Discussion with a mentor

JC Project Freedom
Image by Tilgnerpictures from Pixabay

This is a short post in which I just want to summarize my discussion with my mentor. I have not been talking to him for almost the last 2 years. Every time we talk, he will tell me how much he made from stocks while you are down in the red. This is super irritating when you are losing money. Maybe this blog shares the same tone at times.

I believe his net worth is now close to SGD 6-8 million. He mentioned to me,” You can forget about chasing my net worth.” Personally, I feel it is your money and not mine. I understand how much is enough. Nevertheless, his mind is very sharp and it is worth the time. He always quotes,” If you spend another 10 minutes talking to me, you will become clever.” Sometimes, you just cannot stand him but at times he is right.

How much has your portfolio grown?

This is a question he has thrown at me. He asked,” Since 2018 till now, how much has your portfolio grown?” I am disappointed with my portfolio growth. The truth is the portfolio is still down because I did not shift the dead weight out. He is launching his hedge fund with a few other friends. He told them to become full-time investors in 2019 and they need to generate a minimum of 10% return for each year. If they don’t achieve that, this path is not meant for them.

Actually you don’t need to work

He told me that I don’t need to work, I have accumulated more than 10 years of household expenses. Working for others just for a fixed salary that does not have any upside is a waste of my prime years. Beyond 50 years old, he told me that I can just chill on the beach as I won’t have the energy anymore.

Watch this great video – The One Percent Show with Manish Chokhani here. In life, you need to go for something that has an upside. Everyone’s situation is different, I ask my friend to get a property agent license together, he prefers to go for a PMP certificate.

My mentor’s point is a 5k monthly salary or a 10k monthly salary does not affect my lifestyle. Those armed with a degree or master with a net worth around 200-300k, even if they lose all the money, won’t impact their lifestyle. With an average salary of 5k monthly salary can easily make back the money sooner or later. This part I don’t really understand his point.

Investment Return

He mentioned that if the family expenses are 5% of the portfolio. As long as the annual investment return is 10% or above, it covers the cost and is growing the portfolio. This further strengthens the rationale that work is unnecessary and why being a full-time investor is the way forward.

The part where he asked his team members to quit their jobs, leave their safety net behind to become sharper, forced oneself to focus on investing in something that struck me. When you have nothing to fall back on, that’s when you will go in with your best.

Leverage

He mentioned that one of his team members with only SGD 300k to start off with, through his advice of using leverage has grown the portfolio to SGD 600k. He put me down like I don’t dare to use leverage, I did not even buy a condo while we know that price will rise due to inflation. 3 years ago, he went around to look at 40+ houses and found a distress sale (a divorce case) which is SGD 200k below valuation. He bought the condo and collecting rental income for the last 3 years now which is building the home equity. Couple with the appreciation, the ROI is very high based on the 20% loan amount only. Very smart and I can only salivate on this.

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