Blog – Page 8 – Greg Fok Advisory

Why do I need a financial advisor?

November 6, 2020November 6, 2020
by Gregory Fok

One of the common questions I was asked is to the one above. Not everyone needs a financial advisor but most people would want one if there can be value. Value to bring you limitless possibilities to design your life the way you want it.

1) I cannot see my own blindspots.

We always see what we know and plan ahead. But there are blind spots that are not within our experience to notice or look out for. Having a 3rd party see your blindspots allows for awareness and reduction of blindspots and risks.

2) We help you be your gatekeepers.

When we are emotionally charged up due to fear or greed or just affected by life, we tend to make the easiest decision which most of the time is not the wisest one. We help you to make decisions in your favour and not just take instructions.

3) We stretch your financial imagination.

When you plan on your own, you limit yourself to what you can see. When you plan with an advisor, often, you stretch your financial imagination beyond what you can even imagine. As iron sharpens iron, so does one man sharpen another.

4) We help to put things in perspective.

When we are in our own world, we seem to be struggling in many areas of life, especially financially. But when we put things in perspective, we either have an awesome life or the small things do not matter that much.

5) We help you peer into someone else’s experience.

We learn from older folks who have gone through much of life and bring that experience into the lives of those we meet to learn from the wise and learned.

6) Wisdom of life that is not just found in money.

An experienced financial advisor does not just talk about the financial aspect but more importantly the family and emotional aspects that hold more weight in decision making.

7) Provide you insights.

Nuggets of insights brings the ability to marry money, values and emotion to bring together proper financial planning for a human being.

8) Gains you time and quality of life and not have to worry about money.

Money is probably the number 1 worry most people have in life. An experienced financial advisor minimizes the fear through prudent planning and allows you to focus on the important things that money can bring to life. Eg dignity, maturity, quality of life, stewardship.

Interview and speak with an experienced and trusted advisor to provide you some insights.

Business

When I sign for a loan for a company,…

October 29, 2020October 29, 2020
by Gregory Fok

When I sign for a loan on behalf of a private limited company, is my liability limited to the paid-up capital of the company only?

I was having a conversation with a friend recently who took a loan on behalf of the company as the company was expanding and buying more inventory. They took a company loan which is way more than the paid-up capital of the company. He thought that his risk was minimized to only the paid up capital.

Whenever you sign a loan for the company, you sign twice. Once on behalf of the company and the second time as an individual as a personal guarantor (PG).

This is when the time bomb ticked. If for whatever reason, the company is unable to pay, the banks can go after ALL the personal assets of the individual who signed off because he is the personal guarantor. Personal guarantee is very common for SME business owners who are looking to expand the company because larger funding allows the company to generate faster turn around time to increase the sales and profit margins.

As the company grows and profits are made, most people forget to undo the personal guarantorship. This might come back to bite them many years down the road if unexpected scenarios might appear which we can share more with you as we have an initial conversation.

We help to manage risks for business owners to ensure they grow in a sustainable way and better still, to look into risk management for business owners.

Retirement

Should I leave my children properties as an inheritance?

October 14, 2020October 14, 2020
by Gregory Fok

Properties are an asset that is generally large in value and very illiquid. If it is designed to be given as a way of transferring wealth to the next generation, it would be actually one of the most ineffective tools, from experience. Why do we say that?

Common property disputes

If it is given to more than one party, there are many decisions to make along the way. For example, should the beneficiaries decide to keep the property, rent it out, sell it and at what price and for how long do they wait before the decision is made. We had an incident where a 3 room HDB flat was sold by one of the children too quickly before even trying to get “3 quotes” to get the best price. A small incident like that could also cause potential unhappiness. And throughout the decision-making process, anyone of those decisions made mentioned above can create a point of contention without even knowing it could have hurt a family member unknowingly along the way.

Costs incurred is high

When you buy a property worth $1.5million, inadvertently, you end up paying way more than $1.5million due to renovation, stamp duties, loans, interests incurred. This probably might end up even as high as 1.7 – 2x the amount the value of the property to about $2.55mil to $3mil.

Maintenance costs increases with age of property

As a property ages, there will be costs incurred like maintenance, painting, wear and tear of parts of the house. The older the place gets, the higher the costs of upkeeping it and the beneficiaries will have to bear the costs of maintenance which can get quite high with time.

Sways your asset allocation significantly

When you buy a property, it usually forms a fairly significant portion of a person’s total asset allocation. A person should have a balanced approach towards retirement planning and start of liquify his assets as he gets older for ease of management as well. Uncontrollable events like an illness, a disability, medical needs or loss of job can also create an additional stress on the person or family who might need liquidity for whatever reason and the property is known to be a very illiquid asset.

