Planning for doctors – Page 2

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.

Why are we different?

January 27, 2022January 27, 2022
by Gregory Fok

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

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

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

A few days later…

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

Learning points…

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

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

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

#stewardofwealth

#ihavethebestjobintheworld

#ourvalueasadvisors

#MakingDreamsComeToLife

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.

Plan smart in your business with partners

October 26, 2021October 26, 2021
by Gregory Fok

Do you like to be forced to sell your personal assets at the wrong time to buy over your partner’s shares? I was approached to raise funds for a couple of million dollars for a partnership and they were distressed and were not able to think clearly ahead.

Background

2 partners came together to start a company more than 30 years ago and had built a thriving business together. About a year ago, they were given some advice to do a buy sell agreement in the event of death of either of the partners. However, the outstanding problem was that it was not a “funded agreement”.

When Partner A passed recently, there was an agreement for Partner B to buy back the shares. This allows the family of A not to get involved in the business that they did not understand. Partner B was able to continue the business and they do not need to share the profits of the future business. But the problem was that Partner B had no cash on hand to buy over the shares immediately.

“Having a reluctant partner can be like cancer that grows and potentially creates lots of problems in other parts of the body”.

Action was required immediately. So they are forced to liquidate cash, sell investments and properties almost on an immediate basis. We also know that it takes some time before the money is collected from the sale of the property, if they actually can get a good price.

“This is a costly exercise!”

Even if they are able to raise $2M, would you as Partner B want to pay $2M full in cash for this exercise of transfer of funds when there are other options? What is the alternative? If they had funded their buy sell agreement in advance with discounted dollars, they do not need to come up the full amount. In fact, depending on how you structure it, it could cost as low as 1-3% per year of the $2M and the full amount of cash will be available immediately without the need to sell your best assets at the wrong time.

There are also many other considerations with regards to business planning but this is important if you have a partnership together with another party.

If you are a business owner or know someone who is in partnership with another, I will be happy to have an initial conversation to see if there is a fit on either sides to journey together and be your trusted advisor.

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.

Is there really a need to plan?

July 23, 2021July 23, 2021
by Gregory Fok

I was speaking to a couple on a meeting a few days ago and they both shared that they are both generally high-income earners and are very comfortable where they are right now. They said that even if they do not invest their money, they assume they would still be fairly comfortable when they retire 20 years from today and have enough money to last their whole lifetime.

So I suggested 3 things…

1. The above scenario totally works out as long as the assumption is that they continue to get their income going for the next 20years and they are kept healthy and they do not lose their job. Can they guarantee that it will not happen? Would a backup plan make sense to buffer that potential loss as life can be filled with uncertainties?

2. The second is more from a stewardship perspective. Doesn’t it make sense to be a little smarter and responsible with what has been gifted to you as resources for your way of planning? For sure, we do not wish to be the steward who buried the only coin given to him under the ground as shared in the bible. And eventually find that the only coin that was tasked to him under stewardship was to be taken away as he was not a responsible steward.

3. And finally, wouldn’t you like to be more confident in knowing where you stand, where you will be heading and if your assumptions you are going to adopt was correct? We used a software programme to allow a one-time keying in of their financial info (all in 20mins or so) and project that into the future and for them to keep and maintain their lifestyle. What they were surprised to find out was that they actually do “run out” of money by age 75 if they want to maintain their lifestyle. All we needed to do is to reallocate some money from the left pocket to the right pocket and they can be able to maintain their lifestyle till 99. And still have some money left over for the children without the need to take significant risks.

What this shows is that we are able to help families save time, build confidence of their future and simplify their lives to get them to where they want to be.

If this story sounds like familiar or you know someone going through the similar experience and asking the same questions, we will be happy to be connected for an initial chat to see if there is a fit.

Plan your investments according to time horizons

June 28, 2021June 28, 2021
by Gregory Fok

Whenever someone asks me how much I should invest and what portfolio allocation should I choose, I would usually reply back with what do you actually want to achieve with this investment? Based on that, I will plan accordingly.

The key thing to note is the shorter the time horizon, the lower the risk appetite should be and more allocation will be towards bonds. The longer the time horizon, it can be a higher allocation towards equity risks.

