Investments – Page 4 – Greg Fok Advisory

How do I be smart about transfer of wealth?

November 26, 2021November 26, 2021
by Gregory Fok

There are families we know who want to leave a legacy behind for the next generation or their specific beneficiaries. This can be very useful for families who already have some reasonable amount of wealth and they want to be even smarter. However, this only applies for clients who want to leave behind a legacy with their extra money. Do you know you can be very smart about how you want to design the gifting to them by planning smart?

Use discounted dollars

For example, if you plan to leave $1mil behind for your beneficiaries, do you know that you do not need to park that $1mil in cash just lying in wait? Depending on your age and health, you just need to set aside as little as $200k as a lump sum (if you are younger). This figure that you need to set aside will increase with age, depending on when you start the plan. The earlier you start planning, the lesser you need to fork out and the smarter you become. Or if you pay it out over a period of time, it could even be as little as $2k a month to ensure that the same $1mil goes to your family. Every scenario is different so please have an initial chat with us before you look into the figures. No matter how you do the calculations, it will always be more cost effective than having to set aside that $1mil on your own.

Use the power of compounding effect and growth

Whilst the amount of money is being set aside, it will continue to compound over time as well. Depending on how you structure the plan, the wealth of that $200k will grow over time and you can have some access to it at a much later age. If you be very smart about it, it can have a very significant doubling effect as well.

Guaranteed event

One day, all of us will end up going to heaven, so that $1mil will go down to our beneficiaries. This is an unfortunate event that will happen in ALL our lives for sure. It is just a matter of whether it happens, earlier or later.

To sum up, insurance was designed by the wealthy, for the benefit of the wealthy, for them to continue to be wealthy. If you want to be smart about your wealth and finances, let us have an initial chat to be able to multiply your wealth from all angles!

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.

What is the actual cost to stock picking?

September 2, 2021September 2, 2021
by Gregory Fok

When you read the financial media, there is a always an opinion from an economist to tell us, “This is the right time to sell. This is the right time to buy.” I bought into all that junk more than 10 years ago, thinking I was able to time the market. So almost on a daily basis, whenever somebody forecasted a particular direction, there is a huge temptation to do something to my own portfolio.

And it would have been increased trepidation when it was a stock or industry that I held that was being affected. Yes, I have to admit it was pretty exciting to see that you can make a quick buck over a short period of time, especially when I got it right. However, as the amount of stock portfolio grew, the emotions of fear and greed became more real as more is at stake. Which is why I only invested what I could afford to lose back then. (This is a bad strategy for wealth accumulation because the total asset allocation is usually tilted towards too much of cash or fixed deposits.)

When I was holding on to a stock that had gained 20% in value over a relatively short period, there is a strong temptation to sell out even though I know that the company will continue to grow and the fundamentals are there. Alas, when I decided to sell it, missing my appropriate price for a few days, the stock continued to soar by another 20%! Oh, I missed the boat, I would have thought to myself and would kick myself in the butt for selling it too early.

When markets turned topsy turvy during the financial crisis in 2008, all logic of buying in during the dips went out of the window, even though the company’s fundamentals are still strong. This is especially so when the crisis lasts for a few years. How many investors have the patience and tenacity to hold out the losses for 3-5 years and stick to their guns with all the bad news going on all around them, especially when media says this time is different. If you ever told any family member or friend close to you during that period, they would have all advised you to stay out of the markets in those very uncertain periods, for your benefit of not needing to lose sleep and money.

If a person had invested in during the period from 1990-2020 for a period of 31 years, into a well-diversified portfolio with equities and bonds in it across the world with almost 10,000 companies, you would easily have grown that same portfolio by 700-900% in value, depending on your risk appetite! Now, how many investors would have been patient enough to be able to capture that kind of gain? Hardly, because most investors (my past self included), would have had itchy fingers to try to put fingers into the pie to either sell out too early or attempted to time the market which we all know from history that it is something very difficult to do.

