A few days ago, I went for a talk on “Path to Financial Freedom” by Dennis Ng. It was actually a free preview for his workshops but one could learn a thing or two from the preview. He has been featured in many local newspapers and TV shows and writes for MyPaper every alternate Wednesday. What connects him to the layman is that he was once a salaried employee like most Singaporeans and he became financially free after several years of saving and investing prudently.
Dennis Ng shared how he became a millionaire. He was earning an average of $6,000 per month for 15 years. He saved 20% of his salary per month and that works out to $14,400 per year. What he did with his savings over the years was that he invested in stocks and properties. He did not reveal things like what stocks he invests in, which year he started investing, if he lost huge amounts of money during his investments and if he has buffer cash to cushion him from loses and to cover his basic needs. From his preview, I could gleam that he looks at the financial statements of companies and invests in fundamentally strong companies ala Warren Buffett style. I think a major reason why Dennis became a millionaire was that he timed the market. When the stock market was getting exuberant, he exited from the market like in 2007. He entered again after the prices crashed. He uses technical analysis by looking at 100 days simple moving average and 200 days simple moving average crossovers.
He also is very prudent in his expenses. He shared his experience on how he curbs his expenses. When he was working, his fellow colleague always bought a $5 Spinelli coffee everyday whereas he made his own 3-in-1 coffee. To commute between places, he uses BMW (bus, MRT, walk).
Furthermore, he explained that not all debt is bad. There’s good debt and bad debt. Bad debt is car loan, credit card debt, among others. Good debt is your housing loan and investment property mortgage loan.
The preview reinforced my beliefs and the idea that becoming financially free is not difficult. One has to save a substantial amount every month consistently. Use part of the savings to invest prudently in stocks for the long-term. The other part can become your “safety net” or emergency fund to be used to cover your daily expenses when you lose your job. Your expenses should also be kept low and not be spent on unnecessary stuff. Also, the earlier you start investing, the faster you can start compounding your money since time is on your side.