Gregory Fok – Page 6 – Greg Fok Advisory

How do I be smart about transfer of wealth?

November 26, 2021November 26, 2021
by Gregory Fok

There are families we know who want to leave a legacy behind for the next generation or their specific beneficiaries. This can be very useful for families who already have some reasonable amount of wealth and they want to be even smarter. However, this only applies for clients who want to leave behind a legacy with their extra money. Do you know you can be very smart about how you want to design the gifting to them by planning smart?

Use discounted dollars

For example, if you plan to leave $1mil behind for your beneficiaries, do you know that you do not need to park that $1mil in cash just lying in wait? Depending on your age and health, you just need to set aside as little as $200k as a lump sum (if you are younger). This figure that you need to set aside will increase with age, depending on when you start the plan. The earlier you start planning, the lesser you need to fork out and the smarter you become. Or if you pay it out over a period of time, it could even be as little as $2k a month to ensure that the same $1mil goes to your family. Every scenario is different so please have an initial chat with us before you look into the figures. No matter how you do the calculations, it will always be more cost effective than having to set aside that $1mil on your own.

Use the power of compounding effect and growth

Whilst the amount of money is being set aside, it will continue to compound over time as well. Depending on how you structure the plan, the wealth of that $200k will grow over time and you can have some access to it at a much later age. If you be very smart about it, it can have a very significant doubling effect as well.

Guaranteed event

One day, all of us will end up going to heaven, so that $1mil will go down to our beneficiaries. This is an unfortunate event that will happen in ALL our lives for sure. It is just a matter of whether it happens, earlier or later.

To sum up, insurance was designed by the wealthy, for the benefit of the wealthy, for them to continue to be wealthy. If you want to be smart about your wealth and finances, let us have an initial chat to be able to multiply your wealth from all angles!

Financial Planning

What are doctors most worried about?

November 20, 2021November 20, 2021
by Gregory Fok

You have worked hard in the early years of your career to master your expertise. Now you finally see some light at the end of the tunnel when your hard work pays off with a reasonable income and you have amassed a decent amount of wealth.

As a doctor, you are most worried about the things you have no control over. What are they and how should you plan to minimize the risks?

You want to protect your income against unexpected health risks.

As a doctor, what can potentially derail your cashflow significantly could be an unexpected health risk. As we all grow older, you see patients and even friends and relatives with medical issues like cancer, stroke, heart attack. And these issues could create a cashflow gap in between now and recovery some time later. And some could take many years before a full recovery could be made while others may affect for a lifetime. Be smart about it and transfer that risk out to a financial institution and you will be surprised how cost effective such solutions could be. It could be as cost effective as 1% of the amount of risk you want to transfer, depending on age and health.

You want to ensure that your wealth and investments will never become zero.

Your expertise and time best spent is with your patients as that is what pays for the bills. As such, you will have no time to track and monitor the markets and you do not want to be speculating with the stock market either. Just imagine, if want a surgeon to be operating on your parent, would you want a junior doctor who spends time on the internet learning about how to be the best surgeon or would you rather have an experienced surgeon who has been doing this for the past 16 years and do this on a daily basis? We are that experienced surgeon you may just want to reach out to.

Using an evidence-based approach that goes back as far as almost 100 years, we are able to design and create a portfolio for you, using low-cost globally diversified instruments, that can withstand the many decades of crisis and wars which allows our clients to reach their goals with the least amount of risk and the highest chances of success.

You are concerned over litigation and reputation risks.

You could be a renowned doctor and are established in your field for many years. You have also created a certain amount of networth with your experience and years of work. However, all it takes is a patient who happened to sue and all the reputation built over the years as well as your efforts of building wealth could just disappear almost overnight. The years ahead could also be quite daunting when reputation is tarnished for your practice.

Being smart to transfer some assets out of your name into a trust or a close family member could be a way to mitigate some of these risks as you never know what could go wrong down the road especially if you have already built a certain reputation and networth.

