Connect with us

Trading Advertisement

Loo Cheng Chuan, Founder Of The 1M65 Movement, Shares How Much The Financial Markets Have Changed Because Of COVID-19 #TheNewNormal

Contrary the popular belief, Loo doesn’t just hold all his investable assets in CPF.

This article was written in collaboration with IG, the world’s No.1 CFD provider (by revenue excluding FX, June 2020). All views expressed in this article are the independent opinion of based on our research. is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy here.

“The only constant in life is change”

This often-used quote can be attributed to Heraclitus, an ancient Greek Philosopher. Till today, it remains relevant to describe our world, if not more so than it ever was. For better or worse, the internet and social media have changed the way we live, work and interact with one another.

The financial markets itself have not been spared from these changes. Over the past two decades, the way we find information and make decisions on our trades have evolved drastically. Investors and traders no longer have a problem finding information; our problem, rather, is information overload. Finding a platform that allows us to trade in multiple markets isn’t difficult; it’s knowing how to use the platform to your advantage that is tricky.

Retail investors and traders can now trade over the internet using their laptops or mobile phones. And over the past year, one can say that they may be trading more frequently than ever with such accessibility to the platforms.

These days even financial markets are not spared from social media. Not when a reddit community (wallstreetbets) can move individual stocks such as GameStop and AMC to rise by more than 5 times their original price in a matter of a week. Or when Elon Musk tweets can cause markets including cryptocurrency to rise or fall.

One such person who is familiar with volatility is – Loo Cheng Chuan, Founder of the 1M65 movement. We first interviewed Loo in 2017, where we explored the concept of how an average Singaporean (couple) can make $1 million by age 65 just using their CPF. Loo has been through past recessions and have made millions from them, including the COVID-19 stock market crash that most of us were caught in February and March 2020.

Contrary to what some may think, Loo doesn’t just use CPF to grow his wealth. As shared in some of the previous articles that he has written on DollarsAndSense, Loo is an avid investor in the stock market as well. His main weapon of choice are ETFs that track major indexes such as the S&P 500 and the Nasdaq.

However, what fewer people may know is that Loo also allocates a small portion of his investable funds for algorithm trading. For those not familiar with this term, algorithm trading refers to the use of computers codes and chart analysis to help identify and execute trading opportunities. These computers have been programmed by human traders to perform a certain trading strategy.

As part of the article series that DollarsAndSense is writing in collaboration with IG on what we should be looking out for when investing & trading in #TheNewNormal, we talk to Loo Cheng Chuan on what are some of the changes that he has observed over the past year when investing and trading amid what has been the most volatile periods in recent years.

Read Also: Are Singaporeans Trading More? The CEO Of Investing Note Shares Insights From His Trading Community With Us #TheNewNormal

Timothy Ho (Timothy): The past year has been a roller coaster ride in the financial markets. Between 23 February 2020 to 22 March 2020, the S&P 500 fell by more than 30%. Since then, some of the leading indexes have staged an exceptionally strong recovery and are trading at a higher level than there were pre-COVID. Is this some kind of #TheNewNormal that we are seeing in the financial markets where stocks and other asset classes continue performing well even when there is a global pandemic and recession in the real world?

Loo Cheng Chuan (Loo): Great Question indeed! There seems to be a new investment belief that whenever and whatever the economic or financial crisis will be, especially in the US, the Federal Reserve and the US congress will be there to bail out the financial markets. We saw that happening in the 2008 Global Financial Crisis and again in the 2020 Pandemic Outbreak. I won’t go that far to say that all financial assets will continue to do well even in a pandemic or a recession, but we can be assured that there would likely be governmental cushioning in bad times, especially in the US.    

Timothy: Due to the volatility of the financial markets and the low interest rate environment that we are currently facing, have you seen more Singaporeans putting their money in their CPF accounts to take advantage of higher, risk-free interest rates that CPF is offering?

 Loo: Yes, and it is happening in a phenomenal way.

Here are some interesting CPF stats in 2020.

  1. 40% more members topped up their own or their loved ones’ CPF Account.
  2. Total Retirement Sum Topping-Up Scheme (RSTU) jumped about S$800 million Year on Year (YoY) ($2.97Bn in 2020 vs $2.14Bn in 2019
    – On average each CPF member topped up S$21,00 in 2020
  3. Voluntary Housing Refund grew an astonishing S$1 billion to S$1.4 billion in 2020 (VHR was S$513 million in 2019)
    – On average each member’s VHR amount was a whopping S$99,000 in 2020!
  4. A total of 141,000 (+40% YoY) and 15,000 (+300%) CPF members did the RSTU and VHR.

