I started investing in 2009.

Back then, I was exposed to Warren Buffett’s way of investing. The Oracle of Omaha, as he is fondly called, amassed a portfolio that has grown at an annualised rate of close to 20% over the long term.

It was all about picking strong companies at the right price, holding them for the long term, and letting compounding do the heavy lifting.

Similarly, my approach to investing was straightforward: Aim for 15% annualised returns, compound that over a couple of decades, and hit a couple of million dollars. That was the plan.

The problem?

I never really questioned why it had to be X million dollars. It was just a big, round number that felt nice to have.

And chasing that return made me take on more risk than I needed to. Sometimes, overweighting positions more than necessary and spending a lot of mental energy trying to squeeze out every extra percentage point. Luckily, I never went down the path of speculative stocks or assets such as meme stocks or crypto.

Also, luckily, I had emergency funds set aside, and I had adequate insurance in place.

Then Life Happened

Over the years, a lot has changed. I got married. I switched industries. And then the biggest shift of all? Having kids.

Suddenly, the time I used to spend poring over annual reports and monitoring my portfolio started competing with Saturday mornings at the playground and bedtime stories.

I realised I didn’t have the bandwidth to actively manage a stock portfolio comprising over 15 companies anymore.

I had known about passive investing since day one, but I always brushed it aside because picking individual stocks was more fun and intellectually stimulating. There’s a certain thrill in discovering a small company before everyone else catches on.

Index funds just felt… boring. But the big push came from a simple shift in mindset.

A Simple, Yet Powerful Reframing

I came across the concept of the Philosophy of Enough or Sufficiency, and it completely reframed how I thought about money.

The idea is simple but powerful.

Instead of asking “How do I maximise my returns?”, I started to ask “What returns are enough to reach my goals, without taking on excessive risk?”

That one question changed everything for me.

When I sat down and actually mapped out what my family needed, I realised I didn’t need to chase 15% returns. I needed a reliable way of investing.

So, I made the switch.

Early 2024, I moved fully into passive investing: broad-based, low-cost index funds and exchange-traded funds (ETFs).

Simple. Boring. But incredibly freeing.

There’s a Reason for Everything

Those early years of picking individual stocks, however, weren’t wasted.

Starting early and investing in fundamentally-strong companies gave my portfolio a meaningful head start. The compounding from those years is something I’m grateful for.

But if someone asked me today how they should invest, especially a busy parent juggling work, kids, and life, I wouldn’t encourage them to start the way I did. Unless they have the interest to analyse companies and the time to do so.

I would rather say the following:

1. Start with your why.

2. Figure out what “enough” looks like for you and your family.

3. Then find the most reliable way to get there. For most people, that’s low-cost index funds.

Spend your mental energy on the things that actually bring you joy, such as watching your kids grow up, instead of focusing on the earnings call during your kid’s soccer practice.

Various Data Back Passive Investing

Even though Warren Buffett runs his own stock portfolio, he has repeatedly said that the vast majority of investors would be better off indexing. For instance, in his 1993 letter, he wrote:

“By periodically investing in an index fund, the know- nothing investor can actually out-perform most investment professionals.”

The evidence for passive investing is also pretty overwhelming.

From 2008 to 2017, Buffett bet that a simple S&P 500 index fund would beat a curated basket of hedge funds. The index fund returned 7.1% annualised. The basket of hedge funds returned an average of only 2.2% per annum, net of all fees. It wasn’t even close, with the winnings going to charity.

Another data from S&P Dow Jones Indices (SPIVA) shows that 90% of actively managed funds underperform their benchmarks over long horizons.

People who do this full-time – with teams of analysts and access to resources most of us don’t have – would have failed to beat a simple, low-cost index fund.

If the professionals struggle to outperform consistently, it puts things into perspective for the rest of us, especially if we’re doing this on the side while managing careers and raising families.

The beauty of index investing isn’t just the returns. It’s the mental freedom.

Instead of spending your limited bandwidth analysing earnings reports and second-guessing your picks, you can channel that energy into what actually matters to you.

For me, that’s being present with my kids. For you, it might be something similar or entirely different.

But the principle is the same: spend your mind space on what makes you happy.

Everyone’s Journey Is Different

I’m not here to tell you that passive investing is the only way.

What I’m saying is that after 17 years, the one thing I changed my mind about was this: more returns don’t always mean a better life for my family. Sometimes, enough is the most powerful number in investing.

I hope sharing my perspective helps someone out there who’s in a similar place, maybe at a crossroads between the thrill of stock picking and the pull of wanting to simplify.

Quick Action Steps for Busy Parents

If this resonated with you, here are a few things you can do this week:

1. Define your “why.” Before you look at any stock or asset class, write down what you’re actually investing for. Your kids’ education? Early retirement? The freedom to work less? A clear purpose changes every decision that follows.

2. Calculate your “enough” number. Work backwards from your goal. How much do you actually need, and by when? You might find that a steady 7% to 8% from index funds gets you there without the stress of chasing 15%.

3. Protect what you have before growing it. Make sure your emergency fund, insurance, and basic financial safety nets are in place. No investment strategy matters if an unexpected event wipes out your foundation.

4. Start with low-cost index funds. You don’t need to overhaul your entire portfolio overnight. A broad-based global is a solid starting point. Keep costs low by looking for expense ratios under 0.20%.

5. Automate your contributions. Set up a regular investment plan so money goes into your index fund automatically each month. This removes the temptation to time the market and frees up your mental energy for everything else.

Investing doesn’t have to be complicated to be effective.

Sometimes, the smartest move a busy parent can make is choosing the simplest path and spending the time you save on the moments that truly compound.

A decade ago, “Invest Lah! The Average Joe’s Guide to Investing” was put together with one clear mission: to help everyday Singapore investors think long term and stay rational in an irrational market.

Fast forward to today, my co-authors and I are glad to share that our 10th Anniversary Edition is finally out.

Instead of simply revisiting theory, we spoke to long-term investors to learn how they navigated the Covid crisis and what kept them grounded.

Their responses were insightful and reminded us of investing principles that stand the test of time. Since the next market crash is a matter of ‘when,’ not ‘if,’ those insights are more than just lessons. They are an essential map for the road ahead.

We are grateful to the book's contributors and to World Scientific Publishing for bringing this special edition to life. You can now find it in physical and online bookstores.

As a way of giving back to the community that has supported our investing journey, my co-authors and I have decided to donate all net proceeds from the sale of this book to charity. Thank you for your continued support.

The best time to start building your child’s financial future? Yesterday. The next best time? Today.

I recently had the privilege of sharing my thoughts on Singapore’s CNA about investing for your child’s future.

It was an honour to be part of the conversation, and I’m grateful for the opportunity to contribute to a topic I’m deeply passionate about.

📺Watch the full interview here:

As Warren Buffett wisely said:
“The best investment you can make is in yourself.”

As parents, when we grow our financial knowledge and put things into practice, we also help create a stronger financial future for the next generation.

Just a few months ago, the headlines were filled with panic.

On 2 April 2025, U.S. President Donald Trump announced "Liberation Day", where sweeping new tariffs shocked investors and sent markets tumbling.

The S&P 500 swiftly declined and bottomed at around 5,000 points on 8 April. You could sense fear was in the air.

Fast forward three months later to 3 July 2025, the S&P 500 closed at a record high of 6,279 points, rising some 26% from the April low.

U.S. Treasury Secretary Scott Bessent remarked (emphases are mine):

"So we found out today this episode from April 3 to today is the fastest bounce-back after a 15 percent decline in S&P history, fastest bounce-back ever. So, we, the administration, don’t look at the stock market every day. What we tried to do was set in place economic fundamentals. And, presumably, the market had a chance to digest the panic and is looking forward."

