Differentiation - How an Understanding of It Took My Investment from $12,000 to $45,000 in 1 Year

" Why did you decide to purchase Money Maverick?" Some of my circle were very curious about why I acquired Money Maverick and all its associated properties.

After telling them my reasons behind it, a lot of them were very skeptical. Despite the popular opinion, not because they thought it was an appalling business decision. As you may hear or have personally been having that perspective, the thought of Financial Advisors / Insurance Agents was as positive as we may imagine.


What can I say? Young entrepreneurs tend to be an arrogant and overconfident lot sometimes. I've held that view myself, after all.


After showing them that my first $12,000 investment had turned into $45,000 in just slightly over a year, they became more open to the 'expensive' ILP I'm currently using to invest.


This decision was especially evident in the article below, where my tech fund's YTD outperformed the SNP500 and every Robo available.


READ ALSO: Why You Should Be Cautious of Investments Promising MUCH MORE Than 10% (especially without context) You can ask my Financial Advisor how that happened - he has permission to share. Most people still think that these fees are high and unreasonable, but I made 128% net of fees, and fees will only continue to drop for such products.



Some of them were disappointed to find that I was in China (briefly, before a strategic fund switch), India, and Tech - not truthfully unique, inaccessible sectors or geographies. The rest who were more open-minded wanted to know how Luke had done it.


I don't know-how, of course. I'm not an Investment Specialist.


Compared to trying to explain from his perspective, it might be easier as an entrepreneur and engineer.

I hope more of you will find it digestible.

Introducing The 'HVAC Gauge'


An HVAC gauge reads the pressure of various liquids and gases in an air conditioning system. It's also crucial for reading vacuum pressure when pressure testing or charging a cooling system.

Fellow engineers would appreciate this.

2 years ago, I didn't even know what this was until a friend who also does e-commerce talked about it over coffee.


While there are ups and downs, there is a regular and consistent interest in this particular product over time.

If you look at the picture below, you'll see that the average price on Amazon is $157 for one of these babies. The product research was about the quantity and revenue sold in the US in a given month, and you can see that revenue can go as high as $100,000 (number 8).

There aren't significant differences between products, but active sellers...

Some of this is skewed because the industrial HVACs are more expensive, but I would personally estimate an effective breakeven to be about $80.35. This means that to account for all the fees and costs of creating and customizing the product effectively, you need to sell above $80.35 or make no money at all.


The good news is that at an average price of $157, you'd have a profit of 95%. For the highest revenue product at a lower selling price of $112.48, the profit was still over 40%.


What Does That Teach You, As an Investor?

What interests me about e-commerce like this is that most of these products are essentially the same.


It's not too different from someone who is comparing across insurance companies for the best price, or an investment platform for the lowest fees or sources for the best actively managed fund. So how do you get the most effective result as an investor?


1) Cheapest Isn't Best - but Strike a Balance


The problem with the highest sales number on the platform is that it failed on several fronts: a) The low cost of it was unsustainable. At $61.40, the store lost about $20,000 or more.

You can see that the sales transactions dropped quite rapidly, unlike the graph where I showed that there should be a cyclical sales pattern. Reviews of issues also started to come in. Most cheap things aren't very good. Many Robo-Advisors in the US eventually ended up raising their fees to stay alive. Others even died locally, like Smartly. But at the same time, you see a few clowns who tried to sell far above the average, raising it too, and had next to nothing to show for it. Often is the case when you see people trying to offer something at an absurd price without much additional value. So you don't have to put up with high fees, but you should always consider the cost of going too low and missing out on better-balanced opportunities.

2) Quality is Important

Some of the top e-commerce sellers do extensive research before investing and launching a product. While the first-mover advantage is statistically good to have, an industry becomes more developed and some companies get complacent as a result. (look at our STI ETF). For investing, there are gems beyond the standard benchmarks and common forum investment advice. They can even be weighed directly against said benchmarks.

A head to head outperformance against VRWA, IWDA

It can be appealing to consider an investment that has that much outperformance against its benchmark, and it's easier when I know my consultant is on the ball for managing those investments. Speaking of...



3) Look for Uniqueness


Like HVAC Gauges, there are over 30,000 Financial Advisors (banassurance, insurance companies, FAs, etc) and over 3800 funds (ETFs and UTs) on platforms like FSM. While there are categories and 'specialists', most products are effectively the same. Looking for uniqueness can be hard. But for investments, it boils down to a) The ability to save me time from managing my own investments

b) The ability to make me significantly more money than doing it myself.


I chose my consultant because producing results for me makes him unique, with the potential of continuing said results. Not many Financial Advisors can operate at the level I desire - for example, sourcing out higher annualized returns at lower risks, advising during Financial Crisis's, justifiable asset allocation for my long and short-term investment needs. READ ALSO: Which Level Of The 10 Levels of Investing Are You At? Consider An Investment Specialist. In today's informational age, technology has helped our generation reach stronger fundamental levels of financial knowledge. If a Financial Advisor can only sell products, no matter how emotionally, he/she is likely to die in the industry. If I didn't use Luke, I would likely have wanted to work with a fee-based advisory like Providend had I been richer. I haven't done too much digging but I think Providend does these things:


a) They have highly qualified consultants (all of them CFP at least)

b) It is entirely fee-based

c) The bulk of their revenue is towards the long-term advisory of monies for the High Net Worth using low-cost Dimensional Funds (UTs) and other low-cost products via iFast. Such a proposition seems quite obvious and yet because its Singapore, it is inherently unique: 1) CFP (Certified Financial Planner) is an internationally recognized qualification for Financial Advisors that is considerably harder to get than the other papers to simply attain your license to sell products. Despite recent improvements to a local Diploma/A Level Holder, the low entry barrier is something that many financial forums and bloggers complain about, and having CFP addresses this need. 2) There aren't a lot of people willing to pay fees for advice. This poses an obstacle for the layman but also a unique proposition because the audacity to charge fees suggests capability. 3) Most of these investments are easily accessible, even more so for the HNW than retail: which suggests that their advisory must have a positive financial effect justifying their fee in the long term compared to DIY.

While I don't use Providend, I outsourced my monies to get both a unique Financial Advisor and unique investment selections and maintenance with his knowledge.

A quick look at some of my investments versus the SNP500

Luke can be blunt and that straight-shooting can be hard for others, but I really wouldn't recommend anyone else and you can always speak to him in the links below.

Closing Thoughts

That's all my thoughts on differentiation. Hopefully, I won't see many of the long-time readers of this blog relegated to basic recommendations for much longer. I still don't see the appeal of VRWA, for example. The opportunity cost would be tremendous. Investing continues to be a varied topic and I continue to believe that professional advice is required, especially when it's so freely and readily available. If you can shop for bargains online or search for the best-fixed deposit, you can certainly afford to shop around for good funds and financial advisors.


If you would like to review your investment strategy, let me know.

I can put you through to my friends who have integrity and may be able to help.

Money Maverick




Original Article by Seth Maverick Edited by Tina Vetted for Accuracy by Luke


Sources: FSMOne, various links provided