What do you do next?

We do allow an initial consultation together with us at our cost to allow you to explore and see if there is a fit in what you are looking for and if we are able to add value to you through our many years of experience working and specializing together with doctors.

Financial Planning

Reframing your investment perspective

November 6, 2021November 6, 2021
by Gregory Fok

Usually, when a person invests, they try to get the highest possible returns in the shortest possible time. And market timing and stock selection seems to be the way to go – well, that is at least how the whole investment industry is wired to get people to take action regularly to trade in order to. But is that really the right way to go about investing?

The Process

The focus on the news is to sell and cause people to trade. Even the news on CNBC which shows an economist speaking on TV everyday is to cause emotional movements within your body to think about buying or selling. The typical process starts with product (usually a stock), then it goes to what is the time frame for an overconcentration risk, over the next 3-6 months and then finally, you see how that fits into your overall plan. This causes emotions of greed and fear which usually derails us from our financial plans (if you have a written one in the first place).

We reframe it by starting with the reason “Why do you need to invest in the first place? What are you actually trying to achieve?”. Through conversations with people we meet, many of them are not even clear why they want to invest. They just want to find something that gives them better than the banks. What is the purpose of the grand scheme of things and we help you structure it into a written financial plan for you? With that, we look into what time frame each objective carries along together with it. Some may be 3-5 years. Some could be 10 years and others could be above 15 years and longer. Next, we build a CORE^TM portfolio together that comprises an appropriate mix of bonds and equities (according to your time frame) widely diversified across the world with more than 10,000 companies to minimize risks and increase the highest chance of achieving your goals.

Discipline and the evidence

With the daily movements of the markets and attractiveness of trying to get outsized returns, it can be very hard to stay disciplined. Imagine this, you are driving and you see the other lane go faster than your current one. You probably will be tempted to switch lanes. You might go faster for a while but may come to a roadblock where the original lane now goes faster. Once again, you feel the need to justify the need to switch again. The process of switching lanes causes the higher chance of an accident which is what we want to avoid. In a car accident, the worst is you lose the car. In an investment accident, you could lose your lifetime of savings. This whole process goes on very often in our personal investment world, as there will be the next shiny object that will make us cause us to change our investment strategies when a fellow neighbour or colleague gives you a tip on the next big thing.

Instead, what we focus on is evidence of the history of markets, how markets work, culminating to almost hundred years, with the science of investing with Nobel prize winners on investing strategies, back by research and what the data tell us. And what we do is diversify across ten thousands of companies, tilting it everyday to the areas of evidence of what makes sense. If you would like to know the evidence, we will be happy to share with you.

It takes deep education, deep conviction and lots of effort with many rounds of trying to understand how to apply these principles in practical steps. My biggest takeaway is that I do not need to know how to time the market or stock in order to have a successful investment experience.

Human behaviour is our stumbling block

And the next part is the most difficult to do, which is to stay invested, according to our risk profile and stick to the discipline, even when it becomes very volatile and emotional along the ride because there will be expected uncertainties (like Tech bubble, Lehmann Bros and covid 19 just to name a few) in the years of investing. The best way is to focus on your financial plan and what does it say and work with an expert to hand hold you through. But do note that the human behaviour is the biggest downfall for most investors as temptation will set in.

At the end of the day, what we want for you is to sleep well at night, keep to a discipline to allow your portfolio to capture the full market returns and give you the best chances in your wealth building plan without the need to speculate or time the markets.

Business

Plan smart in your business with partners

October 26, 2021October 26, 2021
by Gregory Fok

Do you like to be forced to sell your personal assets at the wrong time to buy over your partner’s shares? I was approached to raise funds for a couple of million dollars for a partnership and they were distressed and were not able to think clearly ahead.

Background

2 partners came together to start a company more than 30 years ago and had built a thriving business together. About a year ago, they were given some advice to do a buy sell agreement in the event of death of either of the partners. However, the outstanding problem was that it was not a “funded agreement”.

