Financial Planning – Page 3 – Greg Fok Advisory

How do you manage LARGE amounts of wealth

March 25, 2022March 25, 2022
by Gregory Fok

I was having a conversation with a person recently who had come into a rather significant amount of wealth a few years ago.

I asked him what his experience had been holding on this amount of money which came overnight. He shared that he was worried about how he was going to manage it. If done right, he knew that he would be able to live well, and have enough left over for his children as well. However, if there were mistakes made, he knew that he would be the one known to be responsible for the downfall of the asset.

This was when I realized that holding on to significant wealth can be a pretty stressful exercise by itself. And since he did not know better what to do with it, most of it was left in the bank account and he took out a small portion to be invested into stocks that he was familiar with and unfortunately, Singapore Airlines was one of those bought before the covid 19 crisis. He was stopped in his tracks in decision making, for not wanting to make a BIG mistake but he knew he needed help so he was referred to us.

The first key priority was for preservation of wealth. With great power comes great responsibility so we needed to ensure that this cannot go down to zero. Holding on to single equity stocks will not fit this due to the fact that single companies can potentially get delisted or the business can close suddenly without time to react due to unforeseen circumstances and you can have a large allocation to a single company. One of the ways we do this is to diversify into 14,000 companies all across the world. This minimizes our risks to a bare low point. It is almost impossible for all companies to close all at the same time. In fact, in all periods, crisis or not, there will still be some other companies that can be doing extremely well. One example is the some of the technology companies that thrived during the covid 19 crisis.

Focus on what we can control

We will not be able to control markets and the outcome of it but we can control our human behaviour towards the circumstance in front of us. We can also control our asset allocation to the risk appetite that we are comfortable with depending on our time horizon of our goals and milestones that we need the money. We can also control where we position our investments. By tilting towards the evidence-based strategies of having smaller, reasonably priced and higher profit companies, we are able to get a higher outperformance of our investments over time with the opportunity to be able to rebalance it on a regular basis. We also focus on the fact that globally diversified portfolios have given disciplined investors exceptional returns over the almost hundred years of investing. We know that the markets move upwards in a trendline, but we have to expect that there will be unexpected ups and downs in the markets for some of the risk we are taking and it will be within his acceptable temporary risk.

Work with an experienced advisor who understands you and keeps you in check

Staying disciplined in extreme volatile conditions is also a critical component of human behaviour and working with an experienced advisor who has encountered this before to give you specified assurance of your goals and objectives will give you peace of mind.

You can always start by having a conversation to see if there is a fit for who you are looking for and if the financial advisor is a fit together to journey with you. Not all advisors may be right for you and not all clients may right for the advisor. The important thing is that there should be a match.

Can you invest with peace of mind?

March 9, 2022March 10, 2022
by Gregory Fok

Investing seems scary especially in the current market conditions under the Russian-Ukraine geopolitical issue and when lives are at stake.

Is there such thing as investing with a peace of mind? How is that even possible?

It takes a lot of education to understand how markets work based on evidence and science and how you can use it to your advantage. Part of the reason why you may not be having a peace of mind is that you do not have a clear plan of strategy in mind. You are only investing on news and emotions to achieve high returns, rather than with a clear plan to get you to where you want to get to.

What is your real objective?

Go back to your main plan of what is the real objective you are trying to invest in the first place. If it is to achieve the highest returns, please do not read any further. This will not make sense to you.

If you are like most people, you know that one of the key reasons is to be able to build wealth for the lifetime consumption you are going to have based on your personal individual goals you set for yourself. It could be sending your kids to a tertiary education, or paying for a down-payment for a car in the next 5 years, or your retirement funds over the next 10-15years. Sometimes, it could be to build a legacy for your children and give to the family or charity of choice.

Build a portfolio that can withstand the test of time, regardless of the crisis

Design and build a portfolio based on your desired goals you want to achieve and ensure that it can withstand the test of times when crisis comes. When you have a portfolio that is globally diversified across the world, you minimize the risks of losing all your money, because even when a global crisis occurs, there are still some businesses that can be making profits and growing in the midst of crisis, just like what we saw in the Covid-19 situation in 2020. But if take on over-concentration risks, you might run the risk of creating havoc and emotional stress on ourselves and our portfolio.