His last line is worth repeating: “...the market had a chance to digest the panic and is looking forward.”

That’s exactly what the stock market does — it looks forward.

Not backwards at the headlines you’re reading today.

But into the future, well before it becomes obvious to the rest of us.

The Cost of Panic

This entire episode is yet another case study of why panic-selling should be avoided.

Yes, it might have felt “smart” to reduce your stock exposure in early April.

The news was grim, the tone was dire, and it felt like recession was just around the corner.

Selling to avoid the pain might have felt like the most prudent thing to do.

But if you had sold your stock portfolio then, you most likely would have missed the deft recovery.

This episode once again shows why market timing is really tough.

Stay Rational. Stay Invested.

The more rational move would have been to stay invested, and for those still accumulating wealth, to buy more shares while prices were lower.

This is hard to do in practice.

Which is why it helps to revisit the timeless wisdom of Warren Buffett whenever there’s market panic:

“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?

Many investors get this one wrong… they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying.

This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”

In other words, market declines are good news for long-term accumulators. If you're still in your earning years, every dip is a sale.

The Stock Market Moves Up In the Long Run

It’s natural to feel nervous when markets hit record highs, like now. Many may worry that buying now is “buying at the top”. And what if stocks decline just after buying?

While counterintuitive, data shows that investing in stocks (using US large-cap equities as a proxy) at all-time highs has historically delivered better future returns than at other times.

But think about it.

All-time highs often lead to… more all-time highs.

That’s how the stock market moves up naturally over the long term. Even when there’s something to worry about.

Now, with a 90-day pause in Trump’s tariff policy set to expire soon in the next couple of days, volatility may return.

But if there's one key lesson from the past few months, it's this:

Here’s to reaching your wealth goals!

The stock market is once again experiencing significant volatility as President Trump's administration began implementing its tariff program.

Over the past couple of weeks, US President Trump has implemented new trade barriers, including 25% tariffs on goods from Mexico and Canada and a 20% duty on imports from China.

The US has also introduced a 25% tariff on all steel and aluminium imports from around the world.

In recent statements, Trump warned he would impose a 200% tariff on European alcoholic beverages including wine, Champagne, and spirits if the European Union proceeds with its intended 50% duty on American whiskey.

Lessons from History

The current market reaction bears striking resemblance to events during President Trump's first term, particularly between 2018 and 2019, when his administration engaged in a prolonged trade dispute with China. During that period, markets experienced similar patterns of volatility and uncertainty.

Looking back at news coverage from Trump's first term provides valuable context for today's market situation.

CNBC, 22 March 2018: “Dow drops more than 700 points on trade fears, posts worst day since Feb. 8”

CNBC, 13 May 2019: “$1.1 trillion in stock market value lost so far from trade war sell-off with more expected”

New York Times, 26 August 2019: “S&P, Dow and Nasdaq Slide After China Tariff Threat and Trump Twitter Response”

The parallels to today's headlines are unmistakable, suggesting that markets are reacting to a familiar pattern of trade tension and economic uncertainty.

The Stock Market Climbs A Wall of Worry

Amid growing concerns about the market impact of President Trump's renewed tariff agenda, let’s look at things from a rational point of view.

Data from Dimensional Fund Advisors illustrates how markets navigated the previous round of trade tensions:

The above chart tracks the growth of a hypothetical $1 investment from January 2017 through December 2020, spanning President Trump's first term.

Despite significant trade policy disruptions, markets posted positive returns as follows:

• The MSCI China Index doubled to $2.00

• The S&P 500 grew to $1.81

• Developed markets excluding the US reached $1.41

While markets visibly reacted to tariff announcements during President Trump's first term, the data highlights an important reality.

Investors who stayed focused on the long term ultimately experienced positive returns in all major markets by December 2020, despite the ongoing trade tensions that made headlines.

Let’s Look Beyond the Headlines

Warren Buffett, widely regarded as one of the greatest investors of all time, has consistently emphasised the importance of patience in investing, especially during periods of market volatility. Here is one of his most relevant quotes for today's tariff-induced market environment:

"The stock market is a device for transferring money from the impatient to the patient."

This simple, yet profound observation encapsulates the essence of successful long-term investing during market turbulence.

While the impact of tariffs on stock prices may cause short-term anxiety, it’s crucial to remain focused on your long-term financial goals.

Stay disciplined, stick to your investment strategy, and remember that volatility is part of the market's natural ebb and flow.

By keeping a long-term perspective, investors can weather the storm of tariffs, just as they have in previous trade disputes. It’s a simple strategy that trumps in the end.

Investment Moats is one of the OGs of the Singapore investment blog scene. Set up by Kyith Ng in 2005, his blog aims to share his unique experiences around money. Some of the themes discussed in Investment Moats are growing and managing wealth, achieving financial independence, and navigating the world of investing.

The Compounding Dad (TCD): Can you share a bit about your upbringing and how money was perceived or discussed in your family?

Kyith: I believe I grew up in a lower-middle-income family. My dad was the sole breadwinner. I never knew his exact salary, but seeing how frugal my mum was, I assumed it wasn't a large amount.

Even so, I later realised they had managed to save $100,000 in the 1990s. While this might not seem like a fortune today, it was a considerable sum back then.

My mum was a housewife. I don't recall my parents frequently talking about the difficulty of earning money or the need to be careful with spending. I used to go with my mum to the void deck to collect discarded advertising leaflets. We'd bundle them together to sell to the rag-and-bone man (locally called the karang guni man). Looking back, I realise how little money we made doing this, but I think I spent some quality time with my mum.

TCD: Spending quality time with our parents is always nice. Were there any common phrases or lessons about money that you remember hearing frequently when you were young?

Kyith: The strange thing is, I don't recall my parents ever explicitly teaching me about money. We always had food and clothes, but perhaps my experiences subtly shaped my understanding. I realised I was closer to being not-so-rich than poor.

Qualifying for the Edusave bursary was one clue, as there’s a cap on household income or per capita income. Not being able to buy certain toys was another. A particularly striking example was when I discovered the grandmother of a good friend in junior college gave him a $1,000 ang bao every year, while my total ang bao collection averaged around $200.

Perhaps the biggest lesson I learned, albeit indirectly, was that winning the lottery (4D and Toto) could significantly boost savings (TCD’s note: Winning the lottery is a game of chance. Do not gamble with money you cannot afford to lose. Gambling can be addictive.) I remember once looking at my parents' bank passbook. It was quite old, and there was a six-figure sum in it. I vaguely recall Mum telling me they'd won 4D once.

I think they had occasional winnings here and there.

We used to live in Yishun and would usually buy our 4D and Toto tickets from a 7-Eleven in Chong Pang. That shop has since become a very popular Singapore Pools outlet, as rumours spread that the odds of winning are higher there.

Despite my current views on gambling, interpret this anecdote as you will: After we moved to Sengkang, we never won any 4D or Toto, to my knowledge.

TCD: How do you think those early experiences have influenced your current views and behaviours around money?

Kyith: If you have less money, you learn to evaluate trade-offs early on. However, having parents who don't discuss finances openly can put you at a disadvantage compared to your peers. Some of my friends' parents involved them in checking stock prices on Teletext (Google what is that!), sparking early conversations about stocks and how they work.

I suspect that constantly following stocks during childhood can foster a scarcity mindset rather than a growth mindset.

TCD: At what age did you start investing and how did you get interested?

Kyith: My interest in investing began during my final year at university. I was experiencing burnout after 17 years of continuous study. During that last year, I started researching safe investment options that offered better returns than fixed deposits. That's how I fell down the rabbit hole of investing.

TCD: Can you share with us what your investment portfolio consists of? What’s the thought process behind coming up with this allocation?

