Investing 101 – Growing Your Wealth

18th April 2017
picture for investing of sprout growing on coins

Many of us dream of not needing to work and still be able to get money to spend some how. Whilst this may seem immature and wishful at best, the good news is: It’s actually possible. The bad news is you won’t get it right now or even in the next few years. You would have to plan for it and make an effort to grow your wealth to a point where you no longer have to work for money a.k.a. financial independence. The way to go about this is through a method called “Investing”. Investing and investments are huge topics which I won’t be able to cover in just one post (and probably too huge to hold the attention of people long enough to explain in one shot). Therefore, I will break it into multiple posts starting with this overview.

What is investing?

Investing is committing money or capital into something (e.g. stocks, real estate, bonds, business) with the intention of making a profit. In other words you want your money to grow! People use this term loosely nowadays, saying they “invest a lot of time” into something. Personally, something is not an investment unless it turns a profit; if it doesn’t make money it’s just a hobby or you are simply spending time on something.

Savers are losers!

Woah! I’m not going back on what I said about saving up for goals, now. If you have followed Robert Kiyosaki, the author of Rich Dad, Poor Dad, this is one of the lines he likes to drop. When I first came across this I was given the impression that you should NOT save. At all! But soon I came to a roadblock: how will I get money to invest if I don’t save? That’s when I realised that this is just a rule of thumb; it is not a hard and fast rule. You just have to bear in mind that you will lose out if saving is your ONLY plan.

So what does it mean by “Savers are losers”? In our world, there is this thing called “Inflation” which is the little something that makes your money worth less in the future and lowering your buying power. To those born during the 80’s or 90’s, I’m sure many will remember hearing stories from parents and grandparents about how a bowl of kolo mee costed only 50 cents back in the day! Nowadays, it’s around $3.00 most likely due to inflation.

The inflation rate is roughly 1%-3% per year, meaning every year, your money is getting weaker by around 1%! Though Brunei recorded a deflation in 2016, we cannot predict the future. So now look at your savings account: usually banks give a minuscule return of around 0.03%. If inflation was at 1%, your money would be worth 0.97% less next year! So if all you do is save for retirement, you are literally losing your money without noticing!

Why should I invest?

If the prospect of losing money to inflation doesn’t matter to you, there are other reasons why you should look into it at least. In Brunei, we have what is called the Employee’s Trust Fund or Tabung Amanah Pekerja (TAP) and the Supplemental Contributory Pensions Scheme (SCP) for the majority of the local (citizens and permanent residents) workforce. Both schemes act as a forced savings for retirement plus a small interest and while it’s a good initiative, they have many conditions which limit them.

  • Employees contribute, from their salary, a minimum of 5% and is matched 5% by the employer for TAP and contributions of 3.5% and is matched 3.5% for SCP.
  • You can only withdraw 100% of your TAP at 55 years old.
  • You can only get paid out from SCP at 60 years old, starting from a minimum of $150 (the Government of Brunei will top-up to this amount if you’re withdrawing less).

In a nutshell, you have roughly 17% saved up over the years to spend for the rest of your life. Now look at your budget and imagine surviving and paying for necessities with only 17% for maybe 20-30 years. More often than not, it forces you to lower your standard of living. And this is only considering those who live frugally! Those who splurge their TAP savings (on a new Maserati, perhaps?) will have a much harder time.

How do I invest?

Before you grab your wads of cash to drop into an investment opportunity you need take some very important steps particularly for boosting your mind. Taking steps to fortify your emotions are also recommended as rampant emotions potentially disrupts your investing plan. I can vouch that earning money as an employee is hard enough, to part with this hard-earned cash into the unknown is harder plus with infinite risk. Therefore here are some key things to get started:

  1. Study up!

    • There is nothing riskier than going in and investing into something when you know nothing about it. Read up on things like stocks, bonds, real estate and the like to get a grasp on what their pros and cons are. Resources such as Investopedia are excellent to get the ball rolling.
    • Learn the lingo; what’s a balance sheet? Technical and fundamental analysis? P/E ratio? Dividends? There are many terms that are thrown around, they’re literally in a realm of their own. You don’t have to learn everything. Just enough to be able to communicate with a friend who also invests.
  2. Know your risk appetite