Tax issues

Here in Singapore, we face huge tax issues through normal stamp duties, ABSD (Additional Buyer Stamp Duties) and SSD (Seller Stamp Duties) which can affect beneficiaries if it is not designed well for estate distribution purpose. The total tax can compound to be more than 20% as a whole.

Restriction from purchase of HDB

When a person inherits a property, it could also hinder a child’s ability to buy a HDB as a privilege given to all Singaporeans as a level playing field.

What other options?

We find ways to value add to the family overall through detailed understanding of the intention, potential issues and eventual objectives of the family or business. We use instruments that are more liquid, cost effective, hassle free, maintenance free, guaranteed and free from tax implications with an ease of distribution of wealth to future generations as well. This is through proper education and understanding of how we can value add to the entire family where the first generation gets to maximize their retirement and the children still get their fair share of inheritance.

And you still eventually will have your last property you are staying in to be given, please plan well for it to be distributed. Plan well on both the financial and the legal aspects of it.

Special needs

Dignity planning for children with special needs

October 3, 2020October 3, 2020
by Gregory Fok

Dignity is the most important concern parents have for children with special needs. As long as you are around and able to do it, you will be more protective than your other children.

However, what happens when you are no longer around and may not be able to. You can actually plan well in advance ahead for them.

Here are some things to think about…

Dignity and respect from other family members

Can you imagine this special-needs child is no longer reliant on other family members? And is even able to provide some sort of dignity by giving to the other family members an ang pow on the family member’s birthday or special occasion, given in the name of this special child for the rest of his/her life?

Financial ability

Finances can possibly be a strain on the surviving family members and you as the parent would like to alleviate that financial burden. Does it cost a lot to ensure this type of planning is done? No, it does not. In fact, a recent parent intended to set aside $1mil in cash to provide for the child and we told him that he just needs a fraction of about 1-3% of it to ensure that $1mil will definitely be given to his child in the worst-case scenario of unexpected death of the parent.

Complete planning

With our decades of experience of a combination of the wills, trusts and financial aspect, we can enhance a better living experience for the special needs child whilst healthcare and money is managed well. Some people think that planning with a trust costs a lot of money, but if you were planning to look at planning with a $1mil portfolio for the special needs child, it would only take a few thousand dollars to set up the structure to be put in place. And you do not even need to come up with a million dollars upfront to fund it, as explained in the earlier paragraph under financial ability.

If you know of someone who has special needs family members who would like to ensure dignity, financial ability and complete planning experience, we will be happy to have an initial chat to see if we can be able to help.

Business

Tax optimization for doctor and high-income earners

September 15, 2020September 15, 2020
by Gregory Fok

As a doctor or a high-income earner, you eventually will reach the point of paying quite a lot of tax. The way you plan your investments will have an impact on you for your own personal financial planning.

Did you know that there is tax implications in the following areas.

ETF

Many people buy ETFs with the main intent of lowering their cost. However, when you are holding onto ETFs, you can potentially attract fairly high tax implications. And some can even be as high as almost 30%. On top of that, there can be low cost option funds that might be even lower than the cost of your ETFs which we do provide as an alternative.

Foreign shares

Holding foreign shares also attracts estate duties which can go up to as high as 40% or more in certain countries. One of the common markets where people buy shares is in the US. They adopt a buy and hold strategy. If a person had built a retirement plan through owning US shares, he will easily have built it to almost a million or more down the road. However, if a person suddenly passes on, the estate will be liable for a very expensive estate tax to the US as a non resident. And we all know that US has one of the highest estate tax in the world.

Singapore Property

As doctors, with high income ability, there is an attraction to purchase property in a country we are familiar with in Singapore. However, there are various huge tax obligations such as ABSD (Additional Buyer Stamp duties), SSD (Seller Stamp Duties), property tax and income tax. The portion that most doctors ignore is the part where you are taxed heavily based on your income. Given that the yield and income from property is already so low, having to pay an additional tax at 22% every year just makes it very unappealing as an investment option. However, most doctors and high income earners might not even be aware of this fact, or they are too busy being the expert in their field.

We specialize in working with doctors, wealthy families and high-income earners find investment options that can help you achieve the same results or better with little or no tax implications. That is where our expertise comes into play over here to value add. Can you imagine saving hundreds of thousands or even millions of dollars eventually? Wouldn’t that help if you just spent 20mins of your time for an initial conversation with the expert?

Connect with us for an initial chat just to see if there is a fit.

