Business – Page 2 – Greg Fok Advisory

Do you know someone who has a joint loan…

April 7, 2023April 7, 2023
by Gregory Fok

If you do, are you aware that your business partner’s liability now or future, may accidentally become yours?

It is quite common for business partners or doctors, dentists to come together either purchase a clinic, property or start a business or buy medical equipment together. That usually might be the case because on an individual basis, you might not be able to afford buying the clinic, the shophouse, property or come up with capital to run the business. or you basically thought to share the risks with someone else.

So when you do that, you sign the loan off on 2 accounts, once on behalf of the company and the other as a personal guarantor. It might not seem like a big issue at first, but did you know that your partner’s liability can suddenly become yours?

I feel sorry for the innocent parties, however, this case study listed below will have given us a glimpse into understanding that unexpected liabilities that might come about.

A wife bought a landed property together with the husband with a mortgage loan of USD$1.94mil at the beginning. Her husband subsequently, on his own (without the spouse), went on to take on business loans of USD$131mil.

So most people would assume that is the husband’s liability on his own. It is not.

Suddenly, when the husband was unable to pay off the debt, that USD$131mil debt now falls to the spouse as well, on top of the USD$1.94mil loan. (Manifold Times | Wife of Coastal Oil’s Tan Sing Hwa saddled with debt to the tune of USD 131 million)

We help businesses exit smart at the highest multiples, so that you can manage your wealth well.

If you know someone who has taken a joint loan with a partner, it might be time to reassess the financial implications and obligations it might have on you or your family. These scenarios can be planned in advance to be prevented so that the risks does not fall on your friend’s lap.

Why should some doctors and business owners, wealthy families…

February 16, 2023May 17, 2023
by Gregory Fok

For families who are wealthy, their biggest fear is usually loss of assets taken away from them or their family unjustly, especially if there was a way to have mitigated that risk at the beginning.

Some of these risks include…

🔮1) In laws and potential ones

They will provide for their children, their grandchildren and descendants but they will be concerned if the money falls into the hands of the in-laws and future spouses of these in laws who may remarry as well. This is unfortunately true given the state of marriages today.

🔮2) Unwise taxes that can be mitigated.

If a person did not distribute his assets out appropriately, the children and grandchildren might be burdened with the need to pay buyer stamp duties, additional buyer stamp duties for properties in Singapore and estate duties for US shares and other jurisdiction which can be as high as 25-40% of the value of the assets.

We have seen many cases where these taxes could easily have been minimized or eliminated through proper planning. Every case is different.

🔮3) Business owners liability

Most wealthy families run businesses. If you run a business, you never know when and how you might be hit. And most of the time, it is not even your mistake or fault. But you bear significant risks the moment you set up a business on your own. Let us help you to identify the risks and mitigate them so that you can sleep well.

🔮4) Partnerships with others

If you have gone into business or joint ventures with others, their risks can easily become part of your risks. For example, when 2 persons are running a business, when one party is accidentally made bankrupt, the partner could be potentially implicated, even though the cause of the bankruptcy did not arise from your business.

🔮5) Personal guarantees

Pls avoid signing personal guarantees at all costs, if you can help it. If you really cannot do so, protect your family members from unnecessary risks because personal guarantees can sue all the way to the person’s entire assets, even those in their personal name.

🔮6) All assets and loans being under the same bank!

This is the worst allocation of assets because the bank can very quickly take control of ALL assets and freeze it immediately when circumstances change. We had a case where a doctor received payment from a patient (who unknowingly received from an alternative source) and his bank accounts were frozen in the midst of investigation by the police.

We always try to understand your concerns, situation and explore solutions that best fit. Together, we plan ahead to re-allocate your assets and structure to avoid any unforeseen circumstances, which can be varied dependent from person to person, business to business.

If you want to be able to protect your assets, ask us a question so that you can enjoy your life and view.

Business owners consideration for transfer of assets

June 24, 2022June 24, 2022
by Gregory Fok

When a business owner is young, he uses his blood and sweat in exchange for an income he works hard for.

Once he has built it to a reasonable size, he needs to have the following considerations.

1. Who is going to take over the business and the liabilities when the key person is taken out?

A friend of mine had a strong business and successful one for many years and were thriving. One day, during dinner, the partner choked and died suddenly on the spot. Since the partner was the one with all the connections and loans, when the partner passed, the liabilities were called on by the banks almost immediately. Customers trusted that particular partner but when my friend tried to salvage the business, the customers changed suppliers. Cashflow was very tight and eventually the funds dried up promptly. The business had to be closed and there were even outstanding payments that needs to be settled.

2. Who is going to take care of the family expenses?

As a business owner, your purpose of the business is really to take care of your family. However, when there are outstanding payments to be settled and frozen liquidity, the business dries up all the funds and usually the family might not be left with much.

For example, if your family needs $10,000 a month for expenses and you would like to provide them for a period of 20years, the total provision for the family will work out to be about $2.4mil.

3. Funding

Funding of the above scenarios can come from a variety of ways.

a) One is to keep and hold cash and wait for the sudden need to use the fund. However, it is the most ineffective use of funds.

b) The second is to use discounted dollars from your revenue of the business (This is exactly what Walt Disney did to access funds when no banker was willing to lend).

For example, if your revenue drops by 2-3%, will your business by badly affected? If your revenue grows by 2-3% more, will you call for a big celebration?

But what if we reposition that 2-3% wisely, that can protect the 100% of your revenue. Wouldn’t that make sense? And on top of that, after many years of funding, there can be another mountain of asset that you have created for yourself that is totally available for use for the future. Wouldn’t you like to be smart, just like Walt Disney did?

4. Legal aspect

Now that you have settled the above financial portion of your life, have you written your will and trust to solidify the decision of who will be the next person to take over which asset from you? Every asset class has pros and cons in distributing.

For example, illiquid assets like property and businesses should try to give to more than one party to avoid confusion and conflict.

What we can do for you is to combine the power of the finances and the legal aspects of planning your business so that it can continue to thrive for a very long time!

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.

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.

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.

When was the last time you gave yourself permission…

March 10, 2021March 10, 2021
by Gregory Fok

As we grew up along the years, we were told by our parents to study hard, get a good job, work hard, progress and retire. And when we started working, we worked so hard that we have so little time left for anything else.

I love to have DREAM conversations with my clients, so sometimes I pause them in their track to ask, “What is your dream and what exactly are you trying to achieve in your lifetime?” We hardly stop at our own rat race, just to give ourselves some time to dream.

Maybe it is to spend more time with your loved ones. Maybe it is to be able to help someone in need. Maybe it is to be more giving in time and energy to something you are passionate about. Maybe it is to make a difference in one particular person’s life. Maybe it is to create an experience for your whole family. Maybe it is to live your life meaningfully as a legacy for others. Whatever it will be, it all starts with a Dream Conversation.

Just doing that once every year can change the trajectory of your lives for a more meaningful path. Share with us your dreams and we value add to plan with you financially to make your dreams come true so that you have freedom in time, wealth and live life fully!

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.

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.

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.