Forex ventures prove worthwhile

27-year-old founder of forex training firm now has stabilised returns from trading.

Sat, Apr 24, 2010
The Straits Times

By Lorna Tan

Mr Choo Koon Lip was a full-time foreign exchange (forex) trader who became an entrepreneur by accident.

This was back in 2008, when he had already been trading for one year and achieving 'decent' gains.

About 20 of his friends approached him to teach them the finer points of forex trading. They had earlier enrolled in a forex course that cost them $4,000 each, but realised they had not learnt enough.

So in June that year, he set up Forex Asia Academy with about $10,000 and nine employees.

Instead of just offering training in forex, his firm also develops trading applications and manages clients' forex accounts for a fee.

So far, he has trained 450 people here, in Kuala Lumpur and Penang. From January this year, the training programmes in Singapore are conducted in conjunction with Cyberquote, a subsidiary of Phillip Capital. Its four-day forex programme costs $3,900 per head, with 12 participants.

Mr Choo, 27, was first introduced to US options trading in 2004, during his first year at the National University of Singapore (NUS). He lost US$18,000 (S$24,600) in the first three months, which led him to refine his trading methods.

He ventured into forex trading later, starting with US$500, which he promptly lost. He invested another US$2,000 and adopted a more relaxed trading mentality. From then on, his winning trades became more consistent.

A year on, his returns from forex trading began to stabilise. Since then, he has aimed for a monthly return of 10 per cent to 12 per cent.

He graduated in 2006 from NUS with a bachelor's degree in science, majoring in applied mathematics.

During his third year at the university, he started a men's magazine called SNAG with 10 friends. The business, however, closed down in January 2007.

He is single and has a girlfriend.

Q: Are you a spender or saver?

I'm definitely a saver. I try to save up to 70 per cent of my earnings every month and invest half of them in stocks, properties and forex trading. The balance is my liquid emergency fund which I may use for my future education pursuits - like an MBA or executive MBA.

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

Unless I travel extensively, I typically charge about $2,500 per month for personal and business usage. I pay it off at the end of every month. I like to use my Standard Chartered Manhattan Card for business-related activities and my UOB One card for leisure. I hold six credit cards and two debit cards.

I withdraw $50 each time I visit the ATM, twice a week.

Q: What financial planning have you done for yourself?

I split my investments into two categories - active and passive.

My active financial income comes from my full-time trading activities, which generate 10 per cent to 12 per cent on average a month. In a given 12-month period, I tend to have around nine to 10 months of wins and two to three months of losses.

I usually trade four days a week, and I will rest for around one to 11/2 weeks every quarter to rest my mind.

On my personal trading account, I make US$7,000 to US$8,000 a month, which is based on an average of 10 per cent to 12 per cent returns.

Passive financial income comes mainly from rental yields for two Malaysian properties and some oil palm plantation investments. Together, they generate close to 10 per cent per annum.

The oil palm plantation investment is a 23-year one under Malaysia-based Country Height. Three years ago, I invested RM12,000 (S$5,100) in two plots of oil palm plantations. It is like land banking, but with regular annual payouts of 8 per cent to 11 per cent, depending on the price of the palm oil.

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

My money habits are probably inherited from my mum, who is a Hakka - a dialect group that is well known to be thrifty.

My father is a freelance welder, and my mother a factory worker assembling phone spare parts. I have a younger brother.

We grew up in a three-room HDB flat in the West Coast. I'm still sharing the same room with my brother Koon Po, who is a fourth-year finance student at Singapore Management University.

Mum was very thrifty and strict with our pocket money, so we learnt the value of money since we were young. I didn't grow up in a well-to-do family, so since my teenage days, I have been cracking my head on how to create a better life for myself. I wanted to make a mark for myself. I sold popcorn and tickets at cinemas during my secondary school vacations and when I was in junior college.

Q: How did you get interested in investing?

I started learning about US stocks and options in early 2004, when I was 22. That was my first venture into the trading and investment world. I lost big time in trading US stocks and options in my first two months.

At that time, I was looking for other instruments to enable me to trade any time I liked and with a lower entry cost. That was when I decided to venture into forex because the currency market runs 24 hours from Monday morning to Saturday morning. And back then, I could start trading with as little as US$500.

With my background knowledge in options trading, I picked up forex quite easily.

Some of the books I read included The New Paradigm For Financial Markets by George Soros, The Winning Investment Habits Of Warren Buffett & George Soros by Mark Tier, and Trading And Exchanges: Market Microstructure For Practitioners by Larry Harris.

Q: What property do you own?

I bought a 667 sq ft Soho loft unit at Subang in Selangor near Subang Airport for RM260,000 in late 2008. It is worth about RM310,000 now, and construction will be completed next year.

I also bought a 635 sq ft, one-bedroom serviced apartment above Berjaya Times Square Hotel at KLCC (Kuala Lumpur City Centre) last October for RM400,000. My target rental yield is 8 per cent to 9 per cent per annum.

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

It's an IWC watch which I bought two years ago for close to $13,000. I liked the design. But I did not dare wear it as I thought it would be a complete waste if I scratched it. I sold it last year at 5 per cent below what I paid.

Q: What's your retirement plan?

This may be a bit too early to think about as I don't have my own family yet. But definitely I hope that my future spouse and I can lead a life without worrying about tomorrow and the daily expenses. I aim to be financially independent in another five years.

Q: Home is now...

The three-room HDB flat in the West Coast area. It is less than 1,000 sq ft and was bought before I was born. My dad bought it for $15,800. The present value is about $240,000.

Q: I drive...

My father's silver Toyota Vios, occasionally.

This article was first published in The Straits Times.