Kyith: My main portfolio currently consists of exchange-traded funds (ETFs) and unit trusts. I use these ETFs to implement my systematic-active investment philosophy.

It took me some time to understand that higher returns require higher risks. However, there are certain risks we should avoid. To effectively compound our wealth, we need to buy and hold investments long enough for the compounding effect to work its magic. The constant challenge is generating returns while mitigating the risk of significant loss.

We can achieve this by taking calculated risks in appropriate areas.

Individual equities offer high potential returns because the risk of business failure is also high. Fixed income investments have lower return volatility, and their risks are correspondingly lower. We want to avoid the risk of a large portion of our capital being wiped out. The solution is adequate diversification, holding a mix of equities and fixed income. While your returns might be lower than investing in just a few companies or bonds, you mitigate the biggest risk: an unexpected event wiping out a significant portion of your net wealth.

A portfolio's returns often come from a small number of stocks. This is true for a cap-weighted index-tracking fund, an equal-weight strategy, or a factor strategy. The challenge is that you can only identify the winners in hindsight. Therefore, diversification is key to capturing the returns of these successful investments.

You might have heard of some stock selection strategies:

• Buying undervalued companies and selling them when their prices rise to a higher mean.

• Buying high-quality companies with a history of consistent profits.

• Buying companies with strong momentum.

Academic research suggests that systematically selecting stocks, holding them, and selling them at the right time can lead to better performance. The question is, do these strategies consistently work over time? Empirical evidence from research indicates that these systematic strategies when executed over the long term, can generate higher excess returns. Fortunately, we now have unit trusts and ETFs that can implement these strategies for investors at a low cost, reducing the workload considerably. This makes it a relatively passive approach for the investor.

With all this in mind, I've chosen to invest in a few ETFs that are:

• Geographically diversified.

• Low-cost.

• Systematic-passive and systematic-active.

• Low-maintenance in terms of portfolio management.

TCD: How has the investor in you evolved over the years?

Kyith: I was first introduced to investing through unit trusts. A few years later, I began researching individual stock investing and pursued that for a considerable time. Two or three years ago, I shifted to a more passive portfolio focused on ETFs and unit trusts.

TCD: What advice would you give to beginners who want to start investing?

Kyith: I believe it's important to experiment with different strategies, but also to develop a thorough understanding of the ones you choose to implement. Even seemingly simple strategies, like buy-and-hold, low-cost investing, have nuances.

They often appear straightforward initially, until you discover the complexities of financial markets and find yourself facing more questions than answers.

Growth comes not from dismissing these questions, but from patiently unravelling these mental threads to develop a more complete and accurate understanding of each strategy.

TCD: What do you think is the biggest misconception people have about money?

Kyith: It's difficult to pinpoint the biggest misconception about money, as there are so many.

However, one common misconception is the belief that one's current financial resources are insufficient, leading people to fixate on a specific target amount.

I think very few people take the time to explore what their current wealth actually allows them to do or acquire.

If they did, I suspect some might realise they are in a better position than they thought.

TCD: What is the one thing, in your opinion, that people need to succeed in investing?

Kyith: Understanding the behavioural aspect of investing is crucial for success. When we begin this journey, we're often so focused on learning the strategies that we overlook the importance of our mindset. There's simply so much to learn.

We tend to believe we're somehow immune to emotional biases and that our mental fortitude is sufficient.

Experience has taught me that this is often our biggest downfall. It's vital to respect our risk capacity. Many of us think we can handle significant volatility. While we might tolerate upward swings, I suspect few can truly stomach substantial downward movements.

When we're confident in our investments, even with volatility, we can usually hold on. But the reality is that certainty is rare in the markets. Firstly, many of us lack extensive market experience.

We often tell ourselves, "This has never happened before," or "This time it's different." However, a long history of market data reveals that similar events have occurred repeatedly.

Our brains struggle with uncertainty, which is why people sometimes convince themselves to sell investments at the bottom (or vice versa).

TCD: What are the habits one must follow to have a sound financial life?

Kyith: Here are some I can list:

• Earning more and optimising your spending will create a healthy surplus.

• Investing that surplus, whether in personal development through courses or in financial assets, should lead to positive outcomes.

• Strive to learn as much as possible about all aspects of personal finance that you deem important.

• Choose a spouse who shares good money habits.

TCD: You are a well-established investment blogger who started very early in the scene. What keeps you going?

Kyith: My blog currently serves as a sort of personal journal. I jot down notes on investing and life lessons (that I'm happy to share) so I don't forget them. I like to think there are readers out there striving for a better life, and if I can offer even a little help, I'm happy to share my thoughts and experiences.

TCD: What does financial freedom mean to you?

Kyith: To me, financial freedom means having the security of knowing that my essential needs are covered. A significant part of this involves establishing a passive, perpetual, and inflation-adjusted income stream.

This income stream should be conservatively sized to cover my most important expenditures (not all spending is essential). I'm comfortable not securing a large portion of my discretionary spending or continue working to fund it.

Having established a conservative asset-liability match, you're empowered to pursue the things you want in life, free from financial worries.

TCD: A parting shot for the readers of The Compounding Dad…

Kyith: Subscribe to The Compounding Dad!

Happy new year, dear readers! Here are 25 things I learnt about life (of which money is a subset) over the years that I would like to carry into 2025 and beyond.

1. "Make money, spend less than you earn, invest simply, and wait patiently" is probably the most underrated financial advice ever.

2. Getting your personal finances in order is more important than debating about which investment to buy.

3. We are already wealthy if we consider the relationships we have in our lives, often overlooked in pursuit of more tangible things.

4. Stock picking is not for everyone. Most investors will do well investing regularly in index funds (linked to point 1).

5. Mindfulness is an important skill to learn for investing, and by extension, life.

6. Timing the market is futile. Time in the market > timing the market.

7. Everything compounds, including money, habits, knowledge, and good relationships. A 1% improvement every day equates to 37x better one year later.

8. Defining your enough will do wonders for your sanity.

9. Volatility is a feature of the stock market and not a bug. You don’t have to do something when volatility hits. Just stay the course and focus on the long term.

10. The stock market hitting all-time highs is not a sell signal.

11. “Rather than just focusing on saving up for a big pot full of money that you will most likely not be able to spend in your lifetime, live your life to the fullest now: Chase memorable life experiences, give money to your kids when they can best use it, donate money to charity while you’re still alive. That’s the way to live life. Remember: In the end, the business of life is the acquisition of memories”. — author Bill Perkins from “Die With Zero” book

12. Have a beginner’s mind. See life through the eyes of a toddler — all curious and having no preconceived notions of how things should work out.

13 . Embrace the first-principles mindset to learn new things and solve problems. Keep on asking “why" till no more whys are remaining.

14. “Invert, always invert: Turn a situation or problem upside down. Look at it backwards. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead. Avoid these qualities and you will succeed.” — the late Charlie Munger

15. Have a bias towards action and be willing to course-correct. Progress often comes from taking calculated risks and adapting as you go, rather than waiting for certainty that may never arrive.

16. Bear markets (defined as a fall of at least 20% from peak to trough) are common. They occur every 3.6 years on average.

17. The Law of Reversed Effort is real. There’s power in letting go since most things in life are beyond our control. This is not to say that we should give up because we can’t control our lives; it’s the opposite. For instance, when it comes to investing, instead of worrying about factors that we can’t control such as inflation and geopolitics, focus on what we can control — like sticking to a disciplined investment strategy and not panicking during a market correction (linked to point 9).

18. The path to peace is to relax in the uncertainty — to surrender to the ebbs and flows of life and accept things as they are instead of resisting them. Learning to accept what we cannot change can bring peace and clarity. Acceptance is not resigning to a life of just putting up with things. It is simply accepting the truth to allow things to be as they are. Sometimes we cannot change reality, even if we want to (linked to point 17).