Expected the unexpected

There is risks in investing, but there is also a way to take on calculated risks only. Take off the idiosyncratic risks that can occur in any company or country or sector by way of diversification. Once that risk is minimized to the point where it is at the lowest, then expect that some volatility will be the price to pay for an increased premium of returns, depending on your time horizon. That is the way to reduce your risks while capturing the upside by finding evergreen strategies to always outperform the markets through smaller companies, higher profit companies and reasonably priced companies. Rebalancing is key to realize the profits and reposition them to continuously buy into the value, smaller and profitable companies.

Reframe the way you invest

The way most of us invest is driven primarily by emotions and what the industry has caused us to think, which is that we are smarter than the markets, so we will be able to forecast and predict the future. While a person could be lucky once in a while, it is a futile exercise if you stretch that time horizon longer because the reality is that a person is able to do that in a flip of a coin. Instead, we use research materials to understand how markets work and study the history of markets to apply the science to investing to get us the highest chance of achieving our big long term goals in life so that we can sleep in peace through wars, health crisis, economic crisis, technology crisis and the list goes on.

Put in the hard work

Unlike going to the gym where more action leads to better results. In investing, less active action leads to better results with peace of mind. The hard work in investing is patience and discipline. Patience is the ability to sit through periods of volatility when expected returns may be against your favour. The time will pass when the returns will come back to normalization, just like in the history of all crisis for the past 100 years.. Discipline to stay in the strategy and hold it out even when the going gets tough will be another virtue to have. You probably can imagine that there will be another way to make a “Quick buck” through alternative new strategies that will constantly come up. Staying invested using evidence-strategies proven for almost a 100 years keeps us disciplined. We need to stay the course, and not keep changing lanes to avoid an accident in our investment portfolio.

Finally, speak with an experienced investment advisor who looks into what it is you are trying to achieve personally and see if they can help you to reframe the perspectives of financial planning to get you to your big goals in life.

Forecast of what is coming up in the next…

February 10, 2022February 10, 2022
by Gregory Fok

You would probably have heard online about some “investment gurus” are trying to predict what is coming up – whether it is a financial crisis or end of the world or war or something one way or another.

Whoever tells you that they can tell you that they can forecast what stock to buy at what time period so that you can make the most money in the shortest period of time – pls stay far away from them because no one can predict the future.

Even one of the best investors in the world, Warren Buffet, does not get it right all the time. A person could be “lucky” to make certain decisions that turned out right for them once. That person could even be right 3 times or even 5 times in a row. But to extrapolate that “luck” into the future over decades of investment time horizon is almost impossible!

Imagine going back to the midst of the pandemic, end of 2020 when the health crisis is still unfolding and the light at the end of the tunnel is nowhere to be seen. If anyone were to tell you that the stock market would have given you one the best returns in the history of investing, you would probably think he is crazy. But the markets did gave a return of almost 20% for the whole of 2021!

And if you actually study markets that go back all the way to 1920s before the Great depression, the overall equity markets over the long term had captured an average of 9-10%pa annualized throughout that period. However, it was not a smooth ride, it was an upgoing trendline but punctuated with unexpected ups and downs of the markets on a daily basis depending on what kind of crisis was going on at that particular point of time. Sitting through those extreme downturn periods was no fun either.

So rather than investing with a perspective where you can predict where the market is headed for the short term, set your goals and plan effectively in advance over various time frames on a globally diversified portfolio at a low cost. Work with an experienced advisor to ensure that you have different asset classes for diversification so that you have peace of mind. And sit tight in your seat while you let the investment markets be your best friend with time on your side. In fact, you can actually take opportunities to buy regularly along the way whenever the dips come in from time to time when discounted periods present itself. All this happens while you are tilting your entire portfolio towards areas of higher expected returns without the need to take on additional risks!

This strategy only works when you are able to control your emotions and have deep education and deep conviction about how markets work. Or if you know of someone who would like to journey with a trusted advisor who understands how markets work and want to find a simpler way to get to their life goals, reach out to us and we will be happy to have an initial chat to see if there is a fit to help.

Why are we different?

January 27, 2022January 27, 2022
by Gregory Fok

I had a fellow financial advisor who was asking me for some advice..

