Me & My Money Series (Sunday Times)

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This is really one of the better interviews I'd read in this column! I really respect and admire this guy for his philanthropy, and also his attitude towards money. He also has some views which I completely agree with - such as real estate returns being overrated and how he says a car in Singapore is an absolute waste of money.

Perhaps ST should consider more of such interviews?

The Straits Times
Jan 1, 2012
me & my money
Charity the most important investment

Former top investment banker flies economy and discount airlines for business and pleasure so that he can use the money saved to help others

By Joyce Teo

Former top investment banker Michael Dee will bust all your ideas of what a typical banker should be.

The man does not own a car in Singapore and he flies economy and discount airlines everywhere, whether it is for business or pleasure.

'I think of myself as a personal business and make the same decisions in my personal life as I do in my business life,' he says.

Money is to him, he tells me, just a transference of value. 'If I can transfer my money into an emotional connection, then it has a lot of value to me.'

Personal happiness has nothing to do with one's portfolio. 'Money can create dysfunction in families, conflict among nations, arrogance and a belief that monetary wealth means one's life is better than another's of less wealth.'

It should never control one's compassion for others nor cloud one's ability to do the right thing, says the 55-year-old.

Mr Dee flew economy more often at the peak of his earning power, which helped his company cut costs, 'by hundreds of thousands of dollars a year'.

It was money he could use to improve other people's lives. 'There is no greater feeling than flying to Brazil in economy knowing that I can provide $10,000 or more to a charity.'

And charity, he says, should be thought of as your most important investment.

Mr Dee has clocked 26 years at Morgan Stanley and 'while the economic advantages were good, it was never about the money, it was about loving what you do'. He was also with Temasek Holdings for 2 1/2 years.

A United States citizen, he has spent 18 of the past 30 years working overseas. Now based in Singapore, he is an investor, a job which he says he has come to believe is 'the world's hardest profession, because everything affects the market and every day is different'.

Mr Dee is married to Shelly, 52, a housewife and philanthropist. They have four children - Matthew and Christopher, both 17, David, 15 and Diana, 12.

Q: Are you a spender or saver?

An investor. What I spend on, I look at as an investment of money and/or time. Money as a commodity to be spent or saved is a vastly overrated concept.

Time is the most important commodity people can consider, because you can't save it and you don't even know how much you have. If you don't invest a given minute, it is a lost minute and they can add up.

What most affects people's lives is when they realise how little time they have. Their value of time begins to change and they become more focused and discriminating.

Society needs to realise that there is a much greater return to be made investing in our youth than in our elderly years due to the compounding effect. The challenge is to extend people's productive capacity as they age, so that the retirement burden does not fall heavily on youth as the population ages.

I spend on travel as my wife and family are inveterate travellers and love to see the world in all its glory to seek understanding and adventure. This summer, my three sons climbed Mount Kilimanjaro with two intellectually disabled Special Olympics athletes from Tanzania and Singapore, while my wife and daughter spent the week working with street children in Moshi, Tanzania.

Q: How much do you charge to your credit cards every month?

I have two credit cards, one in Singdollars and one in US dollars. I charge everything and collect frequent flier miles. I have never in 30 years had a balance on my credit card and never will. I carry very little cash but my wife is my ATM when I'm short.

Q What financial planning have you done for yourself?

Mostly it's asset allocation, tax and estate planning, as there is global taxation for Americans. I get heartburn when I think of the taxes I have to pay while outside the US.

I am underweight fixed income and heavily weighted to high quality equities which are income generating. We have a few funds but generally the fees are too high to justify them. We also have a relatively high proportion of cash.

Exchange-traded funds (ETFs) are increasingly our choice for diversification, because of their low fees and liquidity. I also like high yielding non-financial, non-telecom stocks with a record of growing payouts, high cash balances and solid credit ratings, which can pay dividends out of free cash flow.

My wife, a Harvard Business School graduate, enjoys stock picking more than I do. As most relationship problems revolve around money, I prefer to focus on making it, keeping it and thus the bigger picture is my zone of focus.

My wife and I have life insurance mostly in a second-to-die policy as it reduces the cost substantially. Life insurance is just disaster insurance. It's health insurance that has real value to me.