19. Follow your intuition. When you do that, you are guided by the intelligence that we all have within us. We don’t have to know everything. We just have to trust our intuition and have faith that our inner wisdom will show us the way forward. Surrender, trust your intuition, take the next step just in front of you, and let the Universe do the rest.

20. Challenge your money beliefs that you may have been told as kids. You can choose not to carry them with you as adults.

21. Begin with your “why”. The rest will follow.

22. Live your life in this moment. The past is gone and the future is not here. It’s called “present” for a reason.

23. Live as if it’s your last day. But save as if you still have another day. If you have ten marshmallows today, save some for tomorrow, but enjoy the rest today.

24. Nothing is permanent in life. Change is the only constant. When faced with a challenging moment (eg. a stock market crash causing your portfolio to plummet), remember: this, too, shall pass. The opposite is true as well.

25. Remembering that we will die one day — memento mori — is a powerful tool to give us perspective. Though it may seem morbid, knowing that our time on Earth is limited provides clarity. At the end of the day, we can't bring our social status or material possessions to the grave. This awareness encourages us to focus on the things that truly matter in our lives, such as cultivating meaningful relationships, finding purpose, or making the world a better place.

When I first encountered Providend’s Philosophy of Sufficiency, something inside me just clicked.

It wasn’t just another investment strategy or a formula for maximising returns. Instead, it felt like a profound shift in perspective, giving me the confirmation that reallocating my equity investments to index funds was the right thing to do.

You see, I had been investing in single stocks from 2009 to just a couple of months back, and I'm now passively investing my money through low-cost, globally diversified exchange-traded funds (ETFs) and unit trusts. I wrote about the evolution of my investing journey here if you are keen to learn more.

The Philosophy of Sufficiency is about understanding what’s truly important in your life (your non-negotiable life goals) and having enough returns to allow those goals to be actualised. It anchors on the truth that in life, you can’t have everything.

This philosophy challenged me to redefine my approach to investing.

For years, I focused on identifying high-quality companies, carefully analysing their financial statements, attending annual general meetings, and listening to earnings calls to find the best stocks (in my opinion) to put in a portfolio that would allow me to beat the market (or generate alpha in Wall Street-speak).

While it was exhilarating, it took up too much of my resources, especially my time.

However, when I shifted my investing framework around the concept of “enough,” I started to feel lighter.

Providend’s emphasis on aligning my investments with non-negotiable life goals—what is called “ikigai goals”— helped me to refocus. One of my ikigai goals is to spend more time with my family.

This shift led me to embrace a more sensible and sustainable investment strategy: investing in index funds. This evidence-based approach, while potentially offering market-average returns, provides a significantly higher probability of investing success compared to the rather time-consuming approach of stock picking.

It's about consistent growth over time, aligned with my life goals and a feeling of contentment, rather than spending hours and hours finding the next Amazon to own in my portfolio.

Another practical perk of anchoring on the Philosophy of Sufficiency and using index funds is that every time there’s a market correction, I don’t have to crack my head thinking of which stock to deploy my money into, given there’s an opportunity cost to choosing the wrong company.

With an index fund, I can just buy more of that single diversified investment and free up my time to think about my other important things in life, like where to bring my kids over the weekend.

Providend’s Philosophy of Sufficiency helped me to realise that true wealth isn't just about the numbers in my portfolio; it's about having the resources and freedom to live a fulfilling life, aligned with my values and aspirations.

It's also about having enough to pursue my passion, such as spending precious time with my loved ones. And for me, that’s a far more valuable return than any market-beating performance.

It’s a lesson I hope more investors will be open to, not just for better financial outcomes, but for a more fulfilling life. As the late Jack Bogle, founder of Vanguard and the man who pioneered index investing, once said:

A few weeks ago, I had a chat with my colleague about my investment journey. He suggested I share my experiences, and I couldn't agree more.

I've always wanted to reflect on my growth as an investor since I started investing in 2009.

So here goes.

Rolling Back Time

2007: My personal finance journey started during my National Service days when I wanted to learn how to budget my allowance. I chanced upon the “Rich Dad Poor Dad” book by Robert Kiyosaki and the money concepts discussed there made me view money in an entirely different light. (Side note: I re-read the book a few months back and it was good to reinforce the concepts about wealth after many years.)

2008 to early 2009: Lots of reading up and learning about investments and the stock market. I also dabbled in forex, losing a couple of thousand dollars, which was a lot of money for me then. Looking at technical charts didn’t make sense to me.

I also went for a personal finance and investing course that accelerated my learning and gave me the investing foundations to build upon. Realised that analysing listed businesses compared to wiggly charts for trading made more sense.

Mid-2009: I put my first dollar to work in the stock market in June 2009. It was really lucky timing as the market bottomed out in March of that year after the Global Financial Crisis (GFC). I started my journey investing in individual stocks with Warren Buffett as my teacher.

2010: Started my blog to journal my investing journey and the mistakes made as an investor to learn from them. I started my blog at financiallyfreenow.wordpress.com and have since bought my own domain — SudhanP.com.

And oh boy, have I made so many mistakes (such as market timing, focusing too much on a company’s dividend yield and not digging deeper into its dividend sustainability, selling off S&P 500 exchange-traded funds prematurely due to US dollar fears, etc).

One good thing about starting investing early is that you have a longer runway to make mistakes, learn from them, and not make the same mistakes again (hopefully!) to allow compounding to happen.

2011 to 2013: I got to know two guys through another common friend and we went on to write one of Singapore’s best-selling investment books, “Invest Lah! The Average Joe’s Guide to Investing”. (Side note: It’s been 10 years since we published the book and the three of us are coming together to release a new edition. Stay tuned!)

It was around this time that one of my co-authors, Chong Ser Jing (who now runs The Good Investors blog and Compounder Fund) asked me to write for The Motley Fool Singapore when the local office opened. The blog that I started in 2010 was really helpful to serve as a brochure of my work.

2014 to 2019: Over the years, my investing style evolved from looking only at undervalued companies to companies that are fairly valued but have more growth potential. I also ventured outside of Singapore stocks to the US to capture growth there.

I realised that I had to get out of my comfort zone and invest internationally since there are many growth companies in other parts of the world as well. Local companies, after all, are limited by their total addressable market in Singapore.

Markets-wise, I also learnt the psychology of how market participants work and could practically understand that markets move in cycles. Saw lots of stock market rallies and corrections along the way due to many reasons such as the European debt crisis, the US credit downgrade for the first time, US debt ceiling uncertainty, interest rate increases from near-zero, and so on.

I also met a lot of good friends along the way who have made me a better investor and person.

In 2019, when The Motley Fool Singapore closed down, I moved on to Seedly to lead the investment content arm there.

2020 to 2021: Early 2020 was an interesting period due to the Covid-led stock market crash. Because I started investing early and had the chance to go through various past market sell-offs, I intuitively knew that “this too shall pass”. This gave me the confidence through my experience to share with my readers that they should focus on the long term and tune out the media noise. I had the conviction to invest more in stocks myself in March 2020 and I did.

After a hyper-quick bear market, stocks started rallying up till the end of 2021. It was also during this time when I loaded up more on the pandemic darlings like Zoom, Fiverr, and Shopify.

2022 to 2023: Of course, such tech stocks didn’t end up doing well and many were underwater. It was also this time in my life when I was reflecting upon my career and the next steps. I took up a short gig with Google that was not related to investing at all and that was when I realised that I didn’t have time to concentrate on many things at a go (family, researching stocks, work, etc).

When I looked at the annualised returns from 2009 when I started my investing journey to the end of 2023, even though my portfolio was in an overall positive position, I was underperforming the general market.

