Blog – Page 10 – Greg Fok Advisory

Measuring the distance

March 21, 2020March 21, 2020
by Gregory Fok

With the volatility in the market, it can be very scary and unnerving at the same time.
This also leads to potentially making emotionally charged decisions – which leads to decisions based on fear or greed. That normally leads to regrets further down the road on hindsight.

The important thing to do now is to focus on your goals.
For example, if I asked you to measure the distance between Changi Airport to Jurong Point, would you take a measuring tape and stop to measure every 3 steps before you reach Jurong point? Or would you use a vehicle, chart the starting point and end point and move towards your goal. Maybe you might stop to check every 5km to see if there is a faster route available, but definitely, you do not need to check every 3 steps.

It’s the same when it comes to retirement planning. Most of the time, we invest because we have a long-term goal like retirement which is a far distance away. So it does not make sense to keep checking our investments every other day. Whenever we check it, it might just lead to stress and emotions of greed and fear take over.

At the same time, there will be opportunities for a faster way to get to your retirement. This will be one of them and you might just miss out the “Sale” that comes a few times in your lifetime. This kind of sale of this magnitude will not come very often but it will be the road less travelled.

So here are a few tips.

1) Focus on your long-term goals and not get distracted.

2) If you have extra cash over and above your 6-12 months emergency funds, you can find strategies to deploy this money during this opportunity.

3) Find risk and non-risk instruments to give you peace of mind.

4) Invest into Global CORE portfolios that are rebalanced by professionals so that you do not need to stress about doing that on your own and after you invest during this period.

5) Do NOT peek at your statements if you are already invested or going to be investing this period.

6) Finally, pls do not read the news too much. It can be mostly depressing because bad news sells. Instead, spend more time with your family and do things you love and go out into the sun more often.

If you have a doctor, business owner or senior management whom is trying to get an opinion from their wealth advisor and is not able to do so, I will be happy to connect with an initial chat.

Business

How does lowering the Fed rates benefit you?

March 11, 2020March 11, 2020
by Gregory Fok

With the lowering of Fed interests rates by 50 basis points last week, it can be an opportunity for investors and the markets.

The Fed rate is at the lowest point in history and may continue to stay low, if the physical economy might take some time to recover with all the fear of COVID 19.

At the same time, the stock markets have gone crazy with wild swings with movements up and down like the see saw.

The question at the back of people’s mind is, “How does it affect me and what do I do with this piece of information right now?”

This period of time works perfectly well for WEALTHY families who want to grow, protect and preserve their assets through multigenerational legacy planning. Through proper allocation of assets, it can bring increased certainty with reduced risk at this time.

Speak with us who can help you navigate through your life goals, dreams and even use the current situation to your advantage.

Business

How do I gain more time for myself?

March 5, 2020March 5, 2020
by Gregory Fok

How do I gain more time for myself?

I used to work 24/7 days and had hardly any time for myself nor my family. Whilst I could do that when I was single, it became tougher when I got married and had my first child that came about in 2008. As I struggled to find a work life balance, it became evident that something had to change. And it had to start with myself.

Today, I work 5 days a week and mainly focused on weekdays in the daytime, although once in a while, I get still work on sat morning after my morning run with my wife.

What changed and what strategies did I deploy?

What are my priorities and goals?

The first thing I did was to focus on what was most important and my priorities in my life. My wife and children are my key priority after spiritual health. Next, getting fit was one of those goals that were important to me to keep me physically sharp. Work is important, but it had to be meaningful work with wonderful relationships I wanted to build over the long term together with my clients. Finally, it was about giving back to the industry and society and sharing my experiences to provide a life of significance. If I have all these things in life achieved, life will be passionately worth living for and it is all about finding purpose in life.

Family time

I only was able to work within the 5 days weekday daytime and the rest of family time will be arranged by my wife. I had to ask her for permission if I crossed that boundary because it was meant to be family time. That way, my priority time is set for my wife and children. Blocking out dates for family and couple trips on a yearly basis was another way I put family as a priority.

Work time

That meant that I only had 5 days a week to get everything done within that short time frame I had. 5 days a week, with 52 weeks means 260 days of work a year. With public holidays and taking time off with family for holidays would take away about another 33 days a year. So I am officially left with 227 days to work in a year. Now when time is that short, we have to make it work effectively.

Finding work I enjoy and am fascinated about to continuously grow

I found that what I loved about what I do is to help clients create ideas and find solutions for the problems that they and their family face, most things related to wealth and health. Through this, it is about the building of a long-term trusted partnership to journey with each other. When I am able to be of value to others, whether in a small or big way, a bond is forged.