Q: What advice would you give to investors?

You should never let your money out of your sight or delegate your finances to a third party.

Do your homework, keep it simple with diversification, maintain liquidity and never trade on rumours. The rumours often come from insiders who are not trying to make you rich, or from complete idiots.

Smart money does not tell people specifically what they are doing.

Every child, teenager, young adult should be taught the value of compound interest in school. Saving as much as you can, as young as you can, is the hidden secret to wealth accumulation.

Other issues that are often overlooked are:

•fees drastically reduce returns over the long haul and should be minimised;

•taking less risk the older you get allows you to sleep better at night;

•asset allocation is more important than stock picking;

•growing and stable dividends are the most undervalued asset; and

•real estate returns are overrated because most people do not account for the very high leverage or believe that prices can go down (and they do).

Q: Moneywise, what were your growing-up years like?

I grew up in a small town outside Buffalo, New York. When I was young, my relationship with my dad was based on me working with him every weekend. He was an electrical contractor. He worked very hard, loved what he did and was a perfectionist. You could count on his work and in particular the bits you would never see. As I put on his tombstone, he was 'A Great Guy'.

My fiercely independent mother is 84 and she has been teaching figure skating for over 60 years. Till today, she puts on her skates and goes on the ice to teach. She embodies all that is great about excellent teachers.

In the 1950s, the idea of working women and, in particular, an entrepreneurial woman, was virtually unheard on.

My parents knew the value of education and even though neither ever went to college, they drove me crazy drilling college into me. We never had much money and most of what my parents had went to my education. I graduated from the Wharton School of the University of Pennsylvania in 1981. They were both all about helping others and they taught me value and values. I hope I have lived up to their lessons.

I have one sister, Anne, who has Down syndrome, which is why I support the Special Olympics.

Q: How did you get interested in investing?

When I was young, I saved as much as I could in every tax deferred plan I could find. Because I started early, those plans are now worth many multiples of what I invested.

I learnt about the value of delayed gratification when I spent my summer savings as a 16-year-old on some fancy racing tyres for my car. They cost US$500 and were stolen a week after I had bought them.

Had I invested that money at a 10 per cent annual rate, I would have had US$22,000 today. My dad showed me the maths just to make the point about how I had wasted my money and it made a huge impression on me. Now, I keep it simple and look to invest in things I generally feel will have long-term value.

My very first stock was in a tin can packaging company called American Can. It later became Citibank. I sold it much later and made 30 times my investment.

Q: What property do you own?

We own very little real estate. I don't like the debt that goes with it. If people had to pay cash for a house, they would save and be more rational in their finances.

I have had zero debt almost my entire life and have no interest in owing any bank any money. I would rather rent and invest my money.

For what a good class bungalow costs here, we could buy hundreds if not thousands of acres of the world's most beautiful land in the US.

Q: What's the most extravagant thing you have bought?

I lost my mind when I bought a Porsche in Singapore. I had driven one when I was 16 and always wanted one to relive that drive of my youth.

But driving in Singapore is boring and analogous to the garage as people treat their cars with the greatest of care. The real value and action was in Malaysia at the F1 track on the weekends. Fortunately I'm over that phase of my life, although I still keep my American Muscle car in Texas.

I bought the used Porsche for about $300,000, at a 35 per cent discount to the new price after its first owner had had it for six weeks, and I sold it for about the same price four years later.

Q: What's your retirement plan?

Retirement is for the unimaginative or the lazy. No interest, thanks. (Former prime minister) Lee Kuan Yew is setting a fine example and raising the bar for everyone. At a minimum, as we get older we should give back to children of the disadvantaged, but never give up completely.

I am financially independent but still have the drive to develop businesses and people and to ensure the next generation has the opportunity to fund my efforts to help others.

The whole concept of old age has radically changed in the last 40 years and will continue to do so. Current retirement ages are far too low, given life expectancy and should be raised immediately.

At the same time, the concept of retaining older workers should change also. Companies could take out life insurance policies on workers to fund current health care costs, for example. Capital and labour are on a collision course as the population ages and pensions and government plans need to get in front of the curve.

