I have a relative from Malaysia. I shall name him as Uncle A. Uncle A is an old bird in investment, both in stocks and property. He is not highly educated, however he believes in self-upgrade that he applies what he learns from newspaper and books on his investment. And he is an extremely smart guy with a calculus in his mind, who believes  in cash flow more than capital appreciation.

I was told he only get his first one million at the age of 40, through prudent saving and conservative investment. And he had multiplied several times of it by now (he is close to 65 if I guess it correctly). He owns dozens of properties in the main cities in Malaysia and Singapore. In addition, he has lots of blue chips in hand. Every month, he receives more than $100,000 in free cash flow from his investment.

Uncle A  does not believe in financial leverage, and he purchased most properties with 100% cash. He always warns me against the interest rate risk and advice to go for the minimum loan. 50% loan is what he recommending. Any amount more than that is risky, taking into interest rate risk as well as the future unforeseen factors like loss of jobs. Any amount less than that is not economical since there will be legal and loan fee involved as an overhead cost. And he is super conservative in investment, only willing to commit money on the safest investment that would not take his sleep away.

Uncle A’s parameter for investment is equally stringent as Warren Buffet, and he does not believe in financial leverage in multiplying the profit. To him financial leverage is a double-edged sword. He only buys things that he could comfortably afford.

He has lots of negative comments when he reviews my portfolio. He thought that it has been over-geared in many aspects, while my portfolio is actually considered on the very conservative side in comparison to many other Singaporeans.

In the current world that many people hinge on financial leverage to work towards their wealth, I wonder people like Uncle A will have done equally well if I put him on today’s context? And there are not many people are equally patient and disciplined in his conservative approach, though Uncle A has worked out well and achieved a super-normal return on his investment.

I will share with you more of Uncle A’s investment stories in future.