Advisor : Could I please tap on your expertise 😊 I’m meeting a doctor to do retirement planning and old age needs planning. She’s approaching 60, married with no kids, father recently passed on at age 92 (which triggered this meeting). Judging from her address, Nassim Hill, fairly wealthy- that’s all I know yet I’ve never planned for a doctor. Any advice?

Greg : It all starts with the question, what are her wishes she would like to fulfill in her own life and the ones of the family around her? It all starts with the why – listen to her and what she wants.

A few days later…

Advisor : I asked her the prospect the question…..her response was ‘What a profound question! I’ve never thought about that. I’ve just been living!’

Learning points…

1) What are our dreams? Have we gotten off the rat race to pause and reflect about what do we really want in our lives?

2) Rather than go into the meeting armed with products, we go into the meeting to listen to what do clients really want, prepared with a heart, empathy and questions to help them clarify their own goals which they have no time to think about.

3) Our value we bring as advisors is not to focus on products but to bring clarity to help them make better decisions for themselves and their families.

#stewardofwealth

#ihavethebestjobintheworld

#ourvalueasadvisors

#MakingDreamsComeToLife

Embracing volatility in investing

January 18, 2022January 18, 2022
by Gregory Fok

Given the recent years, it has been a volatile ride throughout the period from 2017 all the way till now in 2022. With the fresh start to 2022 with a volatile period, this is a stark reminder again that markets will go through volatility from time to time and it is part of any normal market cycle. Trying to predict markets in the short term will yield little fruition and even add on frustration. Focus instead, on our longer term goals and objectives, without trying to time the markets. Continuously add on to your investments over time and diversify globally to reduce our risks towards idiosyncratic risks which can never be predicted.

If a person had stayed invested and kept the course over the past 5 years, we can see that the markets only continue to grow and increase over time just by sheer patience. Speak with us and we can show you what the markets have resulted in a double digit growth over the past 5 years. Understanding how capital markets work helps us in our decision making for the longer term. We all know widely diversified portfolios will grow over time, as evidence based over almost a hundred years.

Going back in history

So we need to remember that over the past hundred years, our world has gone through depressions, world wars, financial and economic crisis, oil embargo and many unprecedented crisis. In some instances, the phrase, “This time, it is different.” comes up. The latest being the health crisis which almost caused the whole world to pause their lives. However, we have always emerged with a stronger returns of the equity markets due to innovation, stronger global demand and an ability for the human race to adapt and change for the better in all senses.

So let us remember why we are investing, sit tight, understand how capital markets work and embrace volatility to get to your goals in a smart way through proper diversification and asset allocation.

If there is someone whom you think will appreciate getting them to their goals in a way that reduces risks and increases wealth, without the need to speculate, we will be happy to have an initial chat with them.

What products can get me the highest returns?

December 30, 2021December 30, 2021
by Gregory Fok

Commonly, in my conversations with clients, this question seems to pop up quite a lot. And as I delve further into the conversation with them with a few more questions, I find that what the client really wants is peace of mind, stability, reduced risks and getting them to their goals in the safest way possible.

Then why is it that the question starts off with what can get them the highest returns? It is unfortunate that this is how the human mind compartmentalize and thinks without the understanding of human behaviour behind investing. And that is the reason why many investors actually lose money over their experience of investing and they say that investments do not work for them, so the safest option will be to keep money in the bank.

Instead, we turn the question around and ask what is it about money that is most important to them? At first, this might seem like an unimportant question to them. However, as we continue the conversation, it takes away the focus on products and shifts the focus towards life and their personal goals and achievements.

Your life plan sets the direction for your financial plan.

When we start to uncover what they really want to achieve in their lives and why it is important to them, safety and reduction of risks begin to appear stronger in the conversation. And most of the time, they come to a realization that they do not need the highest returns. What they really want is to get to their personal goals and objectives using strategies that are evidence based.

Reduce risks, higher expected returns without speculation

After a person learns about how markets work, they start to think about how to reduce risks significantly especially for very large goals of retirement funds and tilts their entire portfolio towards the areas of higher expected returns without the need to time the markets or speculate.

