Inspiration – Page 2 – Greg Fok Advisory

When was the last time you took a holiday…

December 28, 2022December 28, 2022
by Gregory Fok

In the past, I will go on a holiday trip and my mind is actually in “office mode”. I wonder how many of you have this same experience?

While I am physically overseas and with my family, my mind sometimes wanders off to check my work emails. On top of that, my clients who have access to my handphone will just msg me, as they may not know that I am overseas. I am not blaming anyone but myself because I have not learnt the art of decompressing to just be with family.

When I am with family, I worry about work. When I was at work, I worry about not being able to spend more time with my family.

So for this December trip, I will try to make a mental note to just be present with my family and enjoy the time with them.

So if I am unable to respond to you promptly, I apologize. In any case, I did send out an email of the contact person in case it will be urgent and that is the power of the team!

Would you love to be able to do the same for your holidays with your family as well?

When we get better at focusing on the right things at the right time, we become better people.

Do you agree?

I will be the next Warren Buffett for Singapore!

November 14, 2022November 14, 2022
by Gregory Fok

That was my dream and goal when I first started my investment journey almost 20 years ago. I am not sure how many of you actually secretly thought the same, just like I did.

Warren Buffet made investing into single stocks sound so easy, and being an engineer by training, I started to find ways to make sure that my dream will become a reality.

I studied many books, theories and concepts of how I could make it all happen. I also spent thousands and thousands of dollars on courses to ensure that I am armed with knowledge. I started to read and study the annual reports of my favourite companies with their cash-flows, balance sheets and profit and loss statements in detail.

I mean, I am a smart guy with a strong heart and am disciplined and patient enough to attempt to get the results I wanted. I will be the next Warren Buffett! I wanted to be in total control of the companies I understood fully and will be comfortable to invest.

This all sounds logical when markets are good and when I have bandwidth to have a sound mind.

However, reality sets in when the market conditions soared and plunged very quickly. Human behavior took over and the emotions and swings of the markets become more than what one normal person can handle. I might have gotten great results 3-5 years in a row, but all it took was one wrong move and it wipes out all prior efforts or missed the next big growth.

After more than a decade of bad investment experience, I had to be humble enough to know that one can never predict nor forecast what is to come in the short term. Anything in the short term is usually luck just like in a casino and does not require skill.

I learnt that investing is more managing emotions than logic. Emotional decision making creates stress and causes more complexity in the outcome because I end up holding suspended stocks with no coherent approach to investing over time.

I still had to find a way to invest to BIG long term goals of retirement which may possibly last decades.

What evolved was a search for not the best product, but a way of life in investing with the right life philosophy with values built in. With that, I used evidence based strategies and data with research of almost 100yrs to identify the highest chance of success, creating the odds in our favour over the longer term. I do not need the highest returns but the highest chance of achieving my goals.

There was a lot of unlearning and relearning a new way of looking at investing, but it is definitely more fulfilling and allowing a better investment experience and a better outcome.

I’m constantly on the search for reviewing what is best for our clients so that we all can have success together, not just in wealth but more importantly, in life as well,

Anyway, clients want peace of mind as a higher priority, do you agree?

Should I be shifting more money to cash now?

October 17, 2022October 17, 2022
by Gregory Fok

Given the past few days of volatility, it can feel concerning and scary. I can totally understand that because our human mind is wired to prevent us from making sound decisions when it comes to investing! The reason is our brain wants to protect us from danger, which is a reactive decision making process.

Whenever things are uncertain, that is where it comes the sweet spot between danger and opportunity as the Chinese proverbs say.

Well, if you plan to use the investment funds over the next few years, then maybe it might be better to shift money to cash because we can never know what will happen in the short term.

And if that was the original intention, you should have a lower allocation to equities to begin with.

But if your goals are further out, this can be an opportune time to buy on discounts. We may never be able to buy with the highest discounts but we know in 5-10yrs, on a broad diversification, you know that you would have made a great decision.

The right allocation mix would be the key to successful investing.

Clarity of your goal gives you better management of emotions.

