March 4, 2007

Property high-flier with a knack for investing well

Michael Tan's six-figure investment in stocks has been yielding returns of 60% to 70%

By Lorna Tan

PROPERTY agent Michael Tan, 36, was crowned the top money-spinner for last year at Singapore's largest property agency, PropNex.

However, his personal fortune has been made not just by helping clients to buy and sell property.

In the last 11 years, he has also bought seven properties and sold four of them. The three that he currently owns are in prime districts 9, 10 and 11. Two of them are contenders for collective sales.

Not bad for the third child of a timber trader who turned his back on further studies after his A levels.

Instead, he channelled his love for meeting people and sales into a successful career in real estate.

From 2003 to 2005, his average annual sales commissions were $500,000.

Last year, that shot up to $800,000 in commissions, edging out about 4,000 agents to clinch a top award at PropNex.

Besides property, Mr Tan has also invested heavily in stocks and shares. A fortuitous relationship was struck in 2002 when he helped to sell the property of a client who turned out to be an 'outstanding' remisier.

It was the start of a lucrative foray into stock investing.

Since then, Mr Tan has invested a sizeable six-digit figure in stocks such as Delong Holdings and HLN Technologies through this remisier.

Most of the returns are re-invested and his target is to grow his stock portfolio to $1 million.

He also believes in learning from the best and has picked up investment tips from investment gurus such as Mr Zig Ziglar and Mr Robert Kiyosaki.

Though many Singaporeans are still grappling with learning how to save, Mr Tan believes that saving alone is not enough.

Q How much do you save monthly?

A I save 20 per cent of my income and spend 30 per cent on expenses. It is part of my principle of spending less than what I earn. As for the rest, I invest.

Q What financial planning have you done for yourself and your family?

A My investments are mainly in stocks and properties.

Since 2002, I have invested a six-figure sum in stocks through my trusted remisier. I want to grow this to $1 million.

In the last two years, I achieved 60 to 70 per cent returns on a yearly basis on my stocks. Prior to that, the returns averaged 40 per cent.

I own three four-bedroom condominium units currently. I live in one, another is being rented out and the latest unit is still under construction.

Q What is your investment philosophy?

A I have learnt to diversify my investments. I will never put all my eggs in one basket.

My investments allow me to make quick profits on a daily and monthly basis. This enables my money to work for me - to multiply and to grow, adding up to sizeable yearly returns.

I make investment decisions on the principle of buying on weakness and selling on strength.

Q What about insurance planning?

A I have a life coverage of $1 million comprising $200,000 in term policies and the balance in whole life plans.

I also have two investment-linked plans and a Shield hospitalisation policy.

My insurance premiums add up to $20,000 every year.

Q Moneywise, what were your growing-up years like and what money lessons did you learn?

A My dad was a shipyard painter before he made his money trading in plywood.

For several years, my parents and my siblings had to share one bedroom.

Over the years, my dad and my brother have gradually built the family business into a profitable company today.

I've realised that savings, though necessary, are not an investment.

I have learnt how to grow my investments by reinvesting my profits again and again and to stay really focused till the target is reached.

Q What has been a bad investment?

A In 2000, I invested $30,000 in Datacraft which was trading at US$2.63. At its worst, it plunged to 83 US cents.

With hindsight, I was acting on impulse when my friend told me to buy the counter without analysing the company.

I'm still holding on to the stock. On Friday, Datacraft closed at US$1.14.

Q What is your best investment to date?

A In December 2005, I made a cash downpayment of $260,000 on a four-bedroom 2,500 sq ft condominium off Grange Road.

The purchase price from the secondary market was $1.2 million. The current monthly rental of $6,000 covers its full mortgage as well as the mortgage of the condo I'm currently living in.

The market value of this rental condo has since risen to close to $3 million and it is looking at a possible collective sale with a minimum reserve price of $3.6 million. All this in 12 months!

Q What are your retirement goals ?

A I'm striving to achieve $15 million worth of investible funds by 45.

Q Any property tips?

A Do your homework and consult your trusted agent. Study and plan your property investments carefully as much capital is usually involved when it comes to property investing.

Determine your risk tolerance. That is, do not risk more than what you can afford to lose should the market fluctuate unexpectedly.

Q And your home now is?

A A four-bedroom, 1,700 sq ft condominium near Novena Square.

Q And your car is?

A A black Volvo S80.

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