Being selective of clients

In the pursuit of productivity, it also meant that I had to be selective of the clients that I wanted to work with and not everyone might fit into the selection criteria. I do not need to work with everyone, I just worked with the clients who reciprocated and appreciated the value I could bring to the table. It was not easy at the beginning, but over time, that selection process became a strength for my practice.

Investing in other trusted people’s expertise.

In my industry, there is a fair amount of documentation and paperwork. Fortunately, I was able to hire my staff who loves administration and documentation to ensure that the backend of the office is well taken care of. By giving out what I am not strong in, the partnership works out perfectly for all of us. So the office “belongs” to my staff and I only come in for meetings with an Ipad and to submit documents. All other paperwork is handled by my staff.

One other thing I did was to invest into a team of investment experts who looks at and works on the markets on a daily basis whilst I focus on my clients’ personal and long term financial goals so that I do not need to get emotional about the short term volatility of the market which will eventually be much higher in the future than it will be today.

Giving and sharing

With more time, reflection and flexibility, I am able to have space for creativity and learning opportunities almost on a daily basis. And there are wonderful insights that we are blessed with as we deepen our engagements with people around us. With more time, we can allow us to carve out the best of ourselves, our family and society. That also allowed me to step out of my comfort zone to share with many other people of how we can all maximize our full human potential.

With the above strategies I have slowly started shifting since 2009, I have not only gained more time for myself, my work output had grown more than 300% from where I was when I started in 2009. I wish you all the best in being able to gain more time for yourself.

If you think you would like to explore how to go about working as partners and see if there is a fit, I would be happy to have an initial chat.

Investments

Correction and bear markets – good or bad?

February 26, 2020February 26, 2020
by Gregory Fok

A correction normally refers to a drop of at least 10% in the price of a stock (or stock market) from a recent high.

A recent movement in the market has sparked some huge responses in the past 2 days and it would be interesting to note that speculators tend to flee the market while long term investors start to take this as an opportunity. Here’s an explanation of the difference between a correction and a bear market.

A correction is different from a bear market as the bear market is defined as a fall of 20% or more from a stock market’s most recent high.

Corrections and bear markets may sound terrifying, but we shouldn’t fear them as they are common features of a healthy stock market. They are usually short-lived too.

According to Fidelity, since 1920, the US’ S&P 500 index has experienced on average a pullback (defined as a brief 5% reversal in the price of an asset) 3 times a year, a correction once a year, and a bear market every 3 years.

For those investors with a long-term view of the stock market, corrections and bear markets provide great opportunities to buy stocks in wonderful companies at lowered valuations.

Investments

Is this a good time to invest?

February 17, 2020February 17, 2020
by Gregory Fok

Is this a good time to invest?

Wherever there is crisis in the economy, the question comes up more often than ever.

And during the past month, this has been a common question that came up so I thought to pen my thoughts down..

I had a doctor friend who was recommended to speak to me after he exited the market when Singapore turned DOSCORN Orange and realized his losses because there was so much fear on that day. Herd instincts took over Singapore by storm at the supermarkets just like how it had taken over in the stock markets. My friend figured that I could possibly help him better.

Inexperienced investors can be caught on the wrong side of the coin at that time.

Traders and analysts are trying to predict the trend in the markets of what will pen out over the next 6-12 months, but how many actually get it right? Let’s go back a bit in history. During the 2018 US-china trade war, everyone thought that 2019 will be a washout year, instead it turned out to be one of the better years of investing. And investors who stayed on the sidelines would have missed out on that massive gain of almost 20% in 2019 in a total PORTFOLIO.

The important thing to note is that markets are always forward looking and they would have priced in the forecasts of the markets ahead of time as well.

Anyone who tries to tell you where the markets are heading are mostly making guesses. The honest answer to the title would be that it is impossible to know where the markets will turn on the road ahead given that the markets are also driven by emotional sentiments and mostly not by logic.

With the current growing concerns of the COVID 19, supply chains would be severely disrupted. Those countries that rely heavily on international trade and tourism like Singapore, would be a huge cause of concern. However, just like SARS, H1N1 and the other flu like outbreaks we had in the past 2 decades, over time, life will eventually go back to normal and that is when markets will float back up again.

So since it is almost impossible to predict which countries or economies will go up and down, we believe a well-diversified portfolio across the entire world (US, Asia, Europe, emerging markets) with a good mix of asset allocations that fit your risk profile would be best suited to invest for the long term. Ensure that there is active rebalancing done as well, so that you do not hold on to losses nor get too excited with significant gains. Rebalancing helps to create a smoothening effect to your portfolio.