While researching companies and learning about new industries was intellectually stimulating, I realised I could be better off investing passively in broad-market funds to free up my time to focus on things that matter to me more. When I first started investing in 2009, I had ample free time on my side to analyse companies, but I don’t have the luxury of time during the current stage of my life.

It was then that I seriously explored investing through well-diversified exchange traded funds (ETFs) such as the iShares Core MSCI World UCITS ETF (IWDA) and the like.

Another interesting thing to watch during this time was how higher-than-normal inflation and increasing interest rates play out in terms of stock valuations. It was my first time experiencing this as an investor.

2024: As of now, most of my stock investments are passively managed after having shifted out mostly from individual stocks. I still have some Singapore companies but I might move out of them entirely in due course. Guess this is my own rite of passage to discover and grow myself as an investor.

Lessons Learnt Over the Past 15 Years

• The best investors always talk about constantly upgrading themselves. Be a learning machine.

• Be adaptable to changing circumstances. Have strong opinions, but hold them loosely.

• Markets move in cycles. Keep history by your side as your companion. History doesn’t repeat, but it indeed rhymes.

• Making mistakes is part of the investing journey. The key is to be resilient and not to give up on your financial goals.

• Always be in permanent beta. Every stumbling block is a data point to improve yourself and get better.

This has been my journey thus far. Of course, it’s an evolving one. Perhaps 10 years down the road I may have something entirely different to tell you.

Thank you for staying till the end to read my post.

(P.S. Dear reader, how have you evolved as an investor? Comment down below to share if you would like.)

Money isn't just about dollars and cents.

How we think about money — our "money beliefs"— profoundly impacts our financial success.

But where do these beliefs come from? More often than not, they're rooted in the lessons we learnt as children, especially from the ones closest to us.

What we were told as kids from our caregivers (eg. parents and teachers) would have created powerful imprints on our subconscious minds, shaping our attitudes and behaviours around money. It can take both the negative and positive forms.

The topic of money beliefs is something I hold dear. I wanted to shed light on some common money beliefs that originate in childhood, how unhelpful money beliefs can sabotage our wealth, and how we might be able to break free from the chain.

Common Money Beliefs Rooted in Childhood

Here are a couple of common things about money that we may have heard as kids and how they may affect us even as grown-ups:

• "Money is the root of all evil": Such a view can create discomfort with wealth. If we subconsciously believe that money is inherently bad, we may find it difficult to keep it or enjoy it.
  

• "Rich people are greedy and dishonest": This belief creates a negative association with wealth, potentially leading to self-sabotage if we start to become successful. We may feel guilty or undeserving of financial abundance.
  

• "We can't afford that": Growing up hearing this phrase can instil a scarcity mindset, leading to fear-based financial decisions and an inability to enjoy what we have. We may constantly worry about running out of money, even when our finances are stable.
  

• "Money doesn't grow on trees": This saying implies that money is hard to come by and should be guarded closely. While it's important to be responsible, this belief can lead to overworking, undervaluing ourselves, and difficulty investing for the future. We may even miss opportunities that are presented to us.
  

• "It's not polite to talk about money": Many families consider money a taboo topic, leading to discomfort with financial discussions. This lack of open communication can result in poor financial literacy and difficulty managing money effectively.
  

• "Save every cent": While saving is important, an extreme focus on frugality can prevent us from enjoying our money or making smart investments. This belief can lead to a life of deprivation and missed opportunities.

Of course, those who grew up in a household of abundance thinking (opposite of scarcity mindset) would have an entirely different set of money beliefs — the more empowering kind.

Installing New Money Beliefs

What our parents may have told us could be a result of their own upbringing and circumstances. So no one’s to blame here; what’s done is done.

Fortunately, we have the power to break free from these self-limiting beliefs and rewrite our financial narratives. This in turn can help us cultivate a healthier relationship with money.

Shifting our money beliefs first begins with awareness. By reflecting on our childhood experiences and the messages we received about money, we can identify the specific beliefs that hold us back.

Once we become aware of these limiting beliefs, we can challenge their validity. Are they based on facts or unfounded fears? Consciously reframing negative beliefs with positive affirmations is a powerful step towards change.

For instance, replacing "money is the root of all evil" with "money is a tool that can be used for good" can gradually shift our perspective.

Similarly, transforming "I can't afford it" into "I’m open to abundance and financial opportunities" can open us up to new possibilities.

We can even turn the closed statement of “I can’t afford it” into an empowering question:

Here are more examples of new, unshackling money beliefs you can install:

• “What I heard about money isn’t necessarily true. I choose to adopt new ways of thinking that support my happiness and success.”

• “I’m good with money.”

• “I can achieve my financial goals by handling money well.”

• “I think in abundance.”

• “Money buys me time freedom and allows me to do the things I want to do.” 

If you are a parent yourself, I strongly urge you to be more conscious about what you tell your kids about money. It can be challenging to undo years of learning, but it has to start somewhere.

The Power Is In Your Hands

Remember, your beliefs about money are not set in stone. By actively challenging and reshaping them, you can pave the way for a more prosperous and fulfilling financial future.

What are some money beliefs you grew up with? Have they served you well? What can you do to break free from them? Feel free to share in the comments section below.

In the world of business, few figures loom as large as Jeff Bezos, founder and long-time ex-CEO of Amazon.

His annual letters to shareholders have become a masterclass in leadership, innovation, and long-term thinking.

Let’s delve into these letters, spanning from 1997 to 2020, and uncover six key lessons that hold wisdom not just for investors but for anyone seeking to build something meaningful.

(Bonus: You can download the full notes that I have compiled from reading every single Amazon shareholder letter by Jeff Bezos here.)

1. Long-Term Thinking: The Bedrock of Enduring Success (1997)

In his very first letter, Bezos laid out a manifesto: "It's All About the Long Term."

He emphasised that Amazon would prioritize long-term value creation over short-term gains, even if it meant enduring market misunderstanding. This commitment to the long game became a cornerstone of Amazon's culture.

Bezos' message was clear: Building a lasting enterprise requires patience, a relentless focus on customers, and an unwavering will to invest in the future.

It's a reminder that focusing on enduring value, rather than chasing quick wins, leads to more sustainable and impactful outcomes.

2. Focus on the Business, Not Just the Stock Price (2000)

In the 2000 letter, Bezos wrote that Amazon shares were down 80% then. He went on to address the importance of focusing on the fundamentals of the business rather than being overly swayed by stock market fluctuations.

He emphasised that building a great company with strong customer relationships and a healthy financial foundation would ultimately translate into long-term shareholder value.

Quoting Warren Buffett’s mentor, Benjamin Graham, Bezos pointed to the fact that while external factors may influence the stock price, it's the strength of the underlying business that ultimately determines its true worth.

3. Obsess Over Customers, Not Competitors (2012)

Bezos' customer-centric philosophy has been a defining characteristic of Amazon's success.

In his 2012 letter, he reiterated that the company's growth stemmed from focusing relentlessly on customer needs, not on trying to outmanoeuvre competitors.

He encouraged a proactive approach to innovation, anticipating customer desires and going beyond simply reacting to what rivals were doing.

This lesson reminds us that as an entrepreneur, putting the customer at the heart of everything – from product development to customer service – fosters loyalty, drives innovation, and ultimately leads to sustainable growth. It's about creating value for the customer, not just competing for their attention.

4. Decision-Making: Type 1 vs. Type 2 (2015)

Bezos famously categorised decisions into two types: Type 1 and Type 2.

Type 1 decisions are consequential and irreversible/nearly irreversible (one-way doors), while Type 2 decisions are less critical and easily reversible (two-way doors). Most decisions fall into the Type 2 category.