So one of the things we do is to diversify in terms of time frames for the money required.

Even if someone is going to be retiring in the next 1-2years, it does not make sense to put all into cash or primarily into bonds.

There will be some funds a person will need within the next 1-3yrs and those should be in cash or fixed deposits..

And there will be some funds that you will not need till 3-5yrs later, 5-9yrs later, 10yrs later…

For example,

3-5yrs is for a general allocation of 40E/60B..

5-9yrs is for a general allocation of 60E/40B..

10yrs and above is for a general allocation of 80E/20B..

What is most important is to identify your objectives and be clear about it together with you and we can structure the planning for you and journey with you through the period of time to get you to your goals clearly, confidently and in a simplified way of strategic planning with less speculation and more wealth.

Evidence Based Investing

June 15, 2021November 20, 2021
by Gregory Fok

In medical science, based on research, you are able to find ways to give the patient the highest possibility to reaching their goals of healing themselves. In financial science, based on research, you are able to use historical data to give the investor the highest possibility to reaching their long term retirement goals.

“We want to help you to reduce speculation and give you more wealth and peace of mind.”

Some of the myths

1.Investing is gambling.

However, if you look at capitalism and how it works, markets reward disciplined investors who are willing to stick through the longer period of investing time frame. Ownership into shares of a diversified pool of profitable companies that can generate future cashflows for many many years allows value to be created. Innovation and the need to want a better life through basic human consumption also leads to the value of companies increasing.

2. Timing is everything.

The advertisements and news of sensation sell. When to buy, what to buy, when to sell, what to sell… The evidence is that trading can be costly, both financially and even more so emotionally for you and your family.

3. Superior skill leads to better performance

It has been shown based on data that there are few professionals who actually beat the market. If professionals are finding it hard to do it, what more for an individual investor who does this for his own retirement? It has been evidenced that most individual investors underperform the market by a huge margin due to human behaviour and biases over the long term.

Since markets reward investors for taking risks, one of the primary decisions in designing your investment portfolio is to determine which risks to take and why you are taking it.

Academic research has identified several characteristics, or risk factors, that drive stock and bond returns. Eg, equity, value, small and profitable companies.

Each of these factors has been shown to increase the return of a portfolio. For example, the equity premium says that stocks tend to outperform bonds. That doesn’t mean that everyone should only own stocks. While stocks tend to perform better than bonds, they are also much riskier, and usually shouldn’t be used for short-term needs.

Our job is to help our clients formulate a strategy that exposes them to the appropriate risks to help them meet their personal goals, depending on their time horizon.

Reduce your wealth and health Risks

May 18, 2021May 18, 2021
by Gregory Fok

I met with a friend who was referred to me about few years ago.

Her Mum was about 60 years old and had some existing medical conditions. Given her Mum’s health condition of blood pressure, diabetes, cholesterol etc, she knew it would be difficult to get her Mum insured, but she told me this. “I would rather pay a few hundred dollars every month than to be hit with a sudden big amount at the most unexpected time which I may not be able to afford..”

Using my expertise, we searched for an insurance company who was willing to insure despite having some basic existing medical conditions. Of course, the amount was limited but something was still better than nothing at all. We proceeded with the application and some simple medical questions. Her Mum was insured promptly.

About a year later, I received a call. Her Mum went in and out of hospitals as she was unwell, and was later found to be diagnosed with cancer. Being unable to work, her Mum loss her income during that period of time and that also affected the family members who had to take turns to take care of her. There was emotional stress, physical stress and huge financial stress at the same time.

We started the claims process, and after a very detailed check, the insurance company paid out a cheque to the family which was substantial compared to the cost of premiums funded. Definitely, there was still the emotional and physical stress, but when the financial stress was lifted from the whole family, there was room for comfortable adjustments so that things are not as difficult as what it would have seemed initially.

When we are touched lives for the families we work with to the point of making a BIG impact, we feel appreciated for the work we have done.

That is why people come to us to be smart about how they should manage their finances so that they do not need to worry about the unexpected scenarios of life, whether they live too long, die too soon or get into accidents or critically ill in between.