Create a Spending plan

In a recent case we were working on recently, they started off by asking what is the product that can give them the highest returns. Most of the time, that is not their personal objective. Due to smart and proper planning, they actually were able to create a plan to spend more than what they are doing right now. The best part is that they do not need to take excessive risks and they only need to take on a measured approach. And with a differentiated approach (with us) towards getting them to their own goals, they came out of the meeting with much more clarity and confidence of their future.

Deep education, deep conviction

The process of education takes time and a reshaping of the way we think when a person looks at wealth management. I probably went through at least 10-15years of trial and error, going through many mistakes before I finally came to a conclusion that I will not be able to do this on my own. And I have to acknowledge that there is smarter way to invest and grow wealth which is the change of strategy for myself over the past 3-4 years. This helped me to ease my burden of tracking markets constantly and focus on my personal life goals instead. Volatile emotions are removed and the value of wealth through investments has grown by more than 10x over time.

So in summary, what clients really want is not which products that can get them the highest returns, but they want to be able to get to their own personal goals, with no need for speculation and reduce their risks to the bare minimum, especially when you are going to be growing wealth to at least 7 figures.

If you would like to find out more, you can have an initial chat with us, at our cost to see if there is a fit. Not everyone appreciate our value in the work we do, but if there is, we can continue the conversation further if there is a match.

Why does it pay to have a good financial…

December 11, 2021December 11, 2021
by Gregory Fok

John had just started his investment journey money with a robo-advisor at the end of 2019 before the covid-19 crisis occurred after seeing that the markets had grown well through in 2019. What was unexpected was that no one saw the health crisis coming along the way. What happened within the next year was an extreme roller coaster ride.

In the depths of the health crisis in March 2020, fear gripped him. The whole world was in uncertainty and turmoil and many of his friends had shared that the crisis would turn out to be even worse. He was shocked that the markets had dropped quite significantly (almost 30%) so he sold all the investments out.

After realizing the loss of 30%, the markets recovered very promptly, again unexpectedly. He knew that he needed to invest the money as the interest rates in the banks was miserable. He thought he would try again to try to invest, with another attempt. So in the last quarter of 2021, he decided to go back to invest into the markets just before the US elections. His investments actually did pretty well and grew about 10% during that period when he invested. Fear gripped him again at the end of 2020 as his investments had grown well and he read in the papers that markets are at ATH (all time high). And having experienced that dramatic loss early in the year, he decided to sell out and wait for the markets to correct again.

What was again unknown to him is that the markets continued to rally almost another 20% from the beginning of the year.

Instead, if a person had stayed invested throughout the entire time frame from the end of 2019 to Dec 2021, the investments would have grown by almost 40+% throughout the same period.

What are the lessons learnt for Deep Education?

It is very hard to time the market

Even if a person may get it right once or twice, he has to get it right multiple times with many entries and exits. In the short term, it is almost like gambling because it is very hard to know what the markets will turn out to be in the short term. However, we do know from evidence that markets had grown on a upward trendline since 1920s and will continue that path in the long term as long as there is innovation and constant desire for human consumption for a better life. However, there is going to be expected volatility in the short term.

Appreciating and embracing volatility

If a person expects that investments are going to be straight line upwards, he will be in for a rude shock. Whilst it is true that investments markets go up over the long term, it is going to be peppered with unexpected twists of ups and downs. So just like sitting a roller coaster, it is best to stay seated throughout the entire ride and not try to jump off along the way which is the most dangerous. Wait till the end point when it comes to a stop and you will be in safe hands.

Structure your investments according to your goals and time horizon

However, it is noted that some goals may be realized in the shorter time frame and if that is the case, we help you to design your asset allocation according to your personalized objectives. Volatility can be reduced significantly by reducing the equity exposure and inserting a higher allocation to bonds to dampen the swings. The shorter the time frame available, the lower the risk appetite should be taken.

Journey with an experienced advisor

Despite having known all the above steps, when the markets go crazy, which it will from time to time, people will continue to make emotional decisions as we are swayed by human behaviour. What you want is not the highest returns but you want to be able to achieve your goals safely with a strategy based on evidence and with someone who is experienced enough to hold your hands through. And in some unique cases, a person may not even need to invest or he has to find a way to spend more money, give more money to his charity or family members while he is still around.

Let us have an initial conversation to see if there is a right fit to get you to build CORE portfolios of 7 figures and above without the need to speculate and to use an evidence-based approach.

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.

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.

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.