When Partner A passed recently, there was an agreement for Partner B to buy back the shares. This allows the family of A not to get involved in the business that they did not understand. Partner B was able to continue the business and they do not need to share the profits of the future business. But the problem was that Partner B had no cash on hand to buy over the shares immediately.

“Having a reluctant partner can be like cancer that grows and potentially creates lots of problems in other parts of the body”.

Action was required immediately. So they are forced to liquidate cash, sell investments and properties almost on an immediate basis. We also know that it takes some time before the money is collected from the sale of the property, if they actually can get a good price.

“This is a costly exercise!”

Even if they are able to raise $2M, would you as Partner B want to pay $2M full in cash for this exercise of transfer of funds when there are other options? What is the alternative? If they had funded their buy sell agreement in advance with discounted dollars, they do not need to come up the full amount. In fact, depending on how you structure it, it could cost as low as 1-3% per year of the $2M and the full amount of cash will be available immediately without the need to sell your best assets at the wrong time.

There are also many other considerations with regards to business planning but this is important if you have a partnership together with another party.

If you are a business owner or know someone who is in partnership with another, I will be happy to have an initial conversation to see if there is a fit on either sides to journey together and be your trusted advisor.

Financial Planning

Most people invest the wrong way

October 18, 2021October 18, 2021
by Gregory Fok

Many studies have shown that most investors on their own typically lose more than half of the actual market returns over the long term. These studies can be found from the Dalbar studies. From the same research body, you can also identify that the average equity investors widen that gap during and after any particular crisis. The reason is that there would have been movements to shift the investments in and out of markets, caused by emotional behaviour of fear and greed. In some cases, over the short term, some investors actually outperform the market due to luck, not skill. However, once you see that over a much longer period, the studies would once again show that the average investors underperforms poorly.

So how do we overcome this problem?

One of the things you can do is to start getting yourself educated and create confidence and conviction over the findings. This can take a fair amount of time to understand and explore, but through working with a trusted and experienced advisor who has gone through multiple crisis in their careers, that can be of great help.

The other thing you can do, is to know why you want to invest. What is your objective and your end goal. I am not talking about the numbers but the why behind the numbers. What drives you? What gets you to financial freedom and why is that so important to you? A financial coach is not just one to get you to your goals, but who understands the background reason to why that is so important to you. When you have that better understanding for yourself, through discovery with an experienced financial coach, you will have a better handle of how you want to manage your financial plan.

Being smart

Once you find out your why and have your retirement plan, it is all about implementing and sticking to the designed asset allocation strategy together. Your total portfolio will give you an overall total return rather than trying to do a little bit here and there in a way to diversify your portfolio. We create a CORE strategy together with you. So there will be a way to reduce anxiety, preserve wealth and grow it at a meaningful pace so that you will be comfortable with it. In the midst of the process, the education and conviction process is also important to continuously add value to you to give you confidence about planning ahead.

If you would like to explore finding a way to invest in a way with a total portfolio that is reliable, sustainable, provide you peace of mind with reduced anxiety of speculation, I will be happy for an initial meeting with no obligations on either parties.

Business

The process of Growth

September 30, 2021October 1, 2021
by Gregory Fok

When I was a young man in my 20s, I wanted to be successful. I was told to read “Rich Dad Poor Dad”, written by Robert Kiyosaki. I read it back then and never fully understood what it meant to my life until today, when I had a clear revelation…

What I picked up from the book was that I had to go from employee to being a self employed, which allowed the growth of wealth to manifest. The next level of growth was a be an investor and then to eventually build businesses.

I took the first baby step of faith to step out of my comfort zone, from getting a standard regular paycheck every month to starting my career in insurance back in 2005. And yes, indeed, it got me to the next level of growth as an individual and my finances. But it only got me to a certain level of growth.

