How you can invest like Temasek

It was reported today that Temasek’s total holdings today amount to some $308b. It is a healthy number. Well actually to an investor, any number that is bigger than the previous year is a healthy number. Rule number one: don’t lose money (Warren Buffett).

But don’t just watch Temasek having all the fun, you too can get in on this action. In fact, in this day and age you ought to be putting your money to work. Keeping money in the bank is irresponsible. Your cash is only king for a short term, any longer your cash will become pauper because of inflation.

Be like the girl next door: modest

Temasek could have made fat, juicy profits such as the likes of Berkshire Hathaway, Goldman or BlackRock, but they don’t. And that’s a good thing. Aggressive strategies exposes your funds to deadly risks.

Have you heard about how people lost their entire savings? Keep your position sizes small, risks properly managed and take a modest approach. Some money is better than no money.

Don’t get excited, or depressed

Newbies allow the markets to get them excited or depressed through fast profit and flash losses. Money coming and going is very normal in the world of capital. Success comes to the person who gets a grip on his feelings, avoids the volatility and sticks in his purchase for the long term.

Or sometimes you make a bad decision, it is also normal. Even Temasek makes bad decisions from time to time and this is usually the stuff of headlines. But losses are inevitable, you can’t win this bout without first getting a few punches. The only thing that matters is that you remain fit enough to carry on fighting.

Set your investment horizons longer

The investment universe is a sadist. The faster you want a profit, the bigger the loss you’ll receive instead. This is why day traders, gamblers and newbies fall out of the game so fast. Temasek uses a 10 to 30 year horizon. Although not many of us are able to endure such periods, we should at least factor enough time for our investments to brew.

Look for growth

The stock markets are full of interesting companies; food, logistics, softwares, hardwares, cars… it is a confusing mess if you have not decided what your strategy is. 

The Temasek portfolio consists of a good mix of technology companies that are changing our living environment: eCommerce, electric vehicles, private hire vehicles, music streaming companies – these are not merely “exciting” companies, they are producing real value and making real returns…and projected to continue to make returns for the long-term future.

If you need a place to start, look at the same industries that these investment giants are putting their money.

Don’t touch the money

When your money has entered the markets, leave it there. Don’t think about touching it, that’s how wealth grows. You should have other funds for emergencies and day to day spending should come from your day job.

That’s how the country operates – The money made by both GIC and Temasek is meant to shore up wealth for the country. This wealth is the only security net that future Singaporeans have. We don’t have oil, we don’t have rubber and as we are increasingly aware, even water isn’t cheap.

The law allows the Singapore government to draw a small amount from these investment companies to supplement the running of the country (more from GIC than Temasek), but that’s it. The government must find its own means to get money for day-to-day expenses.

Start small, start now

Temasek Holdings started in 1974 with an initial portfolio of S$354m in shares previously held by the Singapore government. In a short 44 years, this figure has multiplied a thousand times.

Even if you have just $1000, start with that. It is not going to turn into $100k next week (and remember: you must avoid this sort of thinking) but keep working hard at saving and moving money into the markets. The longer the money stays accessible in your bank account, the higher your chances of spending it.

Don’t just rely on your CPF for retirement

Temasek does not invest CPF funds: it does not do so directly, it does not do so indirectly. GIC is the company that does so, but indirectly with the government acting as guarantor. 

Apply this analogy to your personal funds. CPF has guaranteed returns, it is a far better place to keep your money than the bank. But it won’t be enough. So just like how Temasek doesn’t touch your CPF funds, you should leave it to GIC to do the difficult work. Create wealth for yourself and use CPF as a supplement for your retirement.

Always be investing

When you money is in the market, many things happen: you will develop a natural interest in the economy and how industries are doing. When you see your money growing, you will want to move more funds into your portfolios.

Instead of spending money on cars, watches and expensive clothes which are really just vanity, you would rather put this money into your investments where the money doesn’t disappear.

With strong holdings in wealth, you’re in a better position to help your family, friends and ultimately society – which is what these big investment firms do.

Our society is fuelled by capital, the more of it you have, the better you are in a position to help, protect and grow people. This is why economics is important to a country.

This is why companies such as Temasek and GIC exist. 

So what are you waiting for? Buy a few books about investment, open an investment account and start putting your money to work today!

 

 

About the author

Tay Leong Tan

Tay Leong Tan is a collective of 3 writers. Tay, Leong and Tan. (Who were you expecting?!) We are enthusiastic about labour issues, economics and current affairs in particular.

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