In fact, any pull backs in the markets present buying opportunities for LONG term investors.

Go back to the basics of planning of patience, prudence, discipline and pray before you make a decision and work with an experienced advisor who has gone through multiple crisis and you will eventually turn out better over the long term.

Business

Shielding your assets for the business owner

February 12, 2020February 16, 2020
by Gregory Fok

As a business owner, there will always be ups and expected downs in the business. Owners always want revenue and profits to keep going up, but an experienced businessman will tell you that it is never always rosy and every once in a while, there will be bumps along the way.

I was speaking with a business owner recently and he shared about his concern for protecting his assets in the event of an unexpected downturn.

As he is in a dilemma to grow his business and protect his assets at the same time, he got caught in between.

I shared, “Do you know that if you would like to expand your business very quickly and grow, you should at least ensure that your family is well protected and taken care of first. Then you can expand aggressively with a peace of mind.”

For example, put aside 20% of whatever assets you have and draw a line on it, ringfence it to ensure it is shielded. For the remaining 80%, you can continue to take on even more aggressive growth of the company to the next multiple level.

The 20% becomes wealth and assets that is shielded and can still continue to work hard in various forms. So even if the worst case of bankruptcy happens, the assets can potentially be protected.

However, do take note that you have to plan and plan early when times are great and there is surplus. Doing this when times are challenging might mean that it is too late.

Of course, when a person is riding high in business, it is very difficult to imagine or foresee any bumps ahead.

So speak with an experienced business and financial advisor early to explore more in depth how you can shield and ringfence your assets.

Business

Should a doctor invest in stocks or his/her own…

January 20, 2020January 20, 2020
by Gregory Fok

I have met some doctors recently with insightful conversations.

There was this doctor who was proud to mention he made 10% on his
investments on a long term basis. It worked out to be about $10,000 from his principal of $100,000 put aside for stocks.
And that would include the emotional swings in the
company stock prices and decisions to make, which he shared that it took time to track and monitor
which sometimes gave him a “heart attack” especially in 2018.

Based on his overall portfolio of cash around $500,000, if you do a total
portfolio calculation, it would actually work out to be less than 2%!

I gave him 2 suggestions..

1) Invest time into his practice. By focusing on career, he could easily have generated more than $10,000 over the years.

2) Pay someone to create a CORE portfolio with a worldwide objective,
constantly managed and rebalanced to keep your risks in check. This
eliminates risks of specific companies and markets and with a diversified
portfolio, with less volatility and reasonable returns which easily can be
more than $10,000. And this offers a peace of mind which moves the
portfolio within a range of comfort for the individual.

Business

Does it still make sense to invest into property?

December 30, 2019February 16, 2020
by Gregory Fok

Does it still make sense to invest in property today?

Some factors have changed today’s environment.

Stamp duties, including ABSD

Hefty stamp duties to the government are laid out right at the beginning of the purchase of the property. Depending on the number of properties, it can be as high as about 20%.

Tax

Properties attract tax over the income and the property tax that needs to be paid. This is usually glossed over and ignored.

Potential growth value

Due to the government measures, the rate of growth will be different in order to keep housing still relatively affordable.

Rental income

The yield for rental income has been dropping over the years with a larger supply of units.

Macro environment

There’s an addition of housing supply of another 30,000+ units in the market in Singapore. Developers are also looking outside Singapore due to the increased risks.

Property is still an instrument that is needed for people to stay and live in.

However, if a person would like to invest, there are numerous other instruments that can potentially do the same or better in the longer term with reduced costs and risks.

Business

Why should you set up a Trust

October 25, 2019November 3, 2019
by Gregory Fok

Why should a businessman or wealthy individual setup a Trust for your Family?

Trusts can override inheritance tax, gift tax, etc which would otherwise be incurred by the beneficiaries in certain countries if it is transferred through a Will. For this reason, wealthy families choose to pass on the assets to their children and future generations through this vehicle.

It is a cost effective and secure arrangement to preserve wealth as it provides additional benefits such as tax savings and confidentiality.

With families members going global, the nationality or residency of beneficiaries is important because of the tax implications.

Changing Family Dynamics

Family systems are growing more complex as disputes and divorces are becoming common. If the owner of assets anticipates ugly divorce scenarios in the family, he or she would be better off placing the assets in a trust and directly apportion to deserving beneficiaries.

Family members with debt burden or facing matrimonial challenges or claims for professional negligence will still be able to reap benefits from the assets without directly owning them.