It is not just the financial cost of not seeing the long term gain in the markets, but the mental anguish, anxiety and emotional stress you go through regularly to find out whether the company can actually survive the next storm. Reading the newspapers and watching the TV can in fact create more stress due to that reason because all the financial media is doing is to force us to take some form of action and that split second decision actually creates mental stress on ourselves. And from history, many companies used to survive and thrive for many decades. In today’s context, the life span of listed companies is getting shorter, so do you want to continue to take that risk with your big goals like retirement which can span for 20-30 years?

So is there a different strategy that we can help you take? I have changed my strategy over the course of time and understand that human behaviour is a bigger component of investing successfully. And that has led me to save time, reduce anxiety and led to more financial wealth as well with a worry free retirement.

Would you like to explore an initial conversation together with no pressures to make any decision but to see if there is a fit in journeying together? Send me a message and we can have that initial conversation at my cost.

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.

Does it make sense to invest on your own?

July 14, 2021July 14, 2021
by Gregory Fok

I met with a friend recently who has been investing on his own and he deems to be quite good at it, but he feels that it may not be easy to achieve his own retirement goals.

Upon prompting and asking a few more questions, I found out that he was trying to trade the market to try to consistently achieve 5% on his own and through his experience, it is not very easy.. He stays up at night to keep watch on the US markets and moves in and out between various companies, depending on his “watch list”. He gets right decisions probably about 8 out of 10 that he makes.

But even with that, he still feels that it is not easy to get a annualized growth year on year, over a prolonged period of time.

Whenever a company price goes up “too much”, he feels it is time to sell and keep the profits. When the company price goes down, there is the fear that the company might go into a downturn spiral due to some negative news. And tracking all these on a frequent basis takes time and emotional efforts to tide through the swings. And this does not even include the crisis periods that come along occasionally every few years.

It sounded like what I used to go through myself as an investor previously as well, unitl I changed my strategy a few years ago.

So I shared that the broad markets actually gave a return of 9-10%pa historically over the long term but yet many self investors have not been able to capture returns anything close to that over a 20-30yr period. Part of the reason is due to the emotional roller coaster we go through in our brain.

The human brain is wired to lose money in investments. When markets have gone up, it is hard to stay put and not sell out. And when markets are going through drops, it can be very difficult to maintain composure and stay invested, while topping up to take advantage of the opportunities. Our human mind is designed to keep us safe so anything out of the norm disrupts the pattern and we make emotional decisions driven by both fear and greed.

This becomes even more challenging when dealing with larger chunks of cash when investing. For example buying stocks with a $100k vs $1mil, which is primarily for long retirement funds is very different.

Do you know that there is a way to help you to…

1) simplify your life in decision making – the lesser decisions you make, the lesser the mistakes.

2) give you back precious time for your life – to focus on your varying passions.

3) give you the confidence to get to where you want in a way that is reliable and sustainble, which requires less speculation.

If you think you or your friends sound like my friend above, who are getting nowhere with your own approach to investing, we can have an initial chat to see how we can help.

How high income earners manage their financial risk?

July 7, 2021July 7, 2021
by Gregory Fok

I was speaking to a senior chief executive of a MNC recently. He shared with me that he was so successful at his work that he had no time to look after his personal finance which is a common experience.

Here are some things I noted from the conversation.

1. Senior directors tend to be very busy and alot of their time is devoted to work with limited time for family.

2. They are worried and afraid that their high income ability tend to end earlier than most of their peers and they find it difficult to be rehired at a similar position or pay scale.

3. Their stress level is very high which makes them unable to continue the hectic pace for their careers over a long period of time.

4. The stakes are high to get to that position so they may not have many close friends they can share their real struggles with within the organization or even outside.

What can they do?

Find a trusted advisor who understands you and appreciates the situation you are in when planning for you.

Structure an investment plan to build a nest egg for themselves as quickly as possible in shorter periods and as early as they can. Time and automation becomes your friend.

Protect your income ability against unexpected health risks of critical illness as you have a strong earning ability over a 5 year period.

The investments should be automatically deducted from your income account and it should be a self rebalancing portfolio. This minimizes decision making which reduces mistakes and risks along the investment journey as well.

Build skillsets and close relationships with clients, staff and peers around you so that you become more difficult to replace as relationships and networks are an integral part of building any business.

Take time once or twice a year to focus on the important but not urgent things in life and you will live a much more fulfilled and balanced life.