Some examples of Type 2 decisions: Should I take that career risk? Should I take up that promotion? Should I move to another country?

He advocated for making high-quality Type 1 decisions deliberately and cautiously, while empowering teams to quickly experiment with Type 2 decisions.

Even if you’ve made a “suboptimal Type 2 decision, you don’t have to live with the consequences for that long” as you can reopen the door and walk back.

This framework provides a practical approach to navigating the complexities of decision-making, even as individuals. It encourages thoughtful consideration for important choices while fostering a culture of experimentation and learning from less critical decisions.

5. The Right Amount of Information (2016)

Bezos constantly emphasised that it’s always Day 1 at Amazon. What does it mean? The definition of Day 2 from the 2016 letter below sums it up well.

Adding on to the previous point about how most decisions are two-way doors, Bezos talked about his approach to high-velocity decision making. He said that it's impossible to have complete information before making a decision.

Instead, he advocated for gathering 70% of the desired information and then making a judgment call.

If you wait for 90%, you are probably too slow in most cases. And since most decisions can be reversed if they are proven wrong, it makes it more important to act quickly and learn from mistakes than to wait for perfect information.

Lesson here? Have a bias towards action and be willing to course-correct. It's a reminder that progress often comes from taking calculated risks and adapting as you go, rather than waiting for certainty that may never arrive.

6. Embrace the Beginner's Mind (2018)

In his 2018 letter, Bezos stressed the value of approaching things with a beginner's mind, unburdened by preconceived notions or past successes.

This lesson encourages a culture of continuous learning and adaptability. It reminds us that staying curious, embracing new ideas, and the willingness to be guided by our inner voice are essential for growth.

A Treasure Trove of Wisdom

Jeff Bezos' annual letters to shareholders offer a treasure trove of insights for investors, entrepreneurs, and anyone seeking to have a better life.

The lessons of long-term thinking, decision-making frameworks, a bias towards action, and the importance of trusting your intuition go beyond the business world. They provide a roadmap for navigating uncertainty, embracing change, and creating a legacy that stands the test of time.

(Another reminder that you can download the full notes that I have compiled from reading every single Amazon shareholder letter by Jeff Bezos here.)

Investing in the stock market often seems daunting due to widespread misconceptions.

Understanding and debunking those myths is crucial for anyone looking to build wealth over the long term.

In this article, we’ll debunk five common myths about investing to help you navigate the world of stocks with confidence and clarity.

Myth #1: Putting Money In the Bank Is Safer

Many people believe that keeping money in a savings account is the safest option.

While it is true that bank deposits are protected and stable, they offer very low returns.

Over time, inflation can erode the purchasing power of your savings, meaning that your money could lose value in real terms.

In contrast, investing in the stock market, despite its ups and downs, has historically provided higher returns that can outpace inflation, helping to grow your wealth over the long term.

Myth #2: Investing Is Risky

Many people believe that investing in the stock market is a surefire way to lose money due to its perceived riskiness.

While the stock market is indeed volatile and can fluctuate widely on any given day, this doesn't inherently mean it's risky.

Chuck Akre, whose Akre Focus Fund has achieved an annualised return of around 15% since 2009, clarified:

“When we speak of risk, we are not speaking of share price volatility. Share price volatility provides us with opportunity. When we speak of risk we are thinking about exposure to permanent loss of capital.”

By performing thorough investment research and investing in a diversified portfolio of stocks over the long term, investors can significantly reduce the likelihood of permanent losses and harness the market's growth potential.

Myth #3: Investing Is Only for the Wealthy

The belief that investing is a privilege reserved for the wealthy is totally not true. Even someone with an ordinary income can create massive wealth.

Everyone can invest and should invest, at least to beat inflation, as mentioned earlier.

With the advent of robo advisors and fractional investing, individuals can start investing with as little as a few dollars.

Moreover, the power of compound interest means that even small, regular contributions (of say $50 per month) can grow substantially over time.

Myth #4: I Need To Have High IQ To Invest

Contrary to popular belief, investing does not require an extraordinary intellect.

The most important traits for successful investing are patience, discipline, and a willingness to learn.

Many of the world's greatest investors, like Warren Buffett and John Bogle, emphasise the importance of keeping things simple.

Basic financial principles and strategies, such as investing in index funds and staying the course during market downturns, are often more effective than complex financial manoeuvres.

Educational resources like The Compounding Dad are widely available to help anyone become a competent investor without needing a high IQ.

Myth #5: You Can Predict Stock Market Movements

While it’s tempting to seek explanations for every market movement, the reality is that short-term fluctuations are often random and driven by a multitude of factors.

Economic data, geopolitical events, and market sentiment can all influence stock prices, but their impacts are difficult to predict. Even professional investors struggle with predicting market movements accurately.

Rather than trying to understand every market move and timing the market, successful investors should focus on the long term and dollar-cost average in a diversified stock portfolio diligently.

Despite numerous ups and downs, the overall trend of the stock market has been positive over the long run, rewarding those who had “time in the market”.

Myths Galore

While we looked at a couple of investing myths above, the stock market is full of many other misconceptions.

What are some others you can think about? Share them in the comments below!

Did you know a janitor in the US once amassed a fortune of $8 million?

Yes, you read that right.

The late Ronald Read’s story shatters the myth that financial security is reserved for the privileged few.

This unassuming Vermont resident, who worked as a gas station attendant and janitor, defied expectations by quietly building an impressive nest egg. His formula for success?

A commitment to living below his means, investing wisely, and unwavering patience.

Let’s dive further into some invaluable personal finance lessons we can learn from Ronald Read.

1. Live Below Your Means

Ronald Read showed the world what living below your means is all about.

Despite his modest income, he managed to save diligently. He wasn't extravagant. He drove a used car, mended his clothes with safety pins, and prioritised needs over wants.

This allowed him to channel funds towards his financial goals consistently.

The lesson here? By controlling your expenses and avoiding unnecessary luxuries, you free up more resources to save and invest.

Prioritise your needs, set clear financial goals, and adopt a mindful approach to spending. Remember, financial success isn't about how much you earn, but what you do with what you have.

2. Invest Regularly and Patiently

Read wasn't a flashy day trader chasing hot stocks.

His investment strategy was one of consistency and long-term vision.

He favoured stable, blue-chip companies that paid regular dividends. He held onto these investments for decades, unfazed by short-term market fluctuations.

This buy-and-hold approach — coupled with the power of compounding (reinvesting dividends for even greater returns) — became the bedrock of his financial success. This approach is similar to another unknown millionaire, the late Anne Scheiber.

The lesson here is that the stock market, while offering significant growth potential, can be volatile.

Don't let short-term dips cloud your judgment. Focus on building a diversified portfolio of well-established companies with a long-term perspective. If you are not into stock-picking, there are also passive index funds you can consider.

Patience allows you to ride out market volatility and benefit from its general upward trend.

3. Continuous Learning and Understanding

While Ronald Read lacked a formal education in finance, he possessed an insatiable curiosity.

He devoured financial newspapers, educating himself about the companies he invested in. This dedication to understanding his investments proved invaluable.

The takeaway? Financial literacy is key. Equip yourself with knowledge. Research the stock market and understand the businesses you invest in.

The Legacy of Ronald Read

Ronald Read's life offers a powerful message of hope and possibility.

Financial success is achievable, regardless of your income level. By adopting his principles of frugality, smart investing, patience, and continuous learning, you can take control of your finances and build a secure future.

I hope Read's story will be an inspiration to embark on your journey towards financial freedom.

Anne Scheiber must be one of the greatest investors you've never heard of.

Scheiber started investing in her 50s after she retired as an auditor in the United States Internal Revenue Service in 1944.

When she retired, she had only US$5,000 as savings and had never earned above US$4,000 per year.

