Monday 13 June 2011

Sometimes it’s better to be “stupid” and “wrong”

I would like to share a “true” story that my grandmother used to tell me when she was alive.

My grandma had a widowed “jie-mei” (sister) friend who stayed at Punggol in the 1960s. This friend stayed in an attap (wooden) house like many Singaporeans who stayed outside the city then. (Singapore got city meh? Hey! My story or your story?)

This jie-mei auntie worked hard and managed to save SGD 2,000 in her late 40s. She was worried that putting this “fortune” under her pillow is not safe in her rickety attap house.

Being illiterate and not financially savvy, plus her strong distrust of banks, she decided that the safest way was to “invest” this SGD 2,000 by buying a plot of “swampy” land just outside her attap house in Punggol.

Her reasoning is simple – thieves can come and rob her, and fires may burn down her attap house, but that piece of “land” will never be lost!

Of course once the news of her buying that piece of “swampy” land spread to her neighbours, relatives, and friends – everyone was quick to offer their “well-intentioned” advice:

“That land can’t even grow vegetables, do you know?”

“Ah yeah! Better put the money in bank, can earn interest!”

“Why you so stupid? That land nobody want; you so silly to buy it!”

“Cannot build attap house on swampy land… If not you can at least earn some rental income. I feel sorry for you…”

And on and on… Everyone seems to be an “expert”. Somehow they did not notice that this jie-mei aunty never asked for their advice. All she did was to listen patiently and nod her head and laugh: “Really? Oh! I so stupid! Silly me!”

10 years passed. Lo and behold! Singapore in the 1970s was undergoing rapid redevelopment. And this development reached all the way to “ulu” (backward) Punggol too. A developer bought the land surrounding her attap house and village, and her “swampy and useless” plot of land was the last one in the way.

Guess how much the developed paid this jie-mei auntie for her swampy land?
SGD 100,000!!! Remember this amount is not a small amount in the 70s! I think enough to buy landed bungalow!

You do the math. A 50 bagger return over 10 years. Compound interest is equivalent to around 48% per annum (even better than Warren Buffet in % terms!)

And in money terms it’s the equivalent of getting a SGD 10,000 per year income for 10 years with an initial investment of SGD 2,000. Now how many of the gurus out there giving seminars and selling books have this kind of dividend/bond/rental yield? No leverage needed some more.

This jie-mei auntie gave her 3 sons most of this windfall money to start their own small businesses. And in her retirement, she was happily visiting Taiwan, Hong Kong, and Thailand. Not so bad for an illiterate not so savvy widow right?

That’s why my grandmother told me this story. In her voice, I can sense her envy and wonderment of the “luck” of her jie-mei friend.


This personal story of my youth was inspired by a chat on LP’s chat box last Friday afternoon.

There’s a gentleman let’s call him “nevetS”. He mused that in 4 years time, he hopes he can sell his HDB (public housing) flat for SGD 450,000 – at the same current market price today.

This remark attracted lots of “well-intentioned” advice (and mockery in disguise. Not so cool leh). And many were skeptical whether he can sell at the current price 4 years later. All of sudden, everyone is a bear on the Singapore property market?

All this new found insight just because our Housing Minister is trying to talk down the red-hot property market?

In Sept 2009, when I started to tip-toe back in the equities market, I was mentally prepared to let my money be tied in the equities market for the next 3-4 years. I thought this great recession will last that long! Little did I expect the STI (Straits Times Index) will double 1.5 years later? Not that I am complaining!

Now how many forecasted this quick turnaround of the STI during 2009? (For those who did, thumbs up to you!)

OK, now switch back to the property market. Can it not happen that in 2012-13 we have a correction, and in 2014-15 the property market recovers and property prices end up higher than in 2011?

Why so sure nevetS is “wrong” and you are “right”? You got attend fortune telling for financial freedom seminar? I am boldly predicting that forture tellers will soon join into the seminars fray if the market demand remains strong! Once upon a time Options and Multi-level marketing seminars were everywhere. Then they were replaced by Forex and Real Estate seminars. If history is anything to go by, we will soon find old wine in new bottles! Hey! Just got another one – invest in fine wine for financial freedom!

nevetS, you bought your HDB during BTO (Build-to-order) at SGD 200,000, while those that come after who bought during WIS (Walk-in-selection) paid SGD 300,000.