These statistics reflect the increase in trust and faith of Singaporeans towards CPF, and an overall improvement in CPF literacy.

When I started the 1M65 movement in 2015, I was being ridiculed on social media, almost on a daily basis, for encouraging Singaporean to top up their CPF accounts. I was given the title of “Mr CPF” by social media trolls more as a sarcasm, rather than an honour.  Today, the tide has turned, as majority of the community have become more CPF and financially savvy, we constantly receive questions, in our 1M65 social media channels, on how to make the best use of our CPF accounts to make more money.

Timothy: With risks come opportunities. Have you seen more retail investors investing aggressively into financial assets over the past year with the expectation of wanting to make high returns in a short period of time?

Loo:  Yes, I do. These unusual times have led me to see the worst of investment behaviours among many investors:

  • Greed: From seeing the stock market and other assets rocketing higher and higher and jumping into the market to trade into something they do not understand
  • Fear of Missing Out (FOMO): From seeing many of their peers making so much money
  • Impatience: As an investor, it’s important to be patient. Many investments require time before they pay off and we can’t expect them to generate the returns we want quickly.

I believe that investing should be an emotionless and long-term experience, allowing time and compounding to take its course.

Timothy: Because of the popularity of 1M65, some people have the misperception that you only put your money in CPF to grow your wealth. However, you also invest in indices, stocks, and even private businesses. Can you share more about your long-term wealth accumulation strategy, including how your CPF savings allow you to make higher-risk investments in the financial markets?

Loo: I believe a holistic investment strategy should be similar to how a house is constructed.

First, you drive strong piling into the ground so that regardless of what happens to the building, the foundation of the building is strong and secures your house. Then you build the different floors.

Like the piling foundation, your CPF savings is the foundation of your wealth — it is a financial safety net.  Unless the Singapore Government mismanages the country in a big way, or a nuclear disaster happens in Singapore, your CPF is unlikely to flounder.

Once you have a 1M65/4M65 secured in your CPF, you can afford to take on more investment risk. Your financial emotions would be stable now, regardless of the circumstances in the stock market or economy.

With a strong CPF financial safety net secured, I started incrementally building layers and layers of investment, each layer with an increasing risk-return profile. I would layer on the S&P 500 and other broad-based global funds. Given that I am diversified in CPF and the S&P 500, I then invest in a “high-risk, high-return” fund run by a good hedge fund manager. Part of my portfolio went into low touch algorithm-based investments.  Apart from running my own business, I also do some angel investment into a few startups who are run by very good entrepreneurs whom I am acquainted with personally.

Like a Kueh-lapis (layered cake), I stack my wealth up with assets of increasing risk-return profile sequentially. It probably won’t make me a billionaire in my lifetime, but it is a safe and steady yet powerful wealth accumulation strategy. I can sleep well and live my life pursuing my passion every day.

Timothy: Algorithm trading is a niche area that is not for everyone. Do you mind sharing with us what got you started on it and how you manage your risk with your trades?

Loo: I was fortunate to attend an Algorithmic Trading class called “Alphanomics”, taught by a world-renowned finance professor, during my MBA at Stanford University many years ago. I was introduced to the world of machines-driven investment, and it was then when I then realised that there is no way humans can beat machines in investment over time.  It took me many years to start on Algo-based investment, as it took time to build the various layers of investment foundation.

Today, 70-80% of US stock market trades are done by Algo Trading. There are many types of Algo-trading. I would avoid those requiring high-frequency intervention, or those that require tight monitoring.  I simply pick a handful that suits my “Bo-Eng” (busy) lifestyle and “Bo-chup” (not caring) financial demeanour.  An example would be the infamous “Magic Formula”, which simply picks a basket of large-cap stocks, with low Price-Earning (PE) ratios and high Return on Equity (ROE), and rebalancing them on a periodic basis. (to find out more about the “Magic Formula”, join our 1M65 Telegram Channel to know more) I manage the risk by employing a few mathematicians to back-test these algorithms over the last 20-30 years and stick to these algorithms regardless of the market conditions. Finally, I make sure I don’t commit more than 15% of my portfolio into Algo-based investment that I manage personally.

Timothy: For aspiring investors or traders looking to explore algorithm trading, how can they use it to complement their own long-term wealth-building strategy?