Inspiration

Planning for short career lifespans

August 28, 2020August 28, 2020
by Gregory Fok

We have worked with individuals with short career lifespans through our time.

They typically have very high earning abilities in a short span of about 2 decades.

Historically, sportsmen, celebrities, surgeons, media personalities fall into this category.

So they have to make the most of their youth and their time and expertise.

Unfortunately, when they are in the prime of their careers, they usually assume that this will continue for them all the way forever. The reality is that once that season is over for them, things can change pretty drastically pretty fast.

More recently, joining the spotlight comes high level corporate staff who are Managing directors and C level management as well of MNCs. Adding to the list are also consultants who work extremely hard and travel non stop and health easily can take a toll.

Due to the covid 19 situation, companies cut the senior levels very quickly when times are bad. And if that same senior executive had just committed to a huge mortgage or is used to a certain lifestyle, he either finds it difficult to take a humble pie to start on a different track or accept a much lower package elsewhere.

We all know someone like that, don’t we.

If you knew that you only had a good 15-20yrs of high income, what will you do differently in financial planning?

Business

Which do you prefer? Time or money?

August 28, 2020August 28, 2020
by Gregory Fok

As Warren Buffett says, “Having money makes you rich, Having time makes
you wealthy.”

If you were given an option, which will you prefer?

In the early years of many individuals whilst working, it is all about
being rich. However, as the years progress and you have found your passion in life and would prefer to spend more time with your loved ones and your passions. You will start to think about finding ways to pay people to do the work you are not best at, so that you have more time for yourself.

Once success is achieved, the next level of growth is about doing things
you genuinely have interests and passions for, together with your loved
ones. It is also about working smarter, rather than harder.

After 15 years of experience, when it comes to wealth management, I
realized a lot of the work I do is not only about managing wealth, but
more about managing emotions for the family. What people want more than making the next million is about living with dignity, fulfilling dreams
and making a difference with significance in the world we live in with the resources meaningfully allocated.

How would you like to live life with both money and time? I believe the
work we do allows us to creatively ensure that you get the best of both
worlds for you and your family.

We are looking for people who possess the following… This person loves
someone, have reasonably good health and some meaningful wealth to think about how to creatively preserve and grow it for the overall family’s
benefit in a meaningful way.

Business

Business Owners need to draw a line.

July 30, 2020July 30, 2020
by Gregory Fok

Business owners need to draw a line.

As a business owner, you have 2 types of assets. The business and your personal assets. Most mix it together because both fund each other over the years. The business funds the lifestyle and personal assets over time and when business is tough, you draw back some personal assets back to the company.

The most important thing you should do is to draw a line in between so that as you are expanding your business and growing, your personal assets can be protected and even untouched by potential creditors.

If the worst of circumstances, you can even have money to pay off creditors to hold back your family assets..

If you are a business owner and know someone who would like to know how to protect their personal assets, type in 2 business owners names and we can arrange a short 15min session to understand your situation and draw the line for you.

Retirement

Maximized retirement funds

July 23, 2020July 23, 2020
by Gregory Fok

What if you could spend every single cent that you have for retirement and expand it more? And on top of that, you will leave a guaranteed legacy to your children with minimal cost?

When we work with people reaching retirement or already retired, they tend to worry about these few things.

Will my money be enough for my retirement years?
How long will I live?
What if I fall critically ill or become disabled due to health or accident?
What if inflation eats into my future spending?
Can I leave a legacy for my children at a minimal funding whilst still spending my way through retirement?
What if financial markets cause havoc on my investments?

By proper asset allocation and planning, you can easily enhance your wealth by up to 4-5 times what you currently have. The earlier you start planning, the smarter your planning becomes. Engage your first conversation to see if there is a fit, trust and experience with your advisor and journey with them on a long term from there.

Transfer of Wealth

Should I take on the role of the executor?

July 15, 2020July 15, 2020
by Gregory Fok

Have you been asked my siblings or relatives to be an executor?

It may be a display of trust towards you to ask you to be an executor. However, always think twice. This may come back to bite you many decades down the road.

As an executor, the role is onerous and layered with significant potential liabilities which you may not think much of it right now.

Do you know that if you do not completely perform your duties in a fair manner or take the necessary steps to protect yourself and keep proper documentation, the costs can even wipe out a person’s entire life savings in his lifetime?

It is always wiser to seek professional help which we will strongly encourage and advise. It is better to pay someone who is the expert to do the job than to save that couple of thousand dollars, to end up with a big hole in your own pocket.

How do you transfer the role of the executor to a 3rd party so that you transfer that risk?

Speak to us and we can find ways to value add. On top of that, the money used can be wisely planned to multiply the wealth even more over time.