Volatility is the “emotional price you pay” in order to get returns you want over time.

Having allocation to single stocks, single bonds and concentrated areas is generally bad assumption of risks.

If you had just bought into a low cost globally diversified portfolio risk adjusted based on your specific goals, this can be a great time to take advantage of the discounts.

Just like in the picture where you see art pieces, financial planning and investing is both an art and science. We use both abilities to our advantage.

If you are a doctor or wealthy individual who would like to find out how you can grow wealth with peace of mind and confidence, we can always give you a 2nd opinion to see your allocation, with regards to reduced risks, reduced costs, reduced volatility, enhanced diversification and enhanced returns together all at the same time.

Why am I not making money in investing?

July 20, 2022July 20, 2022
by Gregory Fok

When I started investing about 20years ago, I read about Warren Buffett. I really wanted to be like him.

He had the ability to read a company profit and loss statements, balance sheets, cashflows and turn these companies into profits! That sounds amazing! And of course, I learned the power of compounding effect as well.

So I diligently put in lots of hard work, to study materials, learn how to read financial statements, paid lots of money for courses to be able to be like Warren Buffett.

Unfortunately, after more than a decade later, from personal experience and many people I talk to and survey of investors, I realized that most investors actually lose money and underperform what the markets would have rewarded them with over long periods of times.

These are some of the reasons for this.

1. Emotions biases play a VERY big role in clouding our emotional decisions. This is a very big big reason with many factors that can derail us.

2. Most investors look at investments at singular products and not at the big picture to how it fits into their overall finances.

3. Working harder in investments actually led to worse results because constant activity leads to more emotional roller coasters and in turn, to more emotional decisions.

4. The perception of most investors is that they can buy the right stocks or time the market. You might get it consistently right 3-5 years in a row and all it takes is a few crisis to rattle you and bring you back down to earth and you may never recover from it.

5. You were not clear of the personal objectives to begin with.

6. You look at your investments on a single time period basis eg. 3 years, and if it is not making money, you pull out. If it makes money, you put in more. What you are effectively doing is buying high and selling low. It does not make sense right?

7. You are not emotionally prepared for temporary losses from time to time.

8. Mental accounting and emotional accounting is different. When we see our investments as products, we take on concentrated risks in certain stocks and lesser in others. A common example is someone investing significantly on one single stock and lesser on many others and a huge pile of cash on the side for fear of making a wrong choice of stock. So if you look at the overall allocation, the total gains on that one stock, even if it is large, on a total overall portfolio (including cash), may be only a fraction of it. Part of the reason is a drag of dead weight by large cash allocation.

9. I did not have an investment philosophy I could stick with in both good and bad times. There are many many times I sold out way too early!

10. I should not just go after the highest returns! It was not about the highest returns, but more importantly I can sleep well at night, have peace of mind and yet still achieve reasonable overall returns on my whole entire portfolio with significantly reduced risks.

I went back to the drawing block and asked myself some hard questions to rewrite the way I grow wealth.

If I continue the way I do, will I get to my big long term goals like retirement which will run into millions if I want to sustain a reasonable lifestyle.

Otherwise, I had to really do something about it.

I did, through a different set of lens, with significantly reduced risks, I can sleep well at night, have peace of mind and get better potential returns! What a better way to live my life now!

If you or someone you know might want to put on a different set of lenses to help you get to your long term goals, we can have a initial chat to see if there is a fit.

You need a spending plan

July 14, 2022July 14, 2022
by Gregory Fok

Most retirees close to, or starting retirement do not dare to spend for fear that they will run out of money.

Most friends and well-wishers may ask them to hold back spending for fear that they may not have enough money for the future, especially if they live longer than expected.

The reason why most people do not dare to spend in their retirement is because they are worried about running out of money and have to rely on the family around them. It is human nature not to want to rely on others and be self-sufficient, or at least for the generation who are currently in their 50s and 60s.

We start with asking the question of what does an ideal retirement life look like for you?

Through this single question, it really opens up many possibilities and even opportunities. Sometimes, we throw our dreams away because we are too fearful. And that becomes a very sad retirement life.

