporate life. I know some who can retire, but are not willing to give up either their pay or position or Both.
Secondly, one must be contented with his lot - even if it is just an HDB flat.... because I know of a few who are Managing Directors at foreign banks, with 20 years of working experience - and are panicking when they are given the pink slip. Their expensive lifestyle and big houses have tied them down.

AK71 said...

Hi Ana,

Yup, we only need so much money in life. The rest is for showing off. ;p

STE said...

Hi qook, thanks for your comments and glad to know that " my story" gave some ' inspiration " to readers out there ,,, as for your questions on how much we set aside for investment in early working stage ,, I would say there is no fix % on that ,, we just simply invest and keep accumulating share we like whenever we hv enough cash in hand,,,when we conver our basic requirement,,,if really needed ,, if I wud say around 70-80% of fund going to investment after deducting our rental, meal ,,allowances for parents , keeping some for emergency fund , and paying housing loans for our house in JB,,, hope this clarify ,, gambatte!!

STE said...

Hi all , I have noticed someone is asking in FB whealther I have make money from my investment of property in JB ,, my answer is No! In fact we are losing about RM $150k in house value plus interest paid ,,,even after almost 10 years of holding the property ,, reason being bad timing ( we bought right before Asian Financial crisis where housing prices been inflated much ) and bad location (near Pasir Gudang area ) ,,, remember, investing in property is about location and location!!! And land is not " scarce" in Malaysia,, new development coming up soon there is demand !!! I'm a bit worried on Singaporean rushing in to " Iskandar project " ummm,, just my own experience,, good luck for those who made money !!
As I said,, living below our mean is very important,, after renting room for about 1-2 years ,, we bought our 1st HDB from re-sales market,, we could afford for 4 rooms flat ,,, but we decided to go for 3 rooms and keep more money for investment,,, we lived there for the next 10 years and only after my two kids grownup,, we decided to upgrade to 5 rooms flat ,,,
Another thing I wud like to emphasize is that " investing during crisis time " ,,,we even refinance our flat to get extra cash to invest during GFC ,, when our portfolio value was in red ,, as Warren Buffet said " Be fearful when others are greedy and be greedy when other fearful!!
As I mentioned in the blogs,, investing during crisis can be very rewarding and shortern your years to FIRE!!
Cheers and hope everyone could achieve your FIRE soon!!

STE said...

Hi all , additional comment is that the "rental " yield for property investment in Malaysia ( or rather JB) is rather low ,,, of course it depend on location as well ,, but that time ,, our semi-d only rent out for RM$400 only ,,, just be caucious on any investing for "rental " in Malaysia ,, just my 2 cts of advice!! Do your due diligence b4 investing , some developer may use the trick of offering rental yield guarantee for few years ,,,beware Cheers !!

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