I bought a ticket to an Evening with AK -23 May 2015, (it got sold out within 3 days), and finally got to meet and shake hands with the man himself.
AK earns $150K per year in Passive Income through dividends. (**Updated dividend income is now about $160K yearly.)
He is the most prolific financial blogger in Singapore. He inspires all common men and shows us that financial freedom is possible if you bother to live within your means, save, and invest.
He is decked out in his usual China-man disguise but he shared information freely and told plenty of jokes throughout the night. I think that’s a bonus – buy ticket for a financial talk but at the same time get to enjoy stand-up comedy!
What attracted me to AK’s blog was when I started reading his posts about people who earn 7-10k monthly, yet are unable to save a single penny. That to me is a real-life horror story. I got more and more intrigued and I am now a follower on his blog.
The Bf Gf Money Blog was partly inspired by AK. I admire his financial prudence, his views on not being a wage slave, his cordiality and his discipline to portfolio management. Best of all, he shows that you do not need to start a business or take great risks to become financially-free.
With him on the panel that evening are panelists: Paul from Value Investing College, Matthew ( the emotionless trader – literally), and Elvin ( another mastermind trader.)
AK and the panelists approached questions on how to invest during bear markets, and stressed caution in bull markets. The panelists also revealed their core stocks, all of which, sadly I cannot mention on the blog due to AK’s disclaimer. I think he doesn’t want people to follow him or the panelists just to get stock tips without researching. Anyway, if you want to hear stock tips, go to the next Evening with AK yourself!
Key takeaways from the Evening
By using the simple acronym EBWIS , AK suggests a framework for personal finance / investing that we can adhere to.
E = Emergency Fund, that is priority, in case you lose your job or suffer some mishap
B= Borrowings. No Borrowings or Leverage!
W = Warchest. Get ready a warchest of cash to take advantage of opportunities. He highlights the Great Financial Crisis as one of the great opportunities presented itself recently.
I = Passive Income. Passive Income is not just comforting, it is necessary in case you need more cash for emergencies or to fill up your warchest.
S = Size positions carefully. Never make investments so big that you cannot sleep properly over them.
That is great advice. Logical, wise and simple to follow.
Next he talked about the framework for his portfolio allocation.
As you can see from the pryamid, AK believes that Cash is King so he allocates the largest portion of his portfolio to cash (C).
His priority is investing in for Income (I). He invests in strong dividend-paying stocks to generate his Passive Income.
Further up the pyramid, he looks for “Growth and Income” (G + I) stocks. Followed by growth stocks (G), and speculative stocks (S) which he only allocates a tiny amount to.
He emphasises on generating Passive Income, and holding Cash for use as emergency and warchest.
He says you do not want to be one of those people who are over invested and have no money to buy shares during a bear market.
He also talks about how your stocks can change categories – from “Income” to “Growth + Income” or moving up further to “Growth”. Hence, you must monitor and allocate your money accordingly.
AK highlights that position-sizing should be adjusted accordingly. Again, he reminds us that this is just his framework and it is not financial dogma that you must die-die follow.
The key point is – Have a plan or a framework. If not, you are blindly letting the market lead you around in circles!
AK talks about how you cannot just simply value a REIT based on NAV. He cites a prominent example of a REIT trading at discount to NAV but poses several risks. When I asked him about interest rates and REITs he branches off into an example of one of the REITs he has an love affair with, and I must say, he makes a very compelling case on investing in it.
An audience member highlights the use of derivatives in ETFs and how sticking to cash ETFs is safer. Another audience member talks about Vanguard ETFs and how he is happy that they are going to be available to retail investors in Singapore soon.
AK also talks about the CPF scheme as one of the best ways of diversifying your portfolio. He thinks it is just like bonds. He asks us not to mix politics with sound financial decisions.
An Evening with AK provides a great insight into what makes AK such a successful investor. He has strict financial prudence. He follows his own disciplined framework for investing and personal finance. He has the ability to think critically and independently. He knows how to go about doing research on the companies he invests in. He stresses on being pragmatic. He has a high-level of self-awareness, knowing his own strengths and weaknesses.
If you are attending this talk, please don’t go looking for stock tips or get-rich quick tips! Instead, go with an open mind, enjoy the free and easy Q & A session, and get a peek into the intelligent and (sometimes funny) mind of one of Singapore’s most famous investors.
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