However, when she passed away at the wise age of 101, she managed to amass a mind-boggling US$22 million.

The secret behind her success was to invest in brand-name companies for the long term, with dividends going back into the pot.

Scheiber focused her attention on strong businesses that could grow earnings and pay higher dividends over time.

Remarkably, her investing period saw many booms and busts, and war and peace, such as the 1972-1974 bear market, the 1987 market crash, the Korean War, the Vietnam War, and the first Gulf War.

Despite the many ups and downs, Scheiber’s discipline in the stock market paid off, since she was in it for the long term. Not one week, one month, or one year, but decades.

The Long-Term Mentality

Warren Buffett, one of the best investors in the world, once famously said that his favourite holding period is forever. In his 1988 shareholders’ letter, he mentioned:

“In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever. We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint. Peter Lynch aptly likens such behavior to cutting the flowers and watering the weeds.”

David Gardner, one of the co-founders of The Motley Fool, revealed the secret behind the massive returns of his subscription service. In an article entitled “The Greatest Secret of All”, he told the world (emphases are mine):

“Find good companies and hold those positions tenaciously over time to yield multiples upon multiples of your original investment.”

The key here is to find outstanding companies to hold onto for decades with full conviction, no matter what the stock market does.

By holding onto the best businesses for the long term, we can take advantage of the beauty of compounding.

Consistency is Key

As they say, Rome wasn’t built in a day. 

The key to being successful in the stock market is to buy great businesses and hold onto them tenaciously for the long term, if possible, forever.

Businesses take time to grow and flourish, but by trading in and out of the stock market, we would only hurt our portfolio returns.

Let me end off with another of Gardner’s pithy quote from one of his interviews:

“Find excellence, buy excellence, and add to excellence over time.”

Perfectly said.

Hello fellow knowledge compounders,

We are going to try a new format for the weekly newsletters based on data collected.

Instead of showcasing and linking out to investing articles already written, we will have one full article in the newsletter itself for maximum effectiveness.

Do let me know your thoughts on this edition of the newsletter via this link or by clicking on the banner at the bottom of this article.

With that, let’s explore this week’s topic: “7 Crucial Don’ts for Stock Market Investing”

The stock market is made up of different types of investors.

When the market is bullish, investors often feel optimistic and may act recklessly, thinking that the rally will persist.

Conversely, during bear markets, extreme pessimism can lead to actions detrimental to their financial health.

With the US stock market hitting all-time highs now and then, some investors might wonder if a market correction is on the cards.

Regardless of what happens to the market (we can’t predict it for sure), maintaining discipline and adhering to certain “rules” can help ensure long-term investing success.

1. Don’t Invest Without Having the Right Foundation

The stock market can be a great place to generate wealth over the long term.

However, before diving in, it's crucial to establish a strong financial foundation by:

• Educating yourself about the various investment instruments available

• Understanding your financial goals and risk tolerance

• Ensuring basic and adequate insurance coverage

• Setting aside emergency funds

• Paying off high-interest debt

This preparation is essential to start your investing on the right footing.

2. Don’t Leverage

While it may be tempting to borrow to invest, don’t.

Leverage can work both ways. Gains can be amplified but at the same time, losses will be amplified too.

If the market crashes again, a portfolio financed with borrowed money can lead to significant losses and financial stress.

It's far wiser to invest with ready funds, ensuring peace of mind.

3. Don’t Use Your Rainy Day Funds to Invest

Resist the urge to invest your emergency funds (also known as rainy day funds), even when market opportunities seem attractive.

These funds are meant for urgent, unforeseen circumstances, and not to take advantage of a plunging stock market.

Using your emergency funds to invest undermines their purpose and can jeopardise your financial security.

4. Don’t Invest With Money You Need in the Next Five Years

While the stock market generally trends upward over the long term, short-term volatility can be unpredictable.

To avoid selling investments prematurely, only invest money you won’t need for at least five years.

Safer instruments like fixed deposits or high-interest savings accounts are more appropriate for short-term needs like a wedding, home renovation, or education.

5. Don’t Try to Time the Market

“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.” — Jack Bogle

Attempting to time the market by selling during downturns and buying during recoveries is notoriously difficult.

Missing even a few of the market's best days can drastically reduce long-term returns.

6. Don’t Invest All Your Money in a Single Stock

Diversification is key. Even the best companies carry risks.

Spread your investments across multiple companies, sectors, and geographies. This reduces risk and enhances long-term stability.

You can also diversify instantly by investing in an exchange-traded fund (ETF) that tracks the broader stock market.

7. Don’t Panic-Sell During a Market Downturn

Despite numerous economic crises and market crashes, the stock market has gone on to march higher over the long run.

Panic-selling in a downturn only locks in losses. As history has shown, staying the course does wonders for your portfolio.

By adhering to these principles, investors can navigate volatile markets and achieve long-term financial success.

What other “rules” would you add? You can comment down below.

Welcome to issue #4 of The Compounding Dad newsletter.

The Compounding Dad newsletter is focused on investing to help you compound your knowledge. Delivered every Saturday, this newsletter will have simple-to-understand and actionable content so you can cut through the noise and make smart investment decisions for yourself and your loved ones.

Each week, we will explore:

1. Our latest investing articles

2. A tip to compound your personal growth

3. Something fun

With that, let’s dive straight in!

The Compounding Dad Investing Articles

10 Investing Charts You Need To See

Improve your odds of investing well over the long term by exploring these investing charts.

Here are other investing articles from The Compounding Dad that might interest you:

1 Tip To Become 1% Better than Yesterday: The Law of Reversed Effort

There’s a Zen parable that goes like this:

A martial arts student approaches his teacher and asks, "How long will it take me to master this craft?"

The teacher replies, "10 years."

The student, looking impatient, responds, "I want to master it faster than that. I will work harder than anyone else. I will push myself to practice for many hours every single day. I won't rest until I become a master. How long will it take then?"

The teacher considers this new information, smiles, and answers, "20 years."

The story captures the essence of the Law of Reversed Effort, a concept coined by author Aldous Huxley. It suggests that over-focusing on a goal can backfire, leading to frustration and hindering progress.

Here's how it plays out:

• Creativity: When you try to force creative inspiration, it often vanishes.

• Sleep: The more you try to force yourself to sleep, the wider your eyes become.

• Learning something new: The more you pressure yourself to master something instantly, the more frustrated you can become.

So, how do we harness the Law of Reversed Effort for a more relaxed and productive life?

• Shift your focus: When pursuing a goal, focus on enjoying the process. For example, instead of obsessing about getting your next promotion, focus on enjoying and doing your work well.

• Embrace the flow: Sometimes the best results come when we enter a state of flow, a state of complete absorption in an activity. Let go of rigid control and allow yourself to be present in the moment.

• Detachment with desire: Maintain a healthy detachment from your goals. This doesn't mean not caring, but rather trusting the process and understanding that some things are outside your control.

Even elite Navy SEALs need to use the Law of Reversed Effort to survive during the drownproofing training, where SEAL candidates are tied up and submerged in a pool for five minutes. To survive, they must counter-intuitively relax and allow themselves to sink. This triggers a natural diving reflex, allowing them to conserve oxygen and propel themselves back up to the surface to breathe. If at any moment they struggle, they won’t be able to resurface.

Remember, the Law of Reversed Effort isn't about laziness. It's about working smarter. By letting go of the need to force outcomes, we can tap into a more effortless and fulfilling way of living.

Dad Joke of the Week

Why shouldn't you write with a broken pencil? Because it's pointless!

1. The Power of Compounding

Albert Einstein is said to have called compound interest "the eighth wonder of the world".

Compound interest is the interest earned on both your initial investment and accumulated interest over time. This means your money grows at an accelerated rate compared to simple interest.

