Financial Planning – Page 4 – Greg Fok Advisory

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.

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.

How do I ensure a comfortable lifestyle?

September 21, 2021September 21, 2021
by Gregory Fok

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

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

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

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

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

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

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

Money and happiness

August 28, 2021August 28, 2021
by Gregory Fok

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

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

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

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

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

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

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

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

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.

Which is the best product in the market now?

July 27, 2021July 27, 2021
by Gregory Fok

This is a very common question that I get constantly. Most people come to me with a product perspective in mind. However, instead of trying to respond to that question, I will turn it back to them and ask, “What are you trying to achieve for yourself by investing in this ‘product’? What is your real dream you would like to have?”

If I take a few more steps back for them, will what you are trying to achieve with this $200k get you to your eventual goals?

For example, maybe this person wanted to be able to choose to stop working by age 65 and spend his time creating memories, travelling the globe for 2 months every year for the first 5 years. What will you need to put this $200k into, in order to help you get to your dreams and goals in the most sustainable manner without taking excessive risks?

Maybe after working it out, we realized that $200k will get him hardly anywhere near to where he wants to be given his overall financial situation. Then would that really be a goal you want to achieve? It could also mean that either he takes on higher risks or he might have to set aside more than $200k to speed up the process to get there, if that goal is so critical for him.

In some other personal customized circumstance, through the proper process of planning, it could also mean that he might not need to take much risks at all to get there. Maybe he has already arrived at his goal, without realizing it. In fact, for this person, it could even mean that he does not need to wait till age 65, but he could have his dream done earlier at age 55 instead of 65, just by shifting his assets and reallocating it appropriately.

What we do best for clients is to ask a few more questions to understand the dreams, desires of the person and their fears. We want to help them through the process of getting them to get to where they want. And not focus on the products we can sell… That is where dreams can be realized for you and you lead a more meaningful life.

We want to save you time, give you confidence and simplify your life for you so that you get the best out of life!

If this is something meaningful for you and if someone you think will benefit from having an initial chat with us, pls share this and we will be happy to be connected and see if there is a fit.