The next step was to be an investor. Well, I was investing in a very haphazard way, trying to make a quick buck in a very short period of time (like how most people want it). I had my hits and misses but all it took was one wrong investment and that would have brought me back to where I first started off. Timing the market was another big mistake I learnt along the way. I always thought I was able to be smarter than the market and most people, since I worked in the industry and I studied my life for this. But I was WRONG…

And I thought, there must be a better strategy than what I am doing that is less speculative and less emotional. That was when I really did my research and wanted to find a way to get me to my BIG goals in life like retirement where I needed to invest reliably, sustainably in a simplified way, yet getting me the highest chance of reaching my personal goals, with the least amount of risk. That was epiphany for me sometime in 2018 when I started to build deep education, which led to deep conviction and also led to growing wealth with a “different way of thinking”.

It was hard at first, because I will go back to my old ways of investing like stock or sector or country picking. Or trying to time the market to game the system. It did not help that the financial news sells based on this approach which you can read about everyday. But shifting to becoming an educated investor allowed me to grow wealth reasonably.

But the biggest shift of trajectory happened when I know I am a business owner of the biggest, brightest and best, most profitable companies all across the world, without the need to time the company or market but to be patient as a value investor and tilt it towards the areas of higher expected returns based on almost a hundred years of evidence.

Can you imagine being a business owner to run great companies with small effort on your part, have lots of free time because you do not need to manage on a daily basis, be able to reap the profits of these companies, with hardly any risks and capturing big growth over decades? Doesn’t this make sense to you?

So I moved from being an employee, to being a self-employed, to being an investor. And today, we are building businesses within my own set of business with our salaried staff funded by me (which allows me to be more strategic – this shall be sharing for another day), and also outside my CORE business as a way to diversify and to capture growth all around as well as a business owner.

Now, our passion is all about contributing back to you and influencing you to make better decisions for yourself based on what you want to achieve. Everyone has different dreams and we respect that. Start off by writing down what is the dream you would like to see for yourself in future.

If you would like to see how you could jump to being an educated business owner and be smart about how you manage your wealth and your life experiences, whilst saving you time to prevent the costly mistakes made, I will be happy to have an initial chat with no obligations at my cost.

Financial Planning

How do I ensure a comfortable lifestyle?

September 21, 2021September 21, 2021
by Gregory Fok

Many people dream of travelling, exploring and touring the world, hanging out with friends for coffee, lunches and high tea when they eventually stop working… They also may want to be able to continue to drive a car, shop and dine wherever and whenever they would like to.. Basically, a person’s lifestyle should not end when a person stops working and retires. In fact, studies have shown that they may actually spend more than when they were working because they did not have the time to do all that.

This sounds like a dream life, and the reality is that it costs some money. And inflation and longevity is not going to make it any easier for you.

Just to give you an example, if you are now 35 years old and would like to have a lifestyle of $4000 a month in today’s context, with a projected inflation rate of 2.5%. This same lifestyle would be $8390 a month by the time you turn 65 years old! And if you do happen to live for another 20 years, that figure that you would need by the age of 65 will probably be at least in the region of a couple of million dollars because the cost of living will still continue to escalate past the age of 65. That is just unimaginable for many people! Of course, I am over-simplifying the calculations because I have not added your other assets you have built over the years, but that figure will not be too far away from the truth.

So the question is how are you going to get to that couple of million by the age of 65?

We use CORE^TM strategies that build large amounts of wealth in a way that is evidence-based, reliable, sustainable and gets you to the goals in the highest possibility of getting you there. All these are done without need for speculation and gives you an ability to grow wealth with reduced anxiety through an appreciation of risk and volatility. But it takes 2 hands to clap along this journey.

Just to give you another example, if a person had set aside $100,000 at age of 35, with an addition of $1500 a month till the age of 65, with a projected compounded effect of 6%, it will get the person to a projection of almost $2million by then with the power of compounding effect! Every person’s situation is different and we will help you plan out what is practical and possible, customized to your personal circumstance. Sometimes, it might mean starting smaller and increasing the additions as you progress with time, but we will find ways to structure something to get you there. At least, even if you do not get to the moon, you will be at least amongst the stars.

