This article was contributed to us by Chua Ee Chien, and was first published on his LinkedIn.
Six years ago, I sold a place that I had bought in the U.S. while living there for a couple of reasons:
- Managing it from Singapore was pretty hard.
- It had appreciated by 60% in 3 years, and I thought it would be a good time to cash out.
Today, it’s up 142%, and that’s not accounting for the rental income I would have received over that time (which would have been roughly US$72,000).
Why did I sell the place? While it was a pain to manage, there were other ways that I could have figured that out. What I really wanted was the cash in hand that I could invest and utilise. That, however, did not turn out spectacularly well.
After leaving the money in the bank for just a couple of months, I did two things that would forever change the course of my history:
- I bought Jekyll & Hyde (the bar I own).
- I invested the rest in the stock market (on margin).
What happened? Well, for those of you who have been following my story, you know at least a part of it. The bar is closing after losing a decent amount of money, and our last operating day is at the end of December 2023.
And, if you’ve read my last post, I’ve shared that margin is the enemy, though honestly, I think emotions have probably been more of a factor.
The point of this is that I thought that through these two channels of “diversification,” I could have more fun and make a quick buck from trading.
If I had, instead, left it as it was and let time run its course, the power of capital appreciation, rental, and compound interest on that extra cash would have put me in a much better financial position than I am in now.
My journey over the past six years has been a learning experience in financial decision-making and investment strategies. The decision to sell a property in the U.S. while it was appreciating, and the subsequent investment choices – acquiring a bar and engaging in margin trading in the stock market – have taught me invaluable lessons.
Take A Long-Term View Towards Investing
Firstly, the importance of long-term thinking in investments cannot be overstated. The property I sold has since appreciated significantly more, highlighting the potential gains of patience and long-term capital appreciation.
Secondly, diversification in investments, while often beneficial, requires careful consideration and an understanding of the risks involved, especially in ventures like bars and margin trading in the stock market.
While I have made intangible gains from the bar, such as relationships, friendships, and business lessons, I’m not sure they compensate for what could have been.
This experience has also underscored the crucial role of emotional intelligence in financial decision-making. Emotions, more than market trends or investment strategies, often drive our choices and learning to manage these impulses is key to successful investing. In hindsight, maintaining the property and allowing time to work its magic through compound interest and rental income would likely have placed me in a stronger financial position. This journey, though filled with its share of setbacks, has been instrumental in shaping a more nuanced, patient, and informed approach to my future financial endeavours.
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Chua Ee Chien is currently APAC Director, Business Development at GTN, leading sales to Fintechs in the greater APAC region. He also owns and runs three restaurant bar concepts under Whimsical Inc. The three concepts are Jekyll & Hyde, graft, and Operation Dagger.