And the longer you invest, the more you can harness the power of compounding to your advantage.

2. Stock Market Drawdowns Are Common

The stock market has declined 10% or more every 1.2 years on average since 1980.

Despite frequent market volatility, stocks have gone on to march higher over the long run.

3. Bull Markets That Follow Crashes Tend to Be Stronger and Last Longer

A bull market is generally defined as a 20% or more rise in the stock market from its most recent bottom.

Meanwhile, a bear market is when the market falls 20% or more from its high.

Since 1962, there have been 12 bull markets and 11 bear markets.

However, the average duration of a bull market was 51 months (or around 4.3 years) while the bear market lasted just 11 months on average.

In terms of average return, bull markets triumphed over bear markets as well (+152% vs -34%).

4. Don’t Fear Inflation

In general, stock returns have been higher than inflation rates over the long run.

5. Investing At All-Time Highs? You Bet

While being counter-intuitive, investing in US large cap equities at an all-time high produced better returns than at other times.

This brings us to the next point.

6. Time In the Market Beats Timing the Market

Market timing is a tough job.

Just missing the 10 best days shaved 50% of the returns as compared to staying invested without any market timing.

7. The Longer You Hold Stocks, Higher the Probability of Making Money

Since stocks tend to rise over the long term, the longer you stay invested, the higher your chances of making money.

8. Ignore Politics

In the US, stock market gains have been recorded regardless of which political party controls the presidency.

9. The Stock Market Has Always Climbed a Wall of Worry

There’s always something to worry about in the stock market — presidential election, inflation fears, geopolitical risks, and so on.

10. Emotional Stability Is Important To Invest Well

Benjamin Graham once said: "The investor's chief problem-- even his worst enemy-- is likely to be himself."

Even though the S&P 500 has returned 5.6% per annum from 1999 to 2018, the average investor only made 1.9% annually due to their erratic behaviour.

Therefore, we should always keep our emotions in check, focus on the long term, and fall back to history (by referring back to the charts above) to do well in investing.

I clearly remember that while I was serving the mandatory National Service in 2007, I wanted to learn how to manage my limited income.

So, I went to the nearby Popular bookstore at Tiong Bahru Plaza to explore some books on budgeting.

As I walked in, I saw a book on the “Popular Bestsellers” rack to my left that caught my eye. It was Robert Kiyosaki’s “Rich Dad, Poor Dad”.

I picked the book up to read the summary on the back page and it sounded interesting. I bought the book thereafter.

A while later, I began reading the book proper and was immediately captivated by the incredible theories it talked about.

Here are 10 noteworthy quotes about personal finance and investing from Rich Dad Poor Dad that I think are worth highlighting.

1. One dad had a habit of saying, “I can’t afford it.” The other dad forbade those words to be used. He insisted I say, “How can I afford it?” One is a statement, and the other is a question. One lets you off the hook, and the other forces you to think.

2. Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.

3. As your cash flow grows, you can buy some luxuries. An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.

4. Rule One. You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is Rule No. 1. It is the only rule. Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.

5. What is more powerful is financial education. Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.

6. Wealth is a person’s ability to survive so many number of days forward… or if I stopped working today, how long could I survive?

7. Don’t get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first. Then, buy the big house or nice car. Being stuck in the rat race is not intelligent.

8. Many great financial problems are caused by going along with the crowd and trying to keep up with the Joneses. Occasionally, we all need to look in the mirror and be true to our inner wisdom rather than our fears.

9. Money without financial intelligence is money soon gone.

10. In today’s fast-changing world, it’s not so much what you know anymore that counts, because often what you know is old. It is how fast you learn. That skill is priceless.

If learning how to manage money well is your goal this year, I would highly recommend you read this wonderful book.

Welcome to issue #3 of The Compounding Dad newsletter.

Last week, I had the opportunity to share my investing and personal finance insights with a group of teachers at a secondary school. Thanks to one of my subscribers for inviting me to be the trainer.

Loads of questions were asked about how to start investing, what to do with a losing investment, and whether now is a good time to invest. Sharing my knowledge to help others level up is something I love doing. That’s also the reason why this website and newsletter exist.

The Compounding Dad newsletter is focused on investing to help you compound your knowledge. Delivered every Saturday, this newsletter will have simple-to-understand and actionable content so you can cut through the noise and make smart investment decisions for yourself and your loved ones.

Each week, we will explore:

1. Our latest investing articles

2. A tip to compound your personal growth

3. Something fun

Since it’s Mental Health Awareness Month, we look at the topic of mindfulness and how it can help you be a better investor.

The Compounding Dad Investing Articles

Peeling the Emotions: How Mindfulness Helps You in Investing

Eckhart Tolle, author of the best-selling book “The Power of Now”, once said:

“Be the silent watcher of your thoughts and behaviour. You are beneath the thinker. You are the stillness beneath the mental noise.”

By practising what’s said in the powerful quote, you can better navigate life’s challenges, including being zen when market volatility strikes.

You see, having emotional stability is extremely important as an investor. Benjamin Graham, Warren Buffett’s mentor, mentioned that "the investor's chief problem-- even his worst enemy-- is likely to be himself".

So how do we keep our emotions in check when it comes to investing? One tool that has helped me is mindfulness. Check out how you can be a better investor as well through this technique.

Here are other investing articles from The Compounding Dad that might interest you:

1 Tip To Become 1% Better than Yesterday: The Four Agreements

Another book that I would highly recommend people to read is “The Four Agreements: A Practical Guide to Personal Freedom" by Don Miguel Ruiz.

It offers a simple yet powerful path to transforming your life. Based on ancient Toltec wisdom, the book proposes four key agreements to create a life filled with joy and authenticity.

Here's a summary of The Four Agreements:

• Be Impeccable With Your Word: Speak with truth and kindness. Don’t use the word to spread negativity.

• Don't Take Anything Personally: Nothing others do is because of you. It's about them, not a reflection of your worth.

• Don't Make Assumptions: Clarify, clarify, clarify. Open communication is key to avoiding misunderstandings and hurt feelings.

• Always Do Your Best: This isn't about perfection, but giving your best effort in every moment, regardless of the circumstances.

What is one agreement that resonates with you? Focus on implementing it now and notice the instant benefit that it might bring.

Dad Joke of the Week

Q: Why did the stockbroker go to therapy?

A: He was convinced the market was rigged against him because every time he bought a stock, the price fell.

Warren Buffett is arguably one of the best investors in the world.

From 1965 to 2023, he generated annual returns of close to 20% for his company’s shareholders.

If you had invested just $1,000 in his firm, Berkshire Hathaway, in 1965, you would be sitting on a cool $35.5 million at the end of last year.

Buffett’s patience in the stock market is one of the key reasons for his incredible return.

He is well-known for holding his stocks for the long run. In fact, he once famously remarked that his favourite holding period in stocks is “forever”.

Yes, Buffett has sold shares, but it is the thinking behind his quote that matters.

When you have a long time horizon when investing, it will help you to focus on the things that matter (hint: stock prices are not one of them).

The following is one of Buffett’s well-known quotes:

“Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”

It requires a considerable amount of time for any business to do well, similar to how “Rome wasn’t built in a day”.

If we have an “investing” time frame of just one month, we would only be looking at stock price fluctuations alone, and this will be to the detriment of our portfolio.

The daily fluctuation in stock prices will not do any good for our psychological health as well.

However, if our investing time frame is measured in decades or even generations, we will be inclined to think about the things that matter: the long-term prospects of a business, the leaders behind a company, the value of a business, and so on.

So the next time you’re looking at investing in a stock or low-cost index fund, think in terms of years, decades, or generations, and not days, weeks, or months. It’s the mindset that makes a whole lot of difference.