If a potential successor is a spendthrift or bad at managing money, then a trust is an ideal arrangement to distribute income and benefits periodically or progressively to that person.

Foresight and understanding of the family members’ needs and progressive dynamics of relationships are important for the establishment of trusts.

If the asset owner is single, then trust is an ideal way to manage the assets, income and investments in case he is incapacitated by sickness or age. The appointed trustees can manage the assets as directed by the settlor.

Trusts offer confidentiality; therefore you can avoid conflicts within the family and make discreet provisions for certain beneficiaries.

Asset Protection

In the case of professionals or business owners with high-risk profiles, the protection of personal assets from being attached to any litigation is a crucial concern. For business owners, if their fortunes turn, they run the risk of defaulting creditors. There is a possibility that their personal assets will be used to meet their credit obligations in the event of litigation. Likewise, professionals such as doctors and lawyers are also at risk of being sued for professional negligence, and there is a possibility that their assets will be used to settle compensation claims.

Placing personal assets in trust will protect the assets from such claims because the ownership of the assets is transferred to the trust and the settlor does not have any more legal rights over the assets.

Business Continuation

In family businesses, placing the shares of the business in a trust will ensure its continuance despite any potential disputes among the family members or bankruptcy of the family members.

Disputes within family members are not uncommon, and if circumstances go awry, any of the family members can sell their shares, which will lead to fragmentation of ownership and dilution of power held by the family. Placing the shares of the business in a trust and splitting profits and benefits to the family members as beneficiaries will preserve the family business for generations to come.

Tax issues

Placing assets in the trust alienates the settlor from the assets and all earnings accruing from the assets. If your income is significantly high, and the income you generate from your assets further adds to your taxable income, and you fall under a higher personal taxation bracket, then it is prudent to transfer the income-yielding assets into a trust, where your family members with marginal tax liability are the beneficiaries. This way, you can alter the tax liability on the assets to a lower bracket and enjoy tax savings.

In Singapore, a trust’s income is taxed at a flat rate, and distributions made to the beneficiaries are then deducted from the taxable income and subjected to tax in the hands of the beneficiaries at the relevant personal tax rates. But it interesting to note that certain types of incomes, such as dividend income earned by the trust, will not be subjected to tax at the trust level; however if that income is distributed to the beneficiaries it becomes a taxable income. Proper structuring of trust is crucial.

Succession Planning

Trusts can provide for the flexibility of choosing the beneficiaries and also determining when the assets need to be passed on to the beneficiary. For example, if the beneficiaries are minors, the assets can be placed in trust and passed on at a later stage when they are legally adults or progressively when they attain prescribed milestones, such graduation, marriage or first child.

If the immediate descendent is financially well-off and is subject of higher tax bracket, or is a resident of jurisdiction with high estate duty, passing the assets to them directly will increase their tax liability. In such circumstances, placing the assets in a trust and passing the benefits to grandchildren may be more prudent.

Sociopolitical uncertainty

If you are a resident of a country where sociopolitical upheavals are occuring, then it makes more sense to settle your assets denominated in home currency into a trust incorporated in stable jurisdiction, where the currency is less volatile. This will preserve the value of your assets. Singapore is a popular choice among foreign high net-worth individuals for its sociopolitical and economic stability and the resilience of the Singapore dollar.

Speak with an experienced trust advisor to value add to your family wealth.

Business

Wealth disappears in less than 3 generations

August 20, 2019August 20, 2019
by Gregory Fok

Wealth disappears in less than 3 generations.

I met with a 3rd generation of this family who came to Singapore many years ago. The family had multiple properties, buildings and shophouses all over Singapore. The family background was in a profitable business. The properties they had were situated at very prime areas near Orchard, Oxley, Raffles Place and Tanjong Pagar areas. If held till today, the wealth could easily be in hundreds of millions.

But today, most of it is gone after the passing of 2 generations. The business has closed and it is left with one condo which the family has worked hard to purchase on their own. Doesn’t this story sound familiar and I am very sure you personally know someone who had gone down this path.

You have built up a good business and have a certain amount of wealth. You are very aware that wealth does not go past 3 generations.

There are many scenarios where wealth may take a turn to the wrong entities or persons.

Designing a trust for legacy planning is critical and it does not cost very much unlike what most people perceive it to be. It only takes one to be open to face the difficult decisions ahead.

If you know someone who
1) has a freehold landed property,
2) has at least a million in investible assets,
3) is running a successful profitable company.

They should start to have an open conversation about what happens next.

Speak with us who can ensure that wealth continues over more than 3 generations.