When we know what really drives you and the kind of ideal life you would like to have, it is easy to build a spending plan around it.

In a recent conversation we had, this person had dreams of wanting to bring her family to be closer. And she wanted to bring the entire family on a cruise, including all her 4 grandchildren. But she knew it required more spending.

We helped her create an investment strategy to reposition her total assets so that she can provide a higher income sustainably over the long term, while maintaining capital, without the need to worry about volatile markets which may happen from time to time.

When she had confidence that the strategies were sound, she went ahead with the cruise. It was her way of bringing the family together to bond with no distractions. We planned for it and she had her wish come true.

When she came back, she shared how she saw her grandchildren enjoying the time on board the ship, she had a big smile on her face and she felt a sense of joy and purpose. Family time was the most important to her and she said she wanted to do this again! She is definitely able to still be able to provide that.

We were able to give her the confidence of being able to spend more without the worry of running out of money through smart planning with us. And that was something that changed for her to instil the power of possibilities at her age.

Have you thought about what your ideal retirement life would look like for you and still have enough to last you?

What is it about the value of money that…

July 2, 2022July 2, 2022
by Gregory Fok

Life has been pretty comfortable and they are living the life of a dream, in terms of their home, their car, their lifestyle, their career and their family! Life is good so why should they need to change anything….

This is a couple who are high income earners. Husband is a doctor and wife is a senior director in a MNC in their 40s with 2 young children. They are comfortable with their income earning abilities and are competent in their work. Life has been pretty comfortable and they are living the life of a dream, in terms of their home, their car, their lifestyle, their career and their family! Life is good so why should they need to change anything! If you were looking at them from the outside, you wished you were in their shoes and time stood still. High income earners usually do not think that they have much money management issues to deal with because their income has been great.

Since I work professionally with this target group of high income earners and doctors, I was personally referred to meet with them. As we started to ask them some life questions, I begin to delve deep into some unmet needs they actually are feeling that they are drowning out with.

I asked them a question that is not the typical of a financial advisor, “What is it about the value of money that is most important to them?” The initial answers are the basic replies to provide for family and fund their lifestyle they have. Deeper into the conversation through appropriate questions, the real meaning behind why they were so concerned about having wealth is because the wife grew up in a background where the parents were constantly not around and she wanted to build the wealth quickly and head off to an early retirement and spend more time with the family. She also had the need to “Prove to her extended family and friends” that she was able to succeed in life due to her family upbringing.

Halfway through the conversation, she eventually broke down and shared that she was hurting and struggling internally actually. She was torn between the fact that she was a successful working mum but that meant there was not much time left for the children. So she wished that she does not miss out the growing years of her child especially the important milestones but yet wanted to be assured of the future.

We put things in perspective for them (showing them the financial planning projections by repositioning their existing resources with appropriate core evidence based investment strategies with us) and if she needed to take a more part time work role which meant a significant drop in her income. But she gets to achieve her goal of spending more time with the kids now till the time they turn late teenage years where they became more independent. And she still gets to keep some parts of the good lifestyles she is already having through proper planning and growing their wealth. They were still able to achieve all of their goals financially with confidence and reliability by starting to plan early.

Having a thought provoking conversation like that can be challenging and maybe painful at times, but if taken with a good intention to improve your lives for the better, you can come out of it more inspired about your future. Our strength is to integrate the life conversations and goals, to connect them to the financial planning side of things so that you live your best life forward.

So, what is it about the value of money that is important to you? Are you ready for the deeper conversation? Reach out and start to live your dream today!

Worried About Stocks? Why Long-Term Investing Is Crucial

May 30, 2022May 30, 2022
by Gregory Fok

By David Booth, Executive Chairman and Founder, Dimensional Fund Advisors

We are living in a time of extreme uncertainty and the anxiety that comes along with it. Against the backdrop of war, humanitarian crisis, and economic hardship, it’s natural to wonder what effect these world events will have on our long-term investment performance.

While these challenges certainly warrant our attention and deep concern, they don’t have to be a reason to panic about markets when you’re focused on long-term investing.

