June 9, 2011
Money Weekly cover story
Calvin Chen: Top economics student on stocks, funds, real estate, and multiple investments
Translations by nastyhobbit@AF
*A note from the translator
Rough translation: (disclaimer: I'm not an economist so the terms are alien to me. Extremely sorry for any mistakes.)*
Investment- and finance-minded Calvin Chen reveals the Taiwanese stock market risk is huge, but investing in real estate is more reliable and will yield astonishing profits.
Excluding his idol status, Calvin Chen has been business-minded since childhood. After graduating from the Taipei Municipal Jian Guo High School (*abbreviated Jian Zhong), he received his economics bachelor's and master's degrees in Canada, and even passed the exam to be an analyst at the Bank of Canada. Unlike many other idol singers, Calvin Chen has a completely different background. In everyone's eyes he was a model student, and conforming to his parents' expectations he passed the exam to enter Taipei Municipal Jian Guo High School. But because of the liberal teaching style, he slacked off excessively during his years in high school, and received the bitter consequences of his self-indulgence when the list of university exam passers was released.
Failing his university entrance exams was his life's turning point
"I remember that day was August 8, I had just given my father a Father's Day present he wasn't likely to forget. He was so angry that he didn't want to talk to me. He only talked with my mother about sending me abroad. I had thought it was all talk, until less than a month later I was carrying my bags at the airport, saying goodbye to my relatives." Recalling the circumstances at that time, Calvin Chen said, "During those seven years in Canada, my whole family practically came to visit me except for him. My relationship with my father only got better when I finished grad school."
When he arrived in Canada, he had to take care of everything himself, unlike when he was at home in Taiwan. For the first time in his life, he experienced freedom, but also learned independence and self-reliance. Even though his family was well-off, Calvin Chen's parents did not provide him with unlimited supply of money, and instead made him learn to earn his own pocket money through part-time jobs, and made him experience the hard work that comes with earning money.
"My mother worked in a bank, so she knew the concept of money. Each month she would send me 1200 CND (about 36000 TWD), 600 of which was for rent, and the rest was for food, clothes and transport. Everything was just right, with not much left over so I worked at a car wash part-time and also became a teaching assistant. One car took maybe an hour and earned me 20 CND."
In seven years, Calvin Chen journeyed from language school to undergraduate degree in economics to graduate school in economics, making him understand the importance of financial investments. After finishing, he even passed the licensure exams to be an analyst for the Bank of Canada. If not for the local talent show sponsored by a radio station in 2004, Calvin Chen smiled and said, "By now I should be married, with children, working at the Bank of Canada with a steady salary."
However, Calvin Chen chose to renounce the high-paying job to return to Taiwan to "start anew", straining once again his just-restored relationship with his father. Calvin Chen revealed that he didn't dare let his family know he had just returned to Taiwan, and when his cover was blown, his father cut him off financially.
Focusing on real estate, no longer playing in the stock market
In 2005, Calvin Chen officially debuted in showbiz as part of the idol group Fahrenheit, letting him taste the sweetness of popularity. His income naturally increased, making him think of applying what he studied and carried out his first investment.
With regard to investments, Calvin Chen admitted that he had tried everything, including shares, funds and real estate. These are all his ways of investing. "I'm very interested in investments, and I also made friends with people who knew about investing. So on the one hand I was investing, on the other I was learning. Particularly learning from my mistakes."
Openly saying he had dabbled in shares and investment funds, but these last five years' experience made him decide to "abandon the stock exchange". Calvin Chen said, "Basically all the stocks I invested in are long-term, and I chose the so-called blue-chip stocks. But in the next years, the fluctuations in the stock market were too big, and the profits by a small investor were not as big because of environmental factors. My five-year resumé is practically break even (no loss, no profits), I can't even keep up with inflation."
Calvin Chen believes that the political situation in Taiwan has a severe effect on the stock market, unlike stock markets abroad that can withstand huge political changes and predictability is quite high, and is only profitable in the long run.
“At the time, I invested more than half of my money into the stock market, which is actually a very risky practice. Now that I’ve understood it more clearly, even if I invest in shares again, I won’t use more than a third of my money on it.” In addition, the previous financial crisis made Calvin Chen believe that no matter on which you invest, one must truly understand it before doing so.
Because he himself likes investing his money, he often discusses with friends. But the reason why Calvin Chen has thrown himself into the real estate business, he said, “Actually it’s because of what my father told me. One time, we were chatting and he told me, “Buying real estate is like raising children.” Even if at the start you have to make a loan, say for their education, etc. but wait until they grow up, (rent it out or re-sell it), it’s like the children are supporting their parents. Even if you do nothing, each month you have an income.”
Don’t invest in luxury houses, buy in familiar areas
Compared to the real estate market catchphrase “Location, Location, Location”, Calvin Chen also has three rules when investing in real estate – location, familiarity, and affordability. “For example, I’ve lived in Tianmu since I was a child. I know each and every street and alley in this district. Dongqu and Tianmu are both considered good locations, with more or less the same price level. But I would only consider of buying in Tianmu, only because it’s more familiar to me.”
In addition, he won’t rashly challenge buying a luxury residence. At the present time, he only buys properties at the 10-20 million TWD price range. “Investing has to go step by step. If hurried, it will collapse on itself.”
So at the start of 2008 he bought a 10-million-dollar property in Tianmu. Even if it’s just a small apartment, but the management and maintenance systems are complete. Each month he receives almost 20,000 TWD in rent. In 2010 he raised 9 million TWD with a couple of friends; each one giving 3 million. He didn’t expect that within three months, they already sold it off, making a profit of 500,000 TWD.
Moreover, Calvin Chen not only invests in real estate, he also established his two brands WOW and GO. When he has time, he meets with his friend online to discuss business matters. Every different holiday, they would release a limited edition special design. “For the Dragon Boat Festival, the design has something to do with rice dumplings, and also the “bag inside a bag” idea. I hope it will be able to attract everyone’s attention.”
Investment experience: 6 years
Main investments: Stocks, funds, real estate
Asset allocation: 50% cash, 30% real estate properties, 20% stocks and funds
2005: First investment in the stock market
2008: Bought first property, at the present time collecting rent
2010: Spent 3 million to buy property with friends, recovered 3.5 million after 3 months, in the future will continue investing in properties in Tianmu
kindly give full credits to the owner of the article when reposting and read the note of the translator.