I’ve been investing since I was about 16 years old. Since I was so young, I had to ask my mother to buy stocks for me through her account. The money came from allowances, hong bao money and odd jobs I did in my teens.
Despite my early foray into investing, I wasn’t able to reap the benefits of compounding returns. I lost money. This was due to my own substandard stock picks, choosing from the substandard Singapore stock pool.
The only real success I remember was with Cerebos Pacific (maker of Brand’s chicken essence, which delisted), but pretty much most of the picks were duds. Singtel, Keppel, Cosco, Lippo, etc. Deeply disgusting how they destroyed value and time.
Despite these terrible returns, I was invested in Singapore stocks for almost 20 years. Honestly, I didn’t pay too much attention to my investment returns since I had a decent income from my job, and my savings went up regardless.
Shoved into another mode
When I first got my windfall in 2017, I didn’t really know what to do. I kept half of it in fixed deposits and cash, and gingerly stepped into American tech stocks such as Amazon, Google, and the S&P 500 ETF. I spread out my positions and panicked whenever they went down. I also went into leveraged high yield bonds, which didn’t turn out too well. For 2018 and 2019, my returns were more or less flat.
It was only in 2020 when I started to become more confident and learn from my mistakes. I stopped viewing red days as doomsday, and green days as euphoric. It doesn’t really matter in the short-term. I started picking stocks of companies which I was a happy customer of e.g. Amazon, Google, Nvidia. This worked well. Success bred confidence. When I had conviction, I bet big.
This has gone far better than if I stuck with Singapore stocks or a more diversified portfolio.
To summarise, I went from SGX stocks (~20 years) -> broad diversification in US stocks, ETFs, and high-yield bonds (2 years) -> heavy concentration in conviction stocks (less than 1 year).
The evolution of investment styles isn’t necessarily a bad thing. Some things can only be learnt through experience. This time away from work was also the only time I have had to deeply think about investing. Since ending my active income from employment, I’ve become more aware that I have to be an excellent custodian and grower of wealth. I can’t be bad at it.
This has been a good year for the portfolio, but I remind myself that it is only 1 year of results, and there is a long way to go. I wouldn’t rule out switching back or making more changes. It really does depend on the circumstances we are in, and which life stage we are at.