Imagine it’s 25 years ago, 1997:

J.K. Rowling just published the first Harry Potter book.
General Motors is releasing the EV1, an electric car with a range of 60 miles.
The internet is in its infancy, Y2K looms, and everyone is worried about the Russian financial crisis.

A stranger offers to tell you what’s going to happen over the course of the next 25 years. Here’s the big question: Would you invest in the stock market knowing the following events were going to happen? And could you stay invested?

Asian contagion
Russian default
Tech collapse
9/11
Stocks’ “lost decade”
Great Recession
Global pandemic
Second Russian default

With everything I just mentioned, what would you have done? Gotten into the market? Gotten out? Increased your equity holdings? Decreased them?

Well, let’s look at what happened.

From January of 1997 to December of 2021, the US stock market returned, on average, 9.8% a year.¹

A dollar invested at the beginning of the period would be worth about $10.25 at the end of the period.²

These returns are very much in line with what returns have been over the history of the stock market. How can that be? The market is doing its job. It’s science. Investing in markets is uncertain. The role of markets is to price in that uncertainty.

Investing in markets is uncertain. The role of markets is to price in that uncertainty. There were a lot of negative surprises over the past 25 years, but there were a lot of positive ones as well. The net result was a stock market return that seems very reasonable, even generous. It’s a tribute to human ingenuity that when negative forces pop up, people and companies respond and mobilize to get things back on track.

Human ingenuity created incredible innovations over the past 25 years. Plenty of things went wrong, but plenty of things went right. There’s always opportunity out there. Think about how different life is from the way it was in 1999: the way we work, the way we communicate, the way we live. For example, the gross domestic product of the US in 1997 was $8.6 trillion and grew to $23 trillion in 2021. (Read more about the merits of investing in innovation.)

I am an eternal optimist, because I believe in people. I have an unshakable faith in human beings’ ability to deal with tough times. In 1997, few would have forecast a nearly 10% average return for the stock market. But that remarkable return was available to anyone who could open an investment account, buy a broad-market portfolio, and let the market do its job.

Investing in the stock market is always uncertain. Uncertainty never goes away. If it did, there wouldn’t be a stock market. It’s because of uncertainty that we have a positive premium when investing in stocks vs. relatively riskless assets. In my opinion, reaping the benefits of the stock market requires being a long-term investor.

By investing in a market portfolio, you’re not trying to figure out which stocks are going to thrive, and which aren’t going to be able to recover. You’re betting on human ingenuity to solve problems.

The pandemic was a big blow to the economy. But people, companies and markets adapt. That’s my worldview. Whatever the next blow we face, I have faith that we will meet the challenge in ways we can’t forecast.

I would never try to predict what might happen in the next 25 years. But I do believe the best investment strategy going forward is to keep in mind the lesson learned from that stranger back in 1997: Don’t panic. Invest for the long term.

FOOTNOTES

²Data presented for the growth of $1 are hypothetical and assume reinvestment of income and no transaction costs or taxes. This value is for educational purposes only and is not indicative of any investment.

1+1 = 3 (Only we can do that!)

April 21, 2022April 21, 2022
by Gregory Fok

We all know the formula of “1+1 = 2”. And that is correct mathematically.

But in financial planning, we can have “1+1 = 3”! How is that even possible?

To begin with, in financial planning, there are many strategies we can adopt to be creative in the way we reallocate assets to be smart about it and give yourself and your family a peace of mind to be able to sleep well at night. The above is just one of the many ways we can do it for the families we work with.

It starts with a conversation of what is most important to you, because getting to know you and your dreams and goals are most important to us, to be able to find a solution for you. All families are different and these concepts do not apply to everybody. It only applies for the right types of persons at the right time, with the right priorities.

Intention and goal

We were having a conversation with a family recently and their children have just started working and most of their large financial obligations are over. They started to ask, what can they do better with the wealth that they have accumulated over the years. They know in their mind, that they want to live well in retirement. At the same time, they want to be able to leave a legacy for their children as a token for them to be remembered by.