Q: Home is now....

A rented five-bedroom house with a pool in the Bukit Timah area.

Q: I drive....

I take the taxi. I will not own a car in Singapore because it is the worst investment I can think of here (my wife has a used car for the kids). Singapore has one of the lowest tax regimes in the world until you buy a car, then it's in the middle.

Most people drive their cars for about two hours a day, or 700 hours a year. It's ridiculous when you consider the capital outlay and depreciating asset versus the annual cost and the opportunity cost of not investing it.

joyceteo@sph.com.sg

----------------------------------------

WORST AND BEST BETS

Q: What is your best investment to date?


It was the investment in the company I committed half my life to, Morgan Stanley. I joined when it was a private company with only 1,100 people.

I bought my first stock at a discount during the initial public offering, and sold a large portion of it in 2000 at $104 a share. I made more than 30 times my money.

Q: And your worst?

Without question, it was the energy giant Enron Corp. I love pipelines and it had been a great investment for decades.

My first shares were at about $5, and the stock rocketed, rising over 17 times. Enron collapsed in 2001, after a false accounting scandal erupted. Its stock price, which hit a high of US$90 per share in mid-2000, plunged to below $1 by the end of 2001.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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he said he loved pipelines business..just wondering is there any similar pipelines stocks in sgx?
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Even his most extravagant buy is a 'value buy'!

Another admirable part of his life, would be imparting social responsibility to his kids - making them hands-on and take part in activities with the less priviledged. The less priviledged deserves our respect as well, not just our sympathy or money alone.

I always thought, teaching socially responsibility and good moral values to the next generation, would be the best legacy one could ever give to the world..
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"Retirement is for the unimaginative or the lazy. No interest, thanks....... At a minimum, as we get older we should give back to children of the disadvantaged, but never give up completely."

i love and entertain this thought for years. i hope i will do it before i leave for good. It's really not about money.
Amen.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Finally, I see some quality article. Probably because of the interviewee.

I do agreed to what MusicWhiz has mentioned, I respect and admire Mr. Michael Dee for his philanthropy and also his attitude towards life.
To add on, I also respect his social responsibility such as towards his next generation and his contribution towards the society .
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the pipeline they are talking about should be the MLPs or master limited partnerships which invests in oil piplines.
Dividend Investing and More @ InvestmentMoats.com
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(01-01-2012, 06:24 PM)Drizzt Wrote: the pipeline they are talking about should be the MLPs or master limited partnerships which invests in oil piplines.
i see..thanks..i tot he is referring to stocks like grp

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Noted that she ploughs almost all her money into her business. The rest of it sitting in a bank will be significantly eroded by inflation. Someone should also inform her that the house in which you live in should NOT be considered an "investment".

The Straits Times
Jan 8, 2012
Me & My money
Pilates gives her greater control

The Moving Body owner believes in putting her money in her own business

By Joyce Teo

Ms Audrey D'cotta started her own pilates studio The Moving Body in 2009 after her husband encouraged her to do so. It was a small operation with four staff until a major investor came in a year later. Today, the studio employs 15.

But she is risk-averse when it comes to putting her money elsewhere. The bank is where she keeps most of it.

'I am averse to investing my money in stocks and financial products because I have less control of what happens to them,' she says.

But investing in a business is different. 'I am heavily involved in its day-to-day operations and that gives me a greater amount of control over the outcome of my investment,' she says.

Ms D'cotta, 33, is married to Mr Malcolm Soh, 38, a teacher at the National University of Singapore (NUS) High School. After graduating from NUS, she became a research analyst at the Defence Ministry and then a fitness coordinator at Planet Fitness.

A curved spine condition led her to pilates, which helps to strengthen the muscles that support the spine. That was in late 2002 and she became hooked. She started teaching it full-time in 2005 and started her studio in 2009.

A year later, the daughter of a client, a former investment banker, eyed the potential of the business and invested in it.

The Moving Body offers classes in pilates, an exercise that builds flexibility and muscle tone as well as relieves aches through controlled movements; gyrotonic, a fairly new exercise that incorporates movement principles from yoga, dance, gymnastics, swimming and taiji; as well as physiotherapy.