    • You need to know that you have a chance of losing your money as well when investing. Knowing this risk will help you budget, take certain actions and mitigate the risks to a certain extent. You may gauge your risk appetite and tolerance by doing certain questionnaires online but it may not be as simple as answering a few questions.
    • You need to find out how much you are willing to lose as well as how much profit you expect to earn in addition to the time horizon you hope to achieve this.
    • Risk appetite is also derived from how you control emotions. If you are very impulsive, it would be best to learn to manage this impulse as well as develop strategies to take emotions out of the equation.
  3. Create a strategy

    • From your research, at one point you should be able to create a strategy for the many factors that goes into investing namely:
      1. Which investment vehicle is best for you? (Stocks, bonds, mutual funds, real estate, starting a business?)
      2. What are your entry and exit conditions? (When to buy and when to sell.)
      3. What are your risk management techniques? (How can you make losses less painful?)
      4. How much would you want to risk? (Are you willing to lose 50% of the amount you put in? Or 10%?)
      5. When do you start? (Start learning ASAP! There will be a point where you feel you can take the leap of faith and that’s when you should start with a practice account.)

Guidelines to investing

Investing can be a full time job for some, but for the majority for us, it’s to plan for and, to a certain extent, control the future we would like to have. I hope it goes without saying that there should not be a “Get rich quick” mentality. Taking into consideration you have done your homework and can take on the white belt (starting level for many martial arts) of investing, here are some quick tips for you to consider:

  1. Document what you do.

    • It’s good to keep a journal of what actions you took and why for future reference; if the investment goes well, you know how to repeat it, and if it doesn’t, you know the contributing factors to it.
  2. Paper trade when possible.

    • It’s very tempting to just jump in and get started because you would feel like you don’t want to waste any time. But if you trade using “monopoly” money first, you can tweak your strategy without needing to lose real money.
  3. Know your fees.

    • Many investment vehicles have brokers or agents. Make sure you know how much commission you’re paying because it will eat into your profits! (And add on to your losses.)
  4. Keep learning.

    • The market is volatile and dynamic, if you stick to a narrow-view, you may be swept by the currents. Try to learn new techniques to supplement (and not hinder) your strategies.
  5. Do NOT gamble.

    • Investing is not a trip to the casino where you pick any number and put down a sum. It actually takes a bit of effort to learn and research. Sure, you may win some trades through sheer luck, but without knowing what you’re doing, the house will always win. And “the house” in investing are people who did their proper due diligence.
  6. NEVER borrow money to invest.

    • If you don’t have a start up capital to invest, start saving now! Never borrow money to invest, it just leads to unnecessary debts and stress if the trade goes south.
  7. NEVER invest money you can’t lose.

    • Same as borrowing, if you need the money to pay bills or debts at the end of the month, don’t risk it as it results the same as borrowing if the trade fails. So please stick to your budget on this.
  8. You CAN start with a small amount.

    • Depending on what you invest in, you don’t need 4-5 digit funds to get started. Some can even start with as little as $100.
  9. You WON’T always win.

    • Simple fact of life, you can’t win 100% of the time. Even if you win 60% of the time, as long as you make more profit than the 40% time you lose, you will come out ahead.


Investments are what we as individuals use to try and build a better financial future for ourselves and our dependents. It’s not a quick and easy endeavour but it does pay off for many who have done proper steps in learning and analysis. One of the investing legends in our world is Warren Buffett who said:

“Price is what you pay. Value is what you get.”

– Warren Buffett, Owner of Berkshire Hathaway

I always loved this quote from him; it’s not trying to only justify paying for something but to justify what we get out of it. If it’s not worth it (i.e. the value is low) you wouldn’t pay for it, right? Investing uses this concept often, if you see the value after your due diligence, you are able to safely go for it with lower risks.

Like I said in the beginning, investing is a huge topic and I will likely cover it over time. In the mean time do comment below if you have any queries and I will answer if I can.

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