If you would like to, at least have an initial chat to share with us what your dreams, visions and fears are, we shall see if there is a fit between us. And if there is, we will journey and help you through the trust based relationship to get you there with the highest chance of achieving your dreams!

Inspiration

What is the actual cost to stock picking?

September 2, 2021September 2, 2021
by Gregory Fok

When you read the financial media, there is a always an opinion from an economist to tell us, “This is the right time to sell. This is the right time to buy.” I bought into all that junk more than 10 years ago, thinking I was able to time the market. So almost on a daily basis, whenever somebody forecasted a particular direction, there is a huge temptation to do something to my own portfolio.

And it would have been increased trepidation when it was a stock or industry that I held that was being affected. Yes, I have to admit it was pretty exciting to see that you can make a quick buck over a short period of time, especially when I got it right. However, as the amount of stock portfolio grew, the emotions of fear and greed became more real as more is at stake. Which is why I only invested what I could afford to lose back then. (This is a bad strategy for wealth accumulation because the total asset allocation is usually tilted towards too much of cash or fixed deposits.)

When I was holding on to a stock that had gained 20% in value over a relatively short period, there is a strong temptation to sell out even though I know that the company will continue to grow and the fundamentals are there. Alas, when I decided to sell it, missing my appropriate price for a few days, the stock continued to soar by another 20%! Oh, I missed the boat, I would have thought to myself and would kick myself in the butt for selling it too early.

When markets turned topsy turvy during the financial crisis in 2008, all logic of buying in during the dips went out of the window, even though the company’s fundamentals are still strong. This is especially so when the crisis lasts for a few years. How many investors have the patience and tenacity to hold out the losses for 3-5 years and stick to their guns with all the bad news going on all around them, especially when media says this time is different. If you ever told any family member or friend close to you during that period, they would have all advised you to stay out of the markets in those very uncertain periods, for your benefit of not needing to lose sleep and money.

If a person had invested in during the period from 1990-2020 for a period of 31 years, into a well-diversified portfolio with equities and bonds in it across the world with almost 10,000 companies, you would easily have grown that same portfolio by 700-900% in value, depending on your risk appetite! Now, how many investors would have been patient enough to be able to capture that kind of gain? Hardly, because most investors (my past self included), would have had itchy fingers to try to put fingers into the pie to either sell out too early or attempted to time the market which we all know from history that it is something very difficult to do.

It is not just the financial cost of not seeing the long term gain in the markets, but the mental anguish, anxiety and emotional stress you go through regularly to find out whether the company can actually survive the next storm. Reading the newspapers and watching the TV can in fact create more stress due to that reason because all the financial media is doing is to force us to take some form of action and that split second decision actually creates mental stress on ourselves. And from history, many companies used to survive and thrive for many decades. In today’s context, the life span of listed companies is getting shorter, so do you want to continue to take that risk with your big goals like retirement which can span for 20-30 years?

So is there a different strategy that we can help you take? I have changed my strategy over the course of time and understand that human behaviour is a bigger component of investing successfully. And that has led me to save time, reduce anxiety and led to more financial wealth as well with a worry free retirement.

Would you like to explore an initial conversation together with no pressures to make any decision but to see if there is a fit in journeying together? Send me a message and we can have that initial conversation at my cost.

Financial Planning

Money and happiness

August 28, 2021August 28, 2021
by Gregory Fok

Whenever I start off a conversation with someone, the person always goes straight into asking me about financial products and what I think of the market.

I was in the midst of one such conversation recently and I stopped the person in his tracks. And I asked him what he was it that makes him happy. You see, most people think that accumulating the next million will make that person happy. However, studies have also shown that once a person earns more than a certain level of comfortable income of about $80,000 a year, the incremental increase of income does not equate to the same amount of increased happiness in a person’s life.

