If you’re like me, you’ve probably pulled any number of hilarious stunts to get a side income. I wasn’t the only one making money from selling Sea Monkeys, don’t you lie. Anyway, while we were up to shenanigans, Stephanie Chai was raking in serious dough on the side. A former model and the brains behind Wedding Guide Asia, Stephanie knows about side income. We ask her about it:
Stephanie Chai has a finance degree, but she says her money management skills started a lot earlier. All the way back in childhood, in fact:
“…My interest in investment, or perhaps my ‘education on money management’ stemmed from my childhood as it was the one thing my Dad would always talk to me about (besides politics and other serious things!). His favourite saying was and still is – ‘it’s not how much you make, but how much you save’.”
Stephanie’s parents didn’t raise a spoiled princess. She wasn’t indulged, which resulted in a degree of financial savvy. It’s incredible what a teenager can do when their allowance shrinks:
“…when I was 14, the book “Rich dad, Poor dad” came out and I decided then and there that the key to true freedom in life (at least for teenage me!) would come from making my own money. Thus for my birthday I asked for a cheque, went through the Yellow Pages (not the smartest idea) and looked at investment firms that sold mutual funds.”
Did that first investment work?
“I went with my parents, chose a fund rather randomly and watched it depreciate for six years! So lesson number one was – do your research!”
Out of Stock…
Post-University, Stephanie took a swing at stocks and property. With regard to stocks, Stephanie had the foresight to detect a decline:
“After university I was a bit more switched on and dabbled in stocks and property. I got out of the sharemarket late 2007, long before the s*** really hit the fan as the market was already heading down and as the saying goes – you can’t beat the bear market (especially if you’re a novice investor like myself).”
But didn’t that finance degree help?
“I majored in finance at University but the best tips were from books by guys like Peter Lynch, Warren Buffett and so on. The second best lesson you can have is to of course, practice. I don’t think I’m a natural share investor, I’m more interested in property so I don’t dabble in the share market much any more.”
…And Into Proper Property
Property proved a more stable investment. In time, it became Stephanie’s primary source of side income:
“What has worked for me; is property investment. I bought my first apartment six years ago, sold it, made a profit and rolled it… at the end of the day you should stick to something you feel confident in. I prefer property because it’s tangible and I actually enjoy going on viewings, studying a market and coming up with ways to increase the property’s value.”
Any reason for the confidence in property?
“I think property is great because though it might not jump as much as the stockmarket, there’s less risk and again, it’s something tangible. Buy in a good location and chances are even in a downturn you won’t see a huge decrease (of course, unless you’ve got a major event like a subprime crisis in the country!). By doing things such as renovation you can also increase the property value. When I look at buying an apartment, I always take into account the entire condo because if the building isn’t taken care of – it will affect your apartment value!”
Investing requires a good deal of capital. It’s the main reason we end up working another job instead of investing. In this regard, Stephanie managed to build the initial nest egg with her modelling career:
“I was really lucky in that I got into modeling during university and had a knack for commercials which is where the dollars are in the industry. I had saved a lot of my earnings so I was thinking of ways to invest and grow it.”
But there was some initial resistance:
“The irony is, that my family really frowned upon the whole modeling thing, and when trying to ‘bribe’ me failed – they gave me the ultimatum cutting off my financial support with the exception of university fees and healthcare (ie – the necessities). At that point I had just started modeling and wasn’t sure whether I’d continue to do well or be a big flop the following week. But after much thought, I decided it would be worse to have never tried then to try and fail.”
Stephanie cites the resulting worry as a source for success:
“It was a great lesson though because that’s the reason I saved so much! I was worried that although I was earning five figures for ads, these were earnings to amortise over the rest of my life. Luckily I was back in the good books after graduating J But it’s like Steve Jobs said about connecting the dots. Had my parents never given me this choice which forced me to really understand the value of money and have drive to learn how to grow it – maybe I wouldn’t be where I am today.”
Making the Decisions
But with that many potential investments, how do we know to pick the right one? Stephanie lets us in on how she does it:
“Honestly it’s a lot of gut feel when it comes to the final decision. Firstly, you’ve got to do the research so for instance – the area I bought in KL – I’ve literally seen most of the condos in the suburb. So before I bought, I knew the price range of most of them and could compare the value because I’ve seen them all.
Last year I was sitting in a café, flipping through The Edge, when I came across an ad for a new KLCC property. I’ve never been keen on that area because it can be quite tricky, but the ad caught my eye. And it was by a good developer. When I went to the showroom, the single bedroom units with the KLCC view had all been booked (apart from the 4th and 14th floor of course, haha). I left my name and told the agent that if anything came up, let me know.
Two weeks later I got a call, and was offered a single bedroom on a high floor. Although there is some truth that there is an oversupply in the KL city area, the single bedroom I procured was one of 20 units that had the KLCC view. So I felt it wasn’t so risky. And I knew smaller units were easier to sell and rent out in the CBD. For the Malaysian market, the key is to sift out the good apples from the rest. Yes, there’s a lot of supply – but there are only a handful of good developers to buy from.”
A Parting Question
This was MoneySmart’s parting question for Stephanie Chia:
What advice do you wish someone had given you when you first started investing?
“That not everyone knows what they’re talking about! Whether friends be older, successful and what not – that doesn’t necessarily mean they’re experts in the investment field you’re looking for advice in. I remember when I first wanted to buy a property and some friends told me all the negative aspects of it and that I wouldn’t make much. Now they’re patting me on the back and saying good move. So just bear in mind that people all have different opinions.”
Do you invest for side income? Comment and let us know!
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