Loo: I would still advocate my “kueh-lapis” investment strategy: Build your various layers of financial safety net with low-risk assets first, before venturing into higher-risk investment.  Many investors jump straight into high-risk investments because they are impatient and want to make money quickly. In a bull market (like current times), they can make a lot of money and BELIEVE that they WILL always make a lot of money.  Remember: Even pigs can fly in a hurricane.

Algo-trading is meant to generate higher than market returns, therefore requiring discipline and emotional stability, which takes time and experience to master. I would suggest beginners to start with bite-sized amounts of investments and take time to nurture the “kungfu” before taking on more risks.  Never sacrifice your peace of mind for greed.

Trade With Caution. With Great Returns Come Even Higher Risk

From our conversation with Loo Cheng Chuan, it’s easy to understand why the financial markets have proven to be an attractive place for retail investors and traders to be in, especially over the past year. Loo himself has invested more money into the markets over the past year, capitalising on the market downturn in February and March 2020.

However, as an experienced investor who has witnessed multiple stock market crashes, Loo is aware of the importance of managing the risks he faces in the financial markets, as opposed to focusing only on returns. This is why the 1M65 strategy, where Loo utilises his CPF to aim towards accumulating millions for his retirement, provides a financial safety net for his wife and him, allowing him to take higher risks that have the potential to deliver higher returns.

For his long-term investments, Loo likes to invest in broad-based index funds such as the S&P 500 and the Nasdaq. These are investments that over time, should deliver a higher return compared to the risk-free returns he earns from his CPF account.

Besides his own business and angel investments that he has made in start-ups, Loo allocates a small percentage of his investable funds (no more than 15% according to him) to make algo-based trades. While they come with higher risks, these trades complement his long-term (buy and hold) investment strategies and can deliver higher returns over time, especially when the markets are volatile.

Similarly, for those of us who are actively trading, or are keen to get started, it’s important that we start with a small amount of money that we can afford to lose first. Rayner Teo, Singapore’s most-followed Forex trader on YouTube, called this the “tuition fee” in an interview we did with him.

Read Also: From Losing To Winning. Rayner Teo, Singapore’s Most Followed Forex Trader On YouTube, Shares With Us His Journey To Profitability

For Loo, algo trading is what he deploys to help him execute his trades based on conditions that he has set to enter and exit a trade. The idea behind algo trading is that we can backtest our investment strategies based on historical data, refine it and implement it for our trades – all these with the help of a computer. The use of a computer to execute our trades also allows us to remove any emotions and human errors from the equation, and to focus solely on the results that we get from our trading strategies. Advertisement

When it comes to algo trading, risk management is vital. As no trading strategy will get 100% of trades right, the question becomes, how can we ensure the profits we make from our winning trades will be higher than the losses we incur on our losing trades, and whether we can deploy this strategy in a discipline, emotionless way. Advertisement

If we want to explore using algo trading for our trades, we can consider trading via IG, the world’s No.1 CFD provider (by revenue excluding FX, June 2020). Through IG, we can gain access to algo trading through cutting-edge platforms such as ProRealTime, MetaTrader 4 and our native APIs they offer. We can also trade across more than 17,000 markets in multiple asset classes such as equities, forex, indices, commodities and many more. IG also gives their clients access to ProRealTime for free in the first month which is seamlessly integrated into their platform. Advertisement Advertisement Advertisement Advertisement Advertisement

Those who are new to trading should consider using a demo account first. A demo account not only allows us to become familiar with the trading platform that we are using, but also lets us back-test various trading strategies before we put actual money in our trade. With IG, we can practice trading with $200,000 worth of virtual funds. Advertisement

With a demo account, we can also gain access to the IG Academy where we can learn how to trade through useful online courses and live webinars. We can also join the IG Community to discuss and learn from other like-minded traders as we explore the financial markets. Advertisement Advertisement Advertisement Advertisement

Read Also: Guide To Opening A Forex Account In Singapore



IG provides an execution-only service. The information in this article is for informational and educational purposes only and does not constitute (and should not be construed as containing) any form of financial or investment advice or an investment recommendation or an offer of or solicitation to invest or transact in any financial instrument. Nor does the information take into account the investment objective, financial situation, or particular need of any person.  Where in doubt, you should seek advice from an independent financial adviser regarding the suitability of your investment, under a separate arrangement, as you deem fit.

No responsibility is accepted by IG for any loss or damage arising in any way (including due to negligence) from anyone acting or refraining from acting as a result of the information. All forms of investment carry risks. Trading in leveraged products, such as CFDs, carries risks and may not be suitable for everyone. Losses can exceed deposits.

This advertisement has not been reviewed by the Monetary Authority of Singapore.