FH Podcast: Why StashAway’s CIO loves Gold, and advice for young investors in Singapore


Hi Everyone!

I’ve been working on this for a while now, and I’m really pleased to announce the launch of Financial Horse Podcast!

The purpose of this Podcast is really simple. No matter how clever I may be, I am but one person. The views that I share, may not be right all the time. To really improve as an investor, you need to expose yourself to different kinds of views and opinions, learn to critically evaluate them, and form your own opinion. The goal of this podcast, is to be able to listen and learn from some of the best investing minds out there, all from the comfort of your home.

You are the average of the 5 people you spend the most time with, so if you’re listening to CIOs and great investors on a regular basis, some of it would rub off right?

Basics: Who is Freddy Lim?

Guest number one is co-founder and Chief Investment Officer (CIO) of StashAway. In this Podcast, we sit down with Freddy to ask him for his advice for young Singapore investors, his personal investment strategy, how modern monetary policy can affect your investments, and why if he could only make one investment in his life, it would be Gold!

His Bio is set out below:

Freddy Lim

Co-Founder, Chief Investment Officer, 17 years experience in cross-asset investing and portfolio management

Freddy gathered years of investment expertise as Managing Director and Global Head of Derivatives Strategy at Nomura. He gained his strong background in cross-asset portfolio at Millennium Capital Management and at CitiGroup, after working at Morgan Stanley, Merrill Lynch, and Lehman Brothers. He holds a Bachelor in Econometrics and Quantitative Economics from Monash University.

Highlights Video

Watch the 10 minutes highlights on YouTube (don’t forget to like and subscribe):

Full Audio Interview

Or Listen to the full conversation (audio only) on Itunes here.

Note: If you don’t have an Itunes account you can also access it via Soundcoud.

If you’re too busy right now to listen, you can save this for your commute later (or listen to it when you’re bored at work ?).

Text Highlights

For those who are pressed for time, a text highlights is also set out below. I do highly recommend at least watching the video version though, it’s always different when you can hear the person speak for yourself. Enjoy!

Freddy’s first Investment [1:30]

Rather than a stock, it was a trade. I traded a dollar Yen. Currency was my first.

Few years before I did my first trade, George Sorros broke the Bank of England. I was trying to understand and got into currency trading.

Did you make money?

I got too scared! I suffered all the pitfalls of novice investors. I took profits too quickly, and dollar Yen actually went up a lot more for decades to come. It was a missed opportunity but it was fun ?

Freddy’s personal investment strategy? [2:45]

The philosophy is the same way in how we design the StashAway product. It comes from personal experience. I believe that:

(1) don’t borrow money to invest;

(2) set goals early; and

(3) focus on the economy.

Keep track of macro trends [4:15]

For aggregate economy, central bank websites are very good (eg. US FRED). You can track macro trends fairly easily and actually everyone should try it! It’s a great strategy to be protective of your own net worth.

Implement standard momentum indicator to the macro information, it’s actually very useful, more so than for than FX or stocks. This gives you a better success rate, that is my tip!

What I wished I knew when I was 25… [11:15]

I wish my 25-year-old self had taken the book written by Robert Kiyosaki more seriously (the first book, Rich Dad Poor Dad). All the ingredients are in that first book. Save from your lifestyle, invest those savings to generate future cash flow, the cash flow quadrant and all the basic planning tools. This is half the battle to success in investing, the other half is lower fees and perhaps sophisticated investing algorithms.

I wish I knew all those things earlier and more people were educating us about these things widely.

Most common mistake for beginner investors [14:35]

Reacting to noise and getting whipsawed by the market.

In the current digital age, there is exponentially more noise from traditional media, social media and Trump’s twitter. The biggest mistake is getting whipsawed from the market. By reacting to the market, you lose money. Averaging into the market over time will always do better.

How do you train yourself to ignore the noise?

Planning. Before you enter the trade, determine your risk level and plan your loss amount i.e. risk budgeting. When you get hurt, you get out and move on. Even a novice investor should train himself in discipline. Don’t just think about the good side. It’s all about planning.

Investing is not about returns first, it’s about risk first [16:45]

Investing is not about returns first, its about risk first. Then you maximize every dollar from the risk taken. That to me is the core definition of investment.

Imagine that your dad gave you a million dollars… [18:45]

You have a million dollars, and you immediately you go invest this money. And the next day, you lose half of it. 500k. Now think again, how much return do you need to get back to 1 million dollars? It’s 100% not 50%.

The biggest pain is after the loss happens.

The path to recovery is an uphill battle, are you ready for that?

Gold is a super-cycle investment [29:15]

I like Gold (not just because I’m Chinese haha). From a risk angle, the more uncertain the world is, the better it is for gold.

Even the People’s Bank of China has been buying up gold over the years. It’s a commodity of choice of central banks.

Gold is a super-cycle investment. As long as you are patient with it, it’s going to handsomely reward you.

Buying bonds [32:00]

The quality and credit rating of the Singapore government issued bonds is very high. But of course, the yield is not as high.

For investors it’s a planning question. If you need money to 3 – 5 years, it’s a good place to park money to fight against inflation.

For capital appreciation, it’s not going to serve this purpose. It’s more about capital preservation.

Robo-advisors in 10 years [40:20]

The industry is barely born. The more public awareness, the better. I welcome competition.

What do you hope to achieve with StashAway? [42:15]

It’ll be personally fulfilling if one day, all my daughter’s classmates will be going to university funded by their parents’ decision to invest in StashAway.

We’re leading by example, but cutting away the fat and getting rid of the middlemen.

Not just a robot, we are human [46:45]

While we are called a “robo” advisor, algorithms need to be worked on by humans. There is always human involvement with constantly improving the new product or launching new products. We are not going to stop here. This is just the beginning.

If you’re keen to invest in StashAway, you can also check out my fuller review here!

Who would you like to hear from next on the FH Podcast? Share your suggestion below! I respond personally to all comments!

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