From The Straits Times    |

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There’s no one-size-fits-all solution when it comes to investing, but there’s plenty to learn from other women’s challenges, successes and failures. How I Invest is a column where we ask women about their financial journeys to help us demystify the world of investing.

Hong Kong-born Stephanie Leung grew up in a family where dinner conversations would revolve around stocks and investments. Even as a student studying computer science at the University of Michigan and later pursuing her master’s degree at Stanford University, she found time to trade, particularly in tech stocks in the early 2000s.

Upon returning to Asia to join management consultancy McKinsey in Hong Kong, the 44-year-old made the decision to sell all her tech stocks, a move she now regrets, as these same companies have since grown exponentially. Over the years, her journey from a computer science graduate to a consultant, trader, hedge fund founder, and now the chief investment officer of Stashaway, has changed her relationship with money. Today, Stephanie is a firm believer in long-term investing, and has made it her goal to empower others to do the same.

While she still finds excitement in daily trading, Stephanie’s investment strategy now prioritises stability, focusing on diversification across assets and funds. As an investment officer based in Hong Kong, Stephanie has constructed a portfolio that aligns with both her personal interests and financial goals, spanning investments in wine, art, crypto, and more.

Stephanie’s investment journey in numbers:

10%: Of her portfolio is in alternative investments including art, wine and crypto

20%: Investments in properties in Japan and the UK

70%: Public investments, including ETFs and equities

10: The age she made her first investment in the foreign exchange market (and lost it all)

30%: Of her monthly salary goes towards investments

How has your journey influenced your investment strategy?

After roles in consulting and trading, I ventured into managing a hedge fund. While hedge funds offered some relief from the constant mark-to-market pressure of traditional trading, they still operated with monthly marks, fostering short-term thinking prevalent in the industry.

Later, I joined a multifamily office where I managed portfolios for some of Asia’s wealthiest families. It was eye-opening as I noticed they didn’t engage in frequent trading, but rather maintained long-term investments, sometimes for decades, focusing on compounding their investment returns rather than making frequent moves. This approach, I realised, was the proven way to generate investment returns.

It dawned on me that I had been pursuing trading rather than investing. Trading, with its complexity, wasn’t the path I wanted. Investing, on the other hand, should be straightforward.

This realisation coincided with my introduction to Stashaway, prompting me to join their mission to democratise investing beyond just wealthy families.

Investing for the long term, despite market fluctuations, increases the probability of success. Dollar-cost averaging, where regular investments are made regardless of market conditions, helps mitigate risk, and is an underappreciated tool that investors should consider leveraging.

Image: Stashaway

What was your first-ever investment?

I wouldn’t categorise it as an investment; it was more of a speculative venture. My first foray into the world of investing occurred when I was around 12 or 13 years old. A family member suggested that I exchange some Hong Kong dollars for British pounds. Without conducting any research or understanding the intricacies of currency markets, I proceeded to the bank and exchanged my money.

In hindsight, it was a trivial amount, perhaps just a few hundred dollars, considering my age at the time. However, shortly after the transaction, I noticed the value of the pound decreasing. Unsure of what to do next, I asked my grandmother, who advised me to convert the pounds back into Hong Kong dollars, since I had no idea what I was getting into.

As I queued at the bank to reverse the exchange, I saw the pound’s value plummeting further. Reflecting on this experience, I realised the importance of conducting thorough research and not blindly following others’ advice in financial matters.

What types of investments do you currently hold?

My investment portfolio comprises both private and public investments. In the public market, I primarily invest in ETFs (Exchange-Traded Funds). My private investments predominantly consist of businesses I’ve invested in, alongside some alternative assets such as wine, art and cryptocurrency.

How about bonds or property investments?

I do include property investments in my private portfolio. As for bonds, while I don’t directly invest in them, I do allocate a portion of my portfolio to ETFs that include bonds.

“Working with some of Asia’s wealthiest families was eye-opening. I noticed that they didn’t engage in frequent trading, but rather maintained long-term investments, sometimes for decades, focusing on receiving dividends rather than making frequent moves… It dawned on me that I had been pursuing trading rather than investing.”

What’s the best piece of advice you’ve ever received about investing?

The best piece of advice I’ve received, which I believe didn’t come early enough, is that compounding is truly the eighth wonder of the world.

What advice would you give to somebody just starting out?

I would advise starting with understanding your risk profile. Rather than fixating on returns, it’s crucial to comprehend the risks involved, because returns are directly correlated with the risks you undertake. There are no free lunches in the world of investing. Many people make the mistake of solely focusing on returns without adequately assessing the associated risks.

Any advice for someone new to investing?

For beginners, I highly recommend studying the investment philosophies of Warren Buffett and Charlie Munger. Even though I am not a stock- picker like the duo, their wisdom extends beyond stock-picking strategies to encompass valuable life principles. One key lesson from them is the importance of acknowledging one’s strengths and weaknesses. Applying this to investing, if you possess expertise in a particular sector like healthcare, it makes sense to invest in related companies where you have a competitive edge.

Tell us about investments in alternative asset classes, including wine and art.

If I’m not interested in something, I don’t invest in it, since I wouldn’t have any knowledge. I enjoy a nice glass of wine, and art is something I appreciate too. These things actually appreciate in value. [For example] I don’t invest in watches because I don’t have a passion for them. It’s all about going with my personal interests.

When did you decide that wines were not only great to enjoy, but also to invest in?

Not early enough; I wish I’d started when I was maybe 18. One of my uncles poured me a very nice glass of First-Growth Bordeaux wine back then, and if I’d invested then, it would have made quite a difference. But I think I started investing in wine funds about seven to eight years ago.

How do these wine funds work?

Similar to other investment funds, the fund manager aims to build diversified portfolios using wines from different regions, vintages etc. Investors can invest in different classes, like Bordeaux, Burgundy, and Italian wines. Some classes may outperform others based on market trends.

What kind of fees should investors be mindful of when investing in alternative asset classes?

The management fees are typically higher than those in the public market. For example, Stashaway’s portfolios invest in ETFs that typically charge less than 20 basis points (0.20 per cent p.a.) in management fees, but alternative fund managers may charge 2 per cent or more, plus performance fees. It’s important to ensure that the returns from alternative assets compensate for these fees. Additionally, alternative assets should be a small percentage of your overall portfolio due to their lower liquidity and higher risk factors associated with physical assets.