Beyond Stock Market Returns: How Providend Transformed My Investment Approach

I made my first stock market investment in June 2009 during the Global Financial Crisis.

It was sheer luck that I entered the market not long after it had hit its lowest point in March that year.

My investing approach was heavily inspired by Warren Buffett — looking for companies with strong competitive advantages, solid business fundamentals, and being run by honest and competent leaders.

His legendary firm, Berkshire Hathaway — which has major investments in household names like Coca-Cola and Apple — has churned out a mouth-watering annualised return of nearly 20% from 1965 to 2024, handsomely outperforming the S&P 500 Index by a wide margin.

As for my own investing journey? Smooth sailing…until 2022 hit me like a financial freight train.

I can hear you asking, “What happened in 2022?”

Glad you asked. Let me take you down memory lane.

The 2020 Tech Frenzy…and My Painful Lesson

We all remember 2020.

The world screeched to a halt, masks became fashion accessories, and we all discovered that even toilet paper could be sold out.

The stock market? It crashed in March and recovered almost instantly.

Even though we grappled with the pandemic for months afterwards, “stay-home” stocks, such as those involved in e-commerce, video conferencing, and online payments, started rallying. After burning the midnight oil researching, I bought some of those tech stocks.

Boy, was I wrong.

The moment the world slowly started reopening, the rally faded as demand fizzled out faster than an opened can of Coke.

When I crunched the numbers on my overall portfolio returns from 2009 to 2022, I was still in positive territory. But there was one problem:

I was underperforming the market. For the first time ever.

It turned out that buying too much, too soon of those pandemic favourites had dragged down my portfolio returns that I was painstakingly watching. Maybe I had a little FOMO (fear of missing out) at the time.

It was humbling, to say the least.

I’m grateful that my early start in investing provided enough of a cushion so that, despite the pandemic stock missteps, my overall portfolio remained in the green.

The Intellectual Fun That Devoured My Calendar

Here’s the thing: I genuinely enjoyed researching companies. It was intellectually stimulating to dive deep into industries, understand business models, and uncover hidden gems.

But researching companies was also extremely time-consuming.

Before marriage and kids, time felt infinite. I could spend days poring over financial statements, tuning into earnings calls, and attending annual general meetings (AGMs).

But at this stage of my life? I don’t have the luxury of time anymore.

There I was, sacrificing precious family moments to pore over annual reports, only to watch my carefully curated portfolio lose to the market.

That’s when a thought started creeping in: “Should I liquidate my stock portfolio and put the money into index funds?”

But I resisted.

The idea of stepping away felt like admitting defeat. I had spent years fine-tuning my stock-picking skills, burning the midnight oil, and getting acquainted with the companies I owned.

Life Decisions Before Financial Decisions

The reason why I invest is to provide my family with the best that I can.

For years, I was laser-focused on identifying high-quality stocks, analysing financial statements, and curating my portfolio — all in pursuit of “alpha” (that’s finance-speak for market-beating returns).

I thought that was the best way to provide for my family.

But at what cost?

My time.

My mental load.

My health.

It wasn’t until I came across Providend’s Philosophy of Sufficiency that I had my lightbulb moment.

The “best” doesn’t have to come from the highest-possible stock market returns by investing in the Alphabets, Amazons, and Apples of the world.

Providend’s Philosophy of Sufficiency is about understanding what’s truly important in our lives (our non-negotiable life goals) and having enough returns to allow those goals to be fulfilled. It is anchored on the truth that in life, you can’t have everything and there are always trade-offs involved.

For me, the trade-off was crystal clear: Was I willing to sacrifice family time for potentially higher returns?

I wasn’t.

So, last year, I wholeheartedly embraced the thought of shifting to a more sensible and sustainable investment strategy: investing in index funds (or passive investing, as some would call it). This approach, which simply tracks the stock market, provides a higher probability of achieving my life goals compared to the rather time-consuming way of stock picking.

When I shifted my investing framework from achieving “market-beating returns” to the concept of “enough returns”, I felt lighter. It was like putting down a heavy backpack I hadn’t realised I’d been carrying.

The Unexpected Joy of Doing Less

Providend’s emphasis on aligning my investments with my non-negotiable life goals — what is called “ikigai goals” — helped me to refocus. One of my ikigai goals is to spend more time with my family. “Ikigai” is a Japanese word that can be loosely translated as “living the daily life that is worth living”.

The transformation in my family life has been remarkable. Where I once would spend entire weekends analysing a single company or frantically catching up with earnings reports, I now spend those hours taking my kids to the library, indoor playground, or art museum, together with my wife.

My kids admiring a portrait made from recycled electronics.

Another perk of my new index fund lifestyle? When Mr Market decides to have one of his periodic tantrums, I don’t have to agonise over which stock deserves my money, given that there’s an opportunity cost to choosing the “wrong” company to invest in at that point in time.

Now, I simply buy more of my already-diversified index fund and get back to living my life.

Your Roadmap to Investing Sanity

I recently shared this perspective with a time-strapped investing friend who also has kids. He told me he still couldn’t bring himself to go passive because he felt like he’d be “missing out” on bigger gains.

Been there, done that!

If you’re feeling the same way, here’s how I’d suggest approaching it:

Get educated: Watch Providend CEO Christopher Tan’s enlightening video on the Philosophy of Sufficiency.
Soul-search: Dig deep and identify what truly matters in your life. Is it witnessing your child’s first steps or witnessing a stock’s 52-week high?
Face the trade-offs: Be brutally honest about what you’re sacrificing. Time is a currency you can never earn back.
Gut-check: Ask yourself if you’re genuinely okay with the trade-offs. Does the prospect of missing family dinners and birthdays make you feel guilty?
Liberation plan: If the trade-offs don’t sit well, make a concrete plan to let go of things that no longer serve your needs.

Using a non-investing example to illustrate the point, let’s say someone wants to climb the corporate ladder to earn more money. The trade-off? Less family time.

But if that same person deeply values being present for their kids, then they have to decide: Is chasing the next promotion worth missing out on bedtime stories and weekend outings?

Embracing “life decisions before financial decisions” might mean choosing a less demanding job that doesn’t have them in front of their work laptop all weekend.

At the end of the day, money is just a tool — a means to an end, not the end itself. True wealth comes from looking inward to discover what makes life meaningful. Once you have identified that, you can use money to support your vision.

Before I go, I want to leave you with a quote from New York Times bestselling author Morgan Housel that has truly resonated with me:

Source: Twitter

Here’s to embracing “enough” and making “life decisions before financial decisions”!