Financial planner Benny Ong draws lessons from the school of hard knocks

How money is made and lost

BENNY ONG has seen many fortunes made and lost in his 63 years, 40 of which were spent in the financial sector. In fact, the founder of Life Planning Associates himself has been on the boom and bust roller-coaster ride, which at times has brought him perilously close to the edge.

The result of his years of observing and reflecting on the quest for money and its varied outcomes is a deep understanding about how people relate to money. And he feels compelled to share his insights, especially with those who have little experience managing their finances. (In his volunteer work, he has encountered individuals who became bankrupt from guaranteeing a car loan!) Paradoxically, another worrisome group is those who have suddenly come into a lot of money.

“The easier the money comes, the easier it will disappear,” notes Mr Ong during our three-hour chat over tea. “I know a man who was a pretty well-to-do contractor. In the late ’60s, he was worth a few hundred thousand dollars – that was considered very rich at the time. His fortune until then was painstakingly accumulated over 20 years from his business as a contractor.

“Then in 1981, he bought a property with a small piece of land, and before he could even pay the stamp duty, he got an offer for it. And the profit from that quick turnaround was $400,000!

“I knew him because he was buying insurance from me. So when he told me about his ‘windfall’, I asked what he wanted to do with his profits. He said: ‘Buy more properties.’ I asked him to be more prudent, and he said: ‘You just advise me on insurance and leave my investments alone.’ I told him my concern was not his buying but his borrowing.

“He said: ‘Don’t worry. The banker is my friend.’ So he ended up buying a lot of properties – land, office units, apartments in Singapore and Malaysia.

“Then the Pan-El crisis came in 1985, and the stock market was closed for three days. At the time, he had loans of more than $1 million. The banks started to call back their loans. The banks had to auction off his 12,000 sq ft bungalow in Katong for $670,000 in 1986. He died an undischarged bankrupt!”

Lessons from this story:

1. The easier the money comes, the faster it will slip away.
2. Assets can melt, but debts will snowball.
3. In good times, the banker is your best friend. In bad times, you deal with the bank – a faceless entity.

“It is different when your money is earned from hard work than when you get a quick profit from speculation or gambling,” says Mr Ong. He himself has experienced it a number of times before, where money easily made vanished just as quickly.

He was first taught that lesson when he was just 10. His family then was staying at Rochor Road. The old shophouse where he lived in was shared by five families. In all, 28 people shared one toilet.

One day, an aunt asked him to help her place a bet for a game called chap jee kee (Hokkien for 12 sticks). The bettor has to pick two numbers between one and 12, which gives 144 combinations altogether. His aunt placed a bet of $5. Out of curiosity, he put in 10 cents with his aunt’s bet. As luck would have it, they hit the winning combination. So his aunt won $250 and he got $5 for a 10-cent bet.

The next day, he raised his stake to 20 cents. He won again, pocketing $10 this time. Emboldened, he raised his stake to 50 cents in the next round. Alas, nothing came of that – but he was hooked. Within two weeks, he had lost all his winnings of $15.

When one of his uncles found out that he was betting on chap jee kee, he scolded Mr Ong. “This is a fool’s game,” he said. “You can never win. The people running it are cheating. Before they declare the winning numbers, they’d tally up all the bets and pick the combination with the least stakes on them. You’re better off buying 4D,” he was told.

So at 11, he started buying 4D and by 15, he was betting on horses. “I’d steal money from my father to bet.” But eventually, it was betting on the stock market and gambling at casinos that brought him down.

When he completed Primary Six at St Anthony Boys’ School, Mr Ong went on to St Joseph’s Institution at Bras Basah. But he dropped out after three months. Over the next seven years, he helped his father who was a businessman dealing in all kinds of goods including liquor, canned food, and baking ingredients.

When he was about 20, he started work as a deckhand in a suction dredger in a Japanese construction firm. At 21, he joined AIA as a life insurance agent.It was a tough business to be in then. “In the ’60s, people were making a lot of money in the stock market – 20 per cent, 30 per cent in a short time. Few wanted to buy insurance. I was struggling.

End of Part 1

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