In the words of my Counter-Strike days: “Song bo (Happy)?”

I already know what nevetS will say J 

nevetS, whatever happens 4 years later is icing on the cake. nevetS, you go man! 


  1. SMOL,

    Good story leh. But difference is your grandma's jie mei had the 2k already. NevetS still has to borrow more than 500k leh.

    If you have 1mil in the pocket, would you buy a 1mil freehold condo or invest in 300k 99yrs HDB and invest the 700k for 35k to 42k passive income per year har? Of course there are risk lah. But as long as you keep to investment with lower volatility, it should be ok.

    Was there too

  2. Hi SMOL,

    Well, I was guilty of saying such things to him too, though not in the same context.

    I think a lot of us means well for him, in the sense that we do not want him to do things that we think he didn't understand fully but still want to do because other people said that it can be done. But what started off as good intention might not end up well in delivery, I must admit. This leads to that and that leads to this, and before we know it, the good intention of the advice is lost in the cynical and rather mean remarks said to him.

    Thanks for your timely advice. I'll restrain myself in the future.

  3. haha ok i'll "stick in one foot" as well.

    the big different is that the auntie was not thinking of making money, but the property guy was (i assume).

    if we start thinking of making lots of money in investment or trading, you will be in trouble very soon.

    and regarding paper profit, they are real. for one it gives you more margin and two, you keep your position and not selling to quick. i'm more worry about opportunity loss than actual loss.

  4. Hi SMOL

    For me, the moral of the story of your grandma's jie mei is the concept of investing in what she knows.

    Her reasons for investing in land was simple, it is something she understands because she stays in kampung where land can be used to build a home, grow crops etc. Possibly she could see that there is potential upside (sell to Govt or developer in future) and limited downside (i.e. land is something tangible and will not depreciate). So she invested based on her own understanding and it paid off handsomely.

    The lesson I would learn from her story is to invest in what you know and to stick it for the long-term. How many of us can claim to have held investments for 10 years without trading?

    Be well and prosper.

  5. SMOL,

    If NevetS were to have paid up the current HDB flat fully in 4 years time and is able to sell it off for 450k, then buy another one for 200k and buy a second flat for 250k then there is no argument. It will be a no brainer.

    His question was for the same size apartment in the same location, would you buy a 300k 99year HDB or a 1 mil freehold condo. His reason was that the freehold is perpetual and is worth the difference in price with the HDB. There was also mention about leaving it behind for future generations.

    Ultimately, each of us have to decide whether it is affordable and within our means to buy freehold. Per chance that the HDB is fully paid, how many would decide to take a mortgage all over again and for a bigger amount on top of that ?

    But then again, it will be NevetS's choice if he decides that he is right and most of us are wrong.


  6. Seeing only one Robin doesn't mean it is already Spring. Right?

    Same as investing we will need to see many more Robins to know it is already Spring.

  7. Hello everyone,

    Thanks for the comments!

    Believe me, when I saw nevetS' comment, I too thought his math or reasoning was "suspect". But when I saw many were "teaching" him in public, I thought it's kind of funny and ironic...

    It’s a bit like others telling me not to gamble, and then I the idiot bought 2 dollars toto quick-pick and hit the million dollar jackpot!!! How? I would wish! LOL!

    PG, your reflection on the story is closest to mine ;)

    Anonymous - yup, at the end of the day, it's up to us individually to make our own decisions.

    When most of my winners are unexpected pure dumb luck, and most of my best laid plans don't turn out as expected, who am I to question others on their plans and decisions?

    CW8888 - Ha ha! Got caught! I plead literary license.

    Coconut - You are right! Greed and fear again. If I knew earlier, I should become a monk first before trading. No emotions? LOL!

    Mew Ge (I think it's your new nick) - your tavern very interesting place to get inspirations! Yes, I know you meant well :)

  8. Hi SMOL,

    I had to use a mirror: nevetS. Hahaha.. You are good. :)

    You might want to consider a part time career in writing parodies and satires. I think you might enjoy it. ;)

  9. Ha ha AK,

    I am indeed enjoying myself! Maybe next year when I return I will try to write to forums? See if my satires will be published!?

    Of course avoid political ones as a start - sure won't be published one!


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