Money is just a tool to be used to create happiness. In fact, through the work we do, I realized that once a person knows what it is that drives a person or keeps a person happy in a non financial aspect of it, then the planning around the money management becomes more meaningful.

Just to give an example, I was having a chat with this person who was referred to me and kept asking me about what is the product that he can purchase and the strategy, the returns and all the very technical things. I responded by asking him, “Before I talk about all of the above, may I know what is it about the value of money that is most important to you?” He stopped to think for quite a while before he could speak. He opened up shared. When he was growing up, he grew up with very little financial ability in his life and his parents probably did not know better either. He studied hard in school, but because his family could barely make ends meet, he had to give up the chance of education for himself to start working early. He felt lousy that he had to go through this in his life so young and so he made it a point that he was going to make a lot of money financially so that he and his family will never go through what he experienced again. And that is why he invested aggressively and also lost quite a fair amount of money in stocks (which is not uncommon). At some point of the conversation, there was even a slight welling of tears in his eyes. But he also knows that his current way of planning is also not able to get him to his goals, which is why he was trying to find another advisor other than the person he met at the bank who was only focused on the product offered.

Unknowningly, that was an uncovering of a human’s deepest desire to understand why a person does what he does. Allowing him to share also brings in healing and forgiveness to a certain sense and he was really trying to ensure that he and his family will never have to run out of money or worry about not having enough.

When we are able to identify what drives him and why with a sense of purpose, it makes the planning so much more meaningful to both himself and myself. So when we structured a financial plan for him and journey alongside with him to keep him on track, he knows that he and his loved ones will not fall into such a familiar situation again.

Happiness means different things to different people so what we do is try to uncover, understand his background, family and see if we are able to ensure he will still be happy and financially taken care of.

Would you like to be able to plan your life with meaning and purpose with a sense of happiness for yourself? Let us have an initial chat to see if there is a fit and the first consultation is at my expense.

Business

Is it easy to time the market

August 19, 2021September 30, 2021
by Gregory Fok

The media is talking all about it. Now the market is going up, now the market is going to crash. However, if you look at even the economists who try to predict where the market is heading over the next 3-6 months, it is almost obviously showing that only 50% of them would be incorrect.

Think about it, back in Jan 2020, economists are still so positive for the year if you read the papers and the news headlines. We would also remember that what followed was unprecedented in an economic turmoil. There were certain airlines and tour companies that went bankrupt almost overnight even though they might have been in business for more than 5 decades.

So is it really that easy to time the market and tell for almost certainty what is going to happen over the next 6 months? If someone says that they know, be very wary of such calls and you probably want to stay far away.

Studies have also shown year after year, on the Dalbar survey, that a typical investor who tries to time the market does poorly in performance compared to the broad based equity market. And that difference could easily be a difference of almost 5x in actual value over a 30 year period. If you search that through the internet, you would be able to find all the statistics. And if you would like to see the studies and results, I will be happy to share that with you as well. Part of the reason is because when markets hit all time highs, investors get worried and pull out as they want to take profits off the table. When markets are plunging down, the fear of further losses prevent them from making confident decisions.

So as an investor planning your life, how should you plan your life to ensure sustainable and reliable growth with reduced anxiety so that you can get to your goals through an intellectual framework?

We always start with your end in mind by having a “Dream Conversation” with you. Knowing that and understanding where you are right now, we will see if you are able to achieve your dreams if you continue on the current path you are getting on right now. If you can, then great because you would be living your dream! If you can’t, we will utilize evidence-based strategies that are backed by almost 100 years of data and use the science of investing to give you the highest possible chance to get to your goals.

If you know someone who is thinking about saving themselves time to be more efficient, wanting to simplify life and get to their dreams confidently, while building more wealth, it all starts with a chat to see if we are the right fit for one another.