Current resources

They had a specific bank account of $1mil in cash that was earmarked for their children to be left behind as an inheritance. This was also a backup resource in case they ran out of money many many years down the road. So they do not plan to touch this money as they want it to be protected.

Smart strategies

If that was their intention, I told them that they could reposition half of it out so that when they are not around, there will be a guaranteed $1mil given to the children, on the very next day. With the other half of it, they could either spend more for themselves during their retirement or they could invest it and grow it even further if they do not intend to use it anyway. And if they reach a very very ripe old age and they are still around and might have run out money, they can utilize these money repositioned which would have grown much more than the bank account as well.

And that is how we can have “1+1 = 3”!

The catch

Like I mentioned before, this idea is not for everyone. These smart strategies are generally designed by the wealthy, for the wealthy and for the families to continue to be wealthy. And a person must be generally in good health for this to work.

Enhanced strategy

Rather than just giving this out to the children as a lump sum, you can have this to be a “Family Bank” for the on going needs of the children and even grandchildren when help might be needed. And once again, these assets can continue to have the chance to grow well progressively through proper financial planning. In such scenarios, it could be “1+1=4”!

If you would like to find out more and explore how this can help, we will be happy to have an initial chat to see if there is a fit.

What kind of values do you want to teach…

April 7, 2022April 7, 2022
by Gregory Fok

We were having a conversation with a couple recently and they shared that they are concerned and worried that their children may not be able to manage the wealth that may be going down towards them.

As the first generation who have gotten themselves out of the poverty cycle, this couple had done well in their business and careers they have created. In the early years of growing up, the children were primarily taken care of by grandparents and the parents were hard at work in the business and careers they have set up for themselves.

Now that they are in their late 50s, through the decades of hard work, there is a certainly a sizable amount of wealth, business, property and investments created over time. The couple also knows that what got them to be successful may not necessarily be able to be repeated by their children.

Whatever that the parents had done, the children may not be able to do in the same capacity and the parents are worried for them (just like how all parents are). The couple we have met with would like to transfer the wealth, together with the values that comes alongside with it. This is so that there is some stewardship and responsibility that comes together with the wealth and it will not be frittered away.

What does the world promote?

The world promotes instant gratification. Everything needs to be done and gotten now. There is envy of your neighbour who seems to be doing better than you with the new house and new car. We also want to have that house and car here and now. Due to the envy, there is greed and a constant desire for more and more in whatever that we have. This leads to build-up of lots of emotions which can often lead to anxiety and fear. This usually leads to unfavourable decisions in the heat of the moment and this is something you would like to avoid.

What does engaged faith and values promote?

Faith promotes contentment and being present where we are today, irregardless of our situation. However, it is very hard, because our minds are always in the past or the future. Staying and observing our present to where we are now helps us appreciate our current being. When we can be present, we can then have a plan and move ourselves in the direction we want in a strategic and smart manner. This leads to peace and patience in knowing that it will take some time for us to get from point A to point B. Staying disciplined in our lane to keep us guided is also a virtue and value that faith can promote.

Values based financial planning process

This is where we are different. We listen to what you would hope to see in your children and instill even to the next generations to come. As the saying goes by Spiderman, “With great power, it comes with great responsibility.” Values based financial planning starts with the kind of values you would like to leave behind. Every family has different types of values you would like to practice and transfer to your children, so we want to know where you stand and how you would like that for your family. After we understand your values, we also try to understand how the process of making decision comes in your financial and investment plans. Sometimes, after listening, we notice that it is not aligned with each other. For example, while we want our children to be disciplined in the investment strategies, we continue to make emotional decisions that do not keep us on track to our long term goals. We sometimes go after the highest returns and ignore the risks that can derail our big financial decisions. It usually is not the highest returns that we are after, but to get to our goals with a peace of mind and be able to sleep well at night.

Your financial and investment planning strategies can make a difference not just to your own emotional and personal freedom. It can change lives for your families and the people around you. You have spent a lifetime to build your wealth, wouldn’t it make sense to spend a few moments to protect and preserve it, enhanced with good values.

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.