The studio later moved from a 1,300 sq ft space to a 4,000 sq ft premises at the same Robertson Quay building and bought over another studio, Pilates Inc.

It recently started an education arm, which offers certification courses for those keen on a career in the fitness industry.

Q: Are you a spender or a saver?

I am a saver, though I do spend on things that I regard as priorities, such as training courses to improve myself. They can cost as little as US$350 (S$450) to as much as US$900. Last year, I attended 10 courses and most of them were held overseas.

I believe in being well insured and saving for a rainy day. On average, I save 40 per cent of my income, set aside 15 per cent for insurance and spend the rest.

Q: How much do you charge to your credit cards every month?

Every month, I charge about $1,000 to $1,400 of personal expenses, including my insurance premiums, to my credit cards.

I have four of them. One is linked to a joint account that I have with my husband for expenses at home; two are for personal expenses and one is for my business expenses.

Q: What financial planning have you done for yourself?

I bought my first endowment plan a decade ago as I thought it was important to save. I now have a few plans that cover savings, protection, accident and hospitalisation, including investment-linked ones. They are worth $360,000 in all.

My husband and I are now saving for a bigger home so that we can have more space when we start a family.

So far, I've invested $100,000 in my business while my husband has put in about $60,000.

Apart from the new investor who is the biggest shareholder, there's a fourth shareholder, Ms Jacqueline Lee, who used to own Pilates Inc.

Last year, the group did sales of more than a million dollars. The plan is to have a few more branches, up from two now.

Q: Moneywise, what were your growing-up years like?

There are just the three of us - my mother, elder sister and me - as my parents divorced when I was very young.

My mother did a great job of raising my sister and me, with very little help from my father. She started out as a personal secretary and now works in the human resource department of the law firm she has been with for more than 40 years.

She managed to buy us a Housing Board flat and put my sister and I through university. From her, I learnt that I have to make the best of every situation and, most importantly, as a woman I have to make sure I can support myself and not have to rely on other people to feed me.

I started teaching aerobics part-time in my university days to earn pocket money.

Q: How did you get interested in investing?

I was keen on endowment plans as I felt I needed to find a way to force myself to save for a rainy day.

Q: What property do you own?

A 110 sq m HDB flat in Strathmore Avenue, which I bought brand-new for $347,000 in 2006.

Q: What's the most extravagant thing you have bought?

I spent three weeks in Israel last November. I was there for a one-week course with a renowned master trainer and decided to tour the country for two weeks after that with my husband. We spent about $13,000 in all.

Q: What's your retirement plan?

I intend to teach or work at my own leisure as long as my body is still active.

Q: Home is now...

The HDB flat.

Q: I drive...

A red Suzuki SX4.

joyceteo@sph.com.sg

-----------------------------------
WORST AND BEST BETS

Q: What's your best investment to date?


I would say it is my $347,000 HDB flat, which is in a fairly central area and within walking distance to the Queenstown MRT station.

I bought it from the Government in 2006 and its value has since risen quite a lot to at least $600,000, I believe.

I plan to sell it in the future and use the money to buy a bigger place.

Q: What's your worst investment to date?

I invested $5,700 of my CPF Special Account monies in the Greater China Balanced Fund in 2005.

Six years later, my policy is worth $5,770. In hindsight, it would have made more sense for me to have just kept the funds in my CPF account as I would have earned a higher interest.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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Me & my money seems to run out of exciting people to interview. I have learnt nothing from her. Perhaps we can each answer the interview questions and share our answers here?
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(08-01-2012, 03:27 PM)Mr Nobody Wrote: Me & my money seems to run out of exciting people to interview. I have learnt nothing from her. Perhaps we can each answer the interview questions and share our answers here?

Nah I personally don't think it will work, for two reasons:-

1) Many forumers here may not be savvy or experienced enough to provide enlightening and learned answers to the questions, or many may feel that they are still in the process of acquiring knowledge and are ill-equipped to provide an opinion on how they are building their wealth. People like myself are still trying hard to grow my wealth pot and definitely I feel that I don't stand on the shoulders of giants....

2) Forumers may not be willing to disclose such personal details about themselves, or about how they made it wealthy.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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