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ME & MY MONEY – Rentals will pay for his retirement

Swiss-born entrepreneur has six properties that can provide 70% of his income after he retires

MR ROBERT Gremli, 63, who hails from Switzerland, will never forget his first impression of Singapore.

‘It was incredibly hot, as if someone had thrown a hot blanket over me in a steam room,” he said. He wondered at the time how anybody could live in such a hot and humid country.

Still, he decided to stay and now, 35 years later, he is a Singapore permanent resident. An entrepreneur, he runs surface coating firm CRC Engineering.

Both Mr Gremli’s father and brother were in the banking industry, so it was hardly surprising that he made his first million, not from his business, but from investing in stock markets worldwide.

‘I was in my 30s. My brother worked for a Swiss bank and got investment tips. For a number of years, we bought warrants on the Japanese stock exchange. I invested a few hundred thousand Swiss francs, and they grew rapidly, topping a million in the space of four years. We sold them before the crash in 1989-1990.’

When it comes to blue chips, he believes in buying and holding for the long haul, which he did till 2003. The blue-chip firms he invested in included Nestle, Sandoz, Credit Suisse, Microsoft and Sun Micro Systems.

Not content with paper wealth, he wanted to liquidate all his shares in 2000, but his bank made the wrong call and talked him out of it. He finally sold all his shares in 2003, after losing half his paper gains.

Still, he was grateful for his profits. ‘Don’t worry about the money you lose, but be happy about the money you make,’ he said.

Looking back, he estimated that his stock portfolio generated average annual returns of about 8 per cent over a 25-year period.

He believes properties are good investments. Currently, he owns six properties: two apartments in London, three houses outside London and an apartment in Singapore, at Pine Grove, where a collective sale is being attempted.

With the exception of one outstanding home mortgage that will be paid off by early next year, all his homes are fully paid for. His retirement plan is to live off the rental income from these homes.

‘I have learnt that over the long term, properties are very good investments. You can’t go in and out daily. Let them appreciate over time,’ he said.

Married for 35 years, he lives in a rented house near the Bukit Timah Nature Reserve with his British wife, four dogs and two cats.

Q Why did you decide to become an entrepreneur?

A I worked for five different companies in Singapore and found that they were, in general, not efficiently run. They offered no long-term career opportunities and when I finally landed a job with a reputable British company, the management decided to sell the Singapore plant to a local company. After five years of hard work, I was made redundant.

That’s when I decided to go out on my own. In 1981, I became a consultant in machine tools and trading. In 2003, I started CRC.

Q What tough times have you faced as an entrepreneur?

A I was fortunate. In my first month of self-employment, I had sufficient work to make a profit. Then I was hired as a consultant temporarily, and I continued my other business activities while on this assignment.

Tough times came when I teamed up with a friend to buy and sell used machine tools. After making heavy losses on purchases that we could not sell, we started to make money. Then, my partner’s attitude changed, and we had to settle our differences in court. I lost $500,000 or more. Don’t do business with friends if you can avoid it!

Q What are your money habits?

A While I was employed, I always put aside at least 20 per cent of my income.

But since I went out on my own in 1981, I have also borrowed money from the bank to enhance the returns on my investments. The machine tool business needed large sums for stock purchases, which we refurbished and then sold on through dealers in the United Kingdom and Australia.

I took most of my money out of the share market and invested it in properties. This has turned out to be very profitable, and I’m holding on to these properties so I can live off the rental income when I retire.

Q What financial planning have you done for yourself?

A My plan is to live off the income from my assets, so that the principal does not have to be touched.

Properties will provide 70 per cent of my income. I purchased a ‘with-profit fund’ or unit trust in 2001 that invests in shares in the European market. It has done poorly so far, but I hope to get a 5 per cent return in the future.

This represents 10 per cent of my assets. The remainder is in fixed deposits in euros and Australian dollars. I also have a yen carry trade, which has added income to my fixed deposits due to the interest differential.

Q What about insurance planning?

A Except for Medisave and Medishield, I have no insurance. My Swiss insurance agent, who lived to be 93, advised me to take out health insurance only if my assets were below a certain size. After that, he said, there was no need to insure, as I could pay for medical bills from my savings. I think he was right.

Q What property investments do you have?A I invested in properties in England in the late 1980s and early 1990s. My first London property, near Sloane Square, was bought for £240,000 (S$717,288) in 1989; now, it’s worth £900,000.

The other property is near Wimbledon, and my houses outside London are in the Cotswolds and Birmingham.

The house in the Cotswolds, bought in 1993 for £180,000, is generating an annual rental yield of 10.7 per cent.

So far, I have sold one apartment in London, for £385,000 in 2003. That was bought in 1991 for £116,000.

My 1,750 sq ft apartment at Pine Grove was purchased in 1999 for $600,000.

Q Moneywise, what were your growing-up years like?

A There were six of us in the family, including two brothers and a sister. My father was a banker who taught us to save and to work for our money. Even as children, we had savings books and we put our pocket money into the accounts. I followed the same practice when I started working.

Some of my friends had cars whereas I rode around on a bicycle. By the middle of the month, they had half a tank of petrol and no cash.

This made it hard for them to please their girlfriends. I had money in my pocket and could offer my girlfriend a ride in a much bigger vehicle, the municipal bus. My upbringing was strict when it came to money, but I have not regretted it.

Q What has been a bad investment?

A I invested about $25,000 in commodities in the 1980s. When I wanted to withdraw my investment, the broker refused to pay me back. I reported him for corrupt practices. After investigators talked to the company, I got $18,000 back.

I did not learn my lesson, so I invested in commodities again. The broker wanted $20,000, which I was not willing to risk. She then proposed that we share the risk: She would put in half and I would put in the other half.

We went ahead. When I decided to withdraw my share, she was unable to pay me. I lost it all, so I reported the case to the police, and they went after her. I put it down to experience and accepted the loss. Since then, I have not invested in commodities.

A much bigger sum was lost through bad advice. I had US$200,000 (S$289,620) worth of WorldCom shares, which my investment adviser had bought without my approval.

When I asked him why, he said it was such a good investment, every client had to have it. He bought my shares at the peak.

When I wanted to sell all my investments, the investment bank’s chief investment strategist talked me out of it.

Then, all the markets started to decline. They never got back to me to advise me to sell. Today, I still have those shares, which are worth nothing.

Q Your best investment to date?

A My best investment in shares was in Sun Microsystems. I invested US$10,000 at US$9 apiece and held them for four years. At the end of 1999, I sold them for about US$87 each and made US$240,000. I then bought myself a secondhand Mercedes for $82,000 and still had a lot of profit left for my next investment.

Q What’s your retirement plan?

A I plan to work as long as I still enjoy it. After that, the plan is to find a successor to run my business while I continue with a reduced workload. Such an arrangement would ensure that no jobs were lost.

My monthly expenses come to about $12,000.

Q And your car is…?

A My car is a silver Mercedes 300 SEL.


Source: The Sunday Times 25 Nov 07


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