Happy Birthday Singapore! I wonder how many of us have, at one time or another, dreamt of running our own business. The idea of being a towkay can be quite appealing. After all, we would get to make the key decisions that will, in many ways, shape our own destiny. Just recently, I came across a story that would, I think, warm the cockles of, if not inspire, many budding entrepreneurs. It was the tale of a man who gave up a 22-year career in engineering to start his own bakery. He happened on the idea during a visit to…
I wonder how many of us have, at one time or another, dreamt of running our own business. The idea of being a towkay can be quite appealing. After all, we would get to make the key decisions that will, in many ways, shape our own destiny.
Just recently, I came across a story that would, I think, warm the cockles of, if not inspire, many budding entrepreneurs. It was the tale of a man who gave up a 22-year career in engineering to start his own bakery. He happened on the idea during a visit to Vietnam when he visited a local Hanoi bakery making baguettes.
That chance encounter prompted him to take up a three-month bakery course in New York, which culminated in him handing in his notice and starting his own bakery that now shifts around 200 loaves a day.
The baker, who turns 50 this year, remarked: “You’re never too old to do something different; sometimes we’re caught in our routines and the rat race, but we have to ask ourselves what kind of legacy do we want to leave?”
I wonder how many of us are so caught up in our daily routines and the unrelenting rat race that we ignore the importance of investing regularly for the time when we will inevitably become our own boss. At some point in the future we will no longer be working for someone else but instead we will be in sole charge of our financial destinies.
For some of us that time is still many years away. But for others, the time is creeping up on us faster than we would like. Consequently, the money that we put aside whilst we are working will hopefully be enough to sustain us for the rest of our lives when we retire.
It is a scary thought but it is one that could be made less daunting if we prepare for it properly. I have been preparing myself for that day for years.
Be a business owner today
For many years I have set aside and invested whatever I could afford for the moment when I decide to call it a day.
Interestingly, I already see myself as a business owner. It’s not that I suffer from some uncontrollable delusions of grandeur. But it stems from something that Warren Buffett once said. The “Sage of Omaha” pointed out that shareholders should always see themselves as part-owners of the businesses that they invest in.
Consequently, I have never looked upon the shares in my portfolio as bits of paper that I can trade back and forth. It sounds dreadfully old fashioned in an age when shareholding periods are measured in hours and minutes rather than years and decades.
But Buffett makes a good point. When we buy shares we should always try to focus on the long-term prospects of the company. For instance, what will the company look like in the next ten or twenty years? Will it still be around?
In order to answer those questions, we need to learn as much as possible about the businesses we want to invest in. By having a clear idea of where the business is today and where it is heading, you are more likely to avoid making snap decisions that you might regret later on.
If you think of yourself not merely as a temporary shareholder but instead as a permanent owner of the business, you will inevitably want to put more effort into learning about how the company functions.
A thoughtful owner
By implication you are also likely to put more thought into every buying and selling decision you make. You may even want to add money to the business when prices are favourable. This could lead to higher returns simply because you are benefitting from the long-term returns you reap from your investment.
Consider multi-baggers Keppel Corporation (SGX: BN4) and Sembcorp Marine (SGX: S51). Their shares have jumped five-fold and six-fold respectively over the last decade. Not a bad return given that the Straits Times Index (SGX: ^STI) only managed to double in the time. But if you had reinvested the dividends from the two companies, the total return would have ballooned to eight-fold and nine-fold respectively.
The point is this: it is never too late and nor are you ever too old to do something different. But unlike the engineer who gave up his job to start a bakery, we don’t need to go quite as far, though some of you might want to. As investors, we can still enjoy the benefits of being a towkay without actually being one, if we would only see ourselves as part-owners of the businesses we invest in.
This article first appeared in Take Stock – Singapore.
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