This early retiree set himself up for life by coincidence

July 04, 2015 08:00
Lee Tak-lun is shown with his plants. The 47-year-old retiree has built a portfolio of property stocks and acquired rental properties after selling his mainland factory business in 1998. Photo: HKEJ

Some seniors would say they stopped working to tend to their plants.

In that sense, Lee Tak-lun is your garden-variety retiree, although at just 47, he hardly qualifies as a senior. 

“My friends always tease me about pretending to work,” Lee says.

In fact, work for Lee is tending to African violets, something he has been doing for the past 15 years.

Lee is also an avid collector of Swatch watches and Lego blocks.

“No one would seriously plan to retire in their thirties. In my case, it was a coincidence,” he says.

Lee became a successful entrepreneur in the 1990s when he and his partners set up a factory in mainland China to make stationery and toys.

“Our business was good. We were making a name for ourselves and most of our orders were from overseas.”

When the economic environment soured in 1997, he and his partners decided to sell the business.

“At the start of our business, every HK$100 produced 130 yuan. We could hire a worker for 200 yuan to 300 yuan," Lee says.

"But now, we were only getting 80 yuan out of every HK$100. It was impossible to hire anyone even for 2,000 or 3,000 yuan a month.”

As it happened, a buyer was interested.

Lee got HK$5 million from the deal. With his savings and investment in an apartment, Lee now had a net worth of about HK$10 million. That was in 1998.

Thanks to shrewd investing, that fortune has more than doubled in the past 15 years, allowing him to enjoy a comfortable life without having to work again.

His investment secret? Diversification and devotion.

Diversification is key to spreading risk, he says. 

In selecting his investment targets, Lee looks for related income streams to hedge against cost.

“I like to simplify matters. Hong Kong property prices are positively correlated to the economy. If the economy goes bad, my rental income will go down, but so will the cost of living. I want a comfortable life, not an extravagant one. As long as I can balance my book, I am happy.”

Half of Lee’s wealth is in property.

He leases out three flats for a combined HK$40,000 to 50,000 per month, enough to cover his daily expenses, hobbies and travels.

Lee built his property portfolio one at a time, taking advantage of major dips in the property cycle in the wake of the 1998 Asian financial crisis, the 9/11 attacks, the 2003 Hong Kong SARS epidemic and the 2008 global financial crisis.

Lee also invests in funds and stocks where he applies a similar hedging strategy, or “balancing” in his own words.

He holds some medical and healthcare stocks.

“When medical expenses increase, so do the share prices of medical and healthcare companies.”

Companies that make daily necessities, such as Johnson & Johnson, appeal to him.

By comparison, Hong Kong stocks are vulnerable to manipulation, he says. “There are too many derivatives in the Hong Kong market.”

Lee likes US stocks and says the US stock market is simple and more direct.

“For example, Apple Inc. normally goes up when its iPhones sell well. Also, most investors in the US stock market are fund managers.”

Lee has yet to figure out Facebook, saying its advertising revenue is small compared with its 1.4 billion-strong user base, but he has bought into Alibaba, although he has some concerns about the reputation of its products.

Lee and his wife have no children but he is worried about not having enough money to last a lifetime.

“I have done the numbers. I won't have enough money left if I live to a hundred."

This article appeared in the July 2015 issue of Hong Kong Economic Journal Monthly.

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Translation by Darlie Yiu

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Hong Kong Economic Journal