Me & My Money: Entrepreneur follows the way of the tortoise with slow and steady investment formula

This article extracted from The Straits Times interviewed entrepreneur Mr Hugen Liu  the co-founder and director of EL Connect, about his take on building his financial wealth.  

EL Connect, his company is a platform that aims to connect job seekers to part-time and short-term opportunities

To entrepreneur Hugen Liu, if investing were a race, it would be one where speed is not of the essence, much like the one between the tortoise and the hare in the Aesop’s fable.

And yes, he identifies with the winning tortoise, describing his investment strategy as one that is methodical and steady.

Mr Liu, 38, believes the investment journey does not start by putting money into something unknown, but with investor education and financial literacy.

“Knowing as much as possible about something you’re venturing into is half the battle won,” he said. “A measured approach will go a long way towards mitigating risks, making informed decisions and avoiding impulsive actions.”

One could say that Mr Liu has also applied the same approach to his business, EL Connect, a platform that aims to connect job seekers aged 15 to 72 to part-time and short-term opportunities.

He knows a lot about the issues from friends who are part-time or gig workers.

He said: “Their experiences provided me with invaluable first-hand insights into the daily struggles and uncertainties they encountered. The relationships I maintained with these friends fuelled my passion for creating a more equitable gig economy.”

EL Connect, which he co-founded and serves as a director, caters to those who prioritise immediate cash payments once the job is completed, have varied work experiences across industries and flexible work schedules.

The business was launched during the Covid-19 pandemic in October 2020. The platform offers jobs that can help workers earn $40 to $150 a day. Around 40,000 job seekers and 800 employers have used it so far.

Mr Liu said he and his business partner decided to act after they saw an underserved market in the part-time gig worker and blue-collar job space. “We took the opportunity to create a platform that could not only bring these individuals working in this sector together, but also help employers find the right talent easily.”

Before he started the business, he spent the initial years of his career providing financial advice to clients at institutions such as Manulife and Standard Chartered Bank. He also did wealth management and advisory at banks like OCBC Bank and DBS Bank.

Q: What is in your personal portfolio? 

A: I hold a unit trust with an annual dividend of 5 per cent.

Additionally, I consider my business, EL Connect, to be a valuable asset in my portfolio. While its exact percentage may vary depending on the overall valuation, it plays a crucial role in my overall financial strategy.

Looking at my portfolio as a whole, about 70 per cent is allocated to my business, although this varies according to business conditions. About 20 per cent goes into my unit trust, while the remaining 10 per cent is invested in stocks.

I favour unit trusts in general. Diversification is a key factor for me because it helps to spread risk across different types of investments. By having a mix of assets, I aim to reduce the impact of poor performance in one area on my overall portfolio. This strategy provides a more stable foundation for my investments. I see diversification as something that is as important as financial literacy.

Additionally, I prefer assets that are professionally managed. This means that experts in the field are making informed decisions on my behalf, utilising their expertise and market knowledge. Professional management gives me confidence that my investments are being handled with a high level of skill and diligence, increasing the likelihood of achieving favourable returns.

I got interested in investing when I learnt about how inflation and other factors cause money to lose value over time. It’s not just about saving; it’s about making your money work for you.

I also consider my business to be a long-term investment plan. Building a business is an investment in itself – from monetary input to sweat and tears, and it is for the long run. 

Besides investments, I also hold an endowment plan and investment-linked policy, and have written out my will as well.

Q: What has been your biggest investing mistake, and best investment? 

A: My biggest investing mistake came early in my youth. I dabbled in the realm of speculation and high-risk share investments without fully understanding the fundamentals of the things I was getting into. Unfortunately, I eventually got burned, and the first lesson came at a cost of around $5,000.

Similarly, in my late 20s, I made another costly mistake by investing in penny stocks. Again, the lack of understanding and a tendency to invest without a clear strategy led to further losses, and this time, the lesson came at a higher price of around $10,000.

This experience reinforced the importance of avoiding speculative shares and highlighted the need for a disciplined approach to buying and selling. I learnt that successful investing requires a careful assessment of risks and a commitment to a well-thought-out strategy. It taught me the importance of not blindly investing in shares without a solid understanding of the underlying fundamentals, and the significance of conducting thorough research and making informed decisions rather than relying solely on recommendations.

Q: Describe your lifestyle. 

A: Home is a condominium unit of 872 sq ft. I drive a black BMW 5 Series. I am single.

As for retirement, I hope that in five years’ time I would no longer need to work as actively as I do now. I expect to need $2,000 a month in retirement, and maybe work some freelance job to supplement it. This is after all the reason I developed EL Connect – to allow people of all ages to be able to supplement their income or even to fund their retirement. If you’re in school or retired, and you have spare time, why not pick up a part-time job and get paid daily?

This is also important to me because my growing-up years were financially challenging, as I was raised by my father alone. He worked as an engineering director specialising in deep sea exploration. Despite facing financial difficulties during my teenage years, my father worked hard to provide for my younger sibling and me, ensuring that we lived comfortably. Interestingly, he wasn’t someone who invested, and he didn’t hold any credit cards. His approach was straightforward – managing to get by within his income.

Observing my father’s financial habits and, later, witnessing many friends struggle with debt and overspending on credit cards, greatly influenced my outlook on personal finance. I adopted a simple mantra: Don’t splurge and avoid indulging in things beyond your means. This mindset shaped my approach to budgeting and spending wisely.

I got interested in investing when I learnt about how inflation and other factors cause money to lose value over time. It’s not just about saving; it’s about making your money work for you.

Moreover, I learnt the importance of diversifying income sources. Instead of relying solely on a single main income, I recognised the value of utilising my time to increase earnings. This led me to explore side hustles, and I found that engaging in part-time or freelance work, especially those with daily payments, was a more productive use of time.

Mr Liu’s top three investing tips

1. Diversification is key.

2. Start when you are young.

3. Start small. By beginning early and with modest investments, you avoid spending on unnecessary items and can let your money work diligently for you despite the rising cost of living.

Article repurpose from The Straits Times by Sue-Ann Tan Business Correspondent