Retirement – Page 3 – Greg Fok Advisory

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.

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.

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.

What should I do with reduction of par policies?

June 24, 2021June 24, 2021
by Gregory Fok

Given the historically low interest rate environment we have been in for some time, with potentially foreseeable low rates going forward, the insurers have to reduce their projections to give consumers a more realistic range of projected investment returns.

Part of the reason is that insurance companies tend to have a higher bond allocation in order to give consumers the guarantees that the insurance companies provide customers but bond yields have been low.

To begin with, the primary purpose of insurance is for protection and safety. However, we also do know and acknowledge that insurance has it’s own limitations with regards to the long term investment returns.

How this impacts you is that if you are planning for long term goals like retirement, you will need to be able to have some of your portfolio into the longer returns of the market like a stronger allocation towards equity using the power of capital markets, but into a very globally diversified portfolio. But for someone closer to the retirement date, he would prefer to have it more in safety but there will still be some money that he may not touch till 5 or 10 or 15years later. So the right fit would be determined by your customised goals you have, where we can explore further together.

Therefore, we can add value to you to do an educational webinar if you have interest.

How do I build large amounts of money reliably and sustainably for long term goals like retirement other than from insurance products?
What is the research and evidence-based approach to investments that produces the higher expected returns?
How do I manage risks and volatility for myself while investing?

If you know of someone who would like to find out more on the above topics, I will be happy to have a session for you, your family, friends and colleagues. Thank you.

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.

Is there a reliable way to invest?

March 29, 2021March 29, 2021
by Gregory Fok

Investments and reliability hardly go hand in hand, I used to think. And investments are filled with ups and downs in the markets.

When I first started investing in 2005, I got excited. When I made that 10-20% return, I thought I should sell out before the markets go down. Sometimes I am right, sometimes I am not. And some of the time, that one wrong move will erase all gains made over the past few years.

Well, I had one objective – I needed to plan well for retirement for the long term which will be a few decades down the road. Is there a reliable way to get there especially since it is many years down the road?

My worries

What if I had invested and when I needed the money for retirement, the company I had invested into went out of business or is no longer a relevant business or unable to make the same profits? A few such companies may have been the recent SIA, Hyflux, Blackberry, Kodak etc.

Being able to predict accurately might have been due to skill or even luck at times. But to be able to do it right 100% of the time is almost impossible. Even Warren Buffet does not get it right all the time.

Investing on my own creates anxieties. Whenever I read the papers or look at my portfolio, I am tempted to make a trade. It is either to sell or buy and that creates additional stress for me that very day as I always hope to sell the highest or buy the lowest.

About 5 years ago, I have finally found a more reliable way to achieve my long goals with less emotions, less risk and yet higher expected returns, while building a large CORRE^TM portfolio. If you would like to find out more, you can send me a question.

Do you know the cost of delay?

March 1, 2021March 1, 2021
by Gregory Fok

Have you thought of letting your money work harder for you? Many people wished they had let their money work harder earlier but never got round to doing it due to the many distractions in life and the distractions will keep coming at you constantly if you do not keep a disciplined approach to start.

So how much does it really impact you as an individual?

Let us imagine 2 persons who are of the same age wanted to have the money available 25 years down the road, with an assumption of annualized returns of 7%pa.

Person A starts investing $1,000 a month for 25years, he would have achieved a projected $758,000.

Person B delays that by 2 years.

So person B starts investing $1,000 a month for 23years, he would have achieved a projected $641,000.

That difference of 2 years of delay would have cost him $117,000 which can be the equivalent to a downpayment of a HDB house! Can you imagine the significant difference over 30-40 years?

Should you not plan early so that you can ensure continued success without the need to worry in the future? Every paycheck counts!

Why should doctors invest differently?

February 22, 2021February 22, 2021
by Gregory Fok

As a doctor, you definitely have a great future ahead of you and will continue to be able to excel if you plan well and efficiently. Why should you invest differently from other people in general? Here are some pointers you need to take note of as it is often neglected by doctors.

Tax implications

You will probably end up hitting the highest tax bracket earlier than most professions. It also means that you will end up paying the highest tax bracket. Due to that, you need to try to ensure you pay fair income tax.

For an asset class like property, adding extra income to yourself through rental means that you will pay additional income tax at the highest tax bracket, over and above all the other maintenance costs incurred!

For an asset class of stocks and equities in other countries, you will subject yourself to additional tax which can be as high as 50% in some countries. If a person continues to hold on to that asset class, your family members will need to pay for inheritance tax when there is that wealth transfer eventually.

You make more money focusing on your practice than trying to time the stock market

Since you are able to earn a decent income, you will automatically be curious to find out how you can let your money work harder. As a retail investor, you tend to try to find a way to buy the right company, at the right time and sell it off at a profit and constantly find new opportunities. However, after a period of trying, you realize that it can be very tiring to keep chasing the next deal as not all opportunities work out well. You would be better off spending time focused on your patients and improving your skill to be able to earn more.

Emotional roller coaster

When you try to invest on your own, you tend to have to make decisions of whether to buy, hold or sell. As the markets can get volatile from time to time, you might get emotionally charged up just before a surgery or seeing a patient. You get distracted from your core work as a doctor and usually is not helpful in making decisions in your work. On top of that, when you are making decisions for your investments, being emotionally charged through greed and fear causes you to make multiple mistakes.

Taking an extreme caution towards your career choice and finances

Most doctors did not really choose their profession. They usually are smart and have good grades. The selection to be a doctor is usually a natural choice by default. Anyway, it is prestigious and not everyone could get into medical school. Due to that reason, most doctors are very careful and not too adventurous in nature, especially when it comes to their finances.. But if they were smart to tweak their asset allocation just by a little bit, on their overall portfolio, they would have gotten very different results over the next 20+ years, very often even double or triple the difference, if they are patient enough.

In short, we understand how doctors think and want to partner you to achieve your personalized dreams and goals in life. Through our 16 years of experience, we are able to value add to you so that you get back more time for yourself, minimize your taxes in investing, reduce your risks significantly while multiplying your net-worth. After all, isn’t that what you want, for a better lifestyle for yourself and family?

When is the right time to invest?

January 21, 2021January 22, 2021
by Gregory Fok

This is a question that I get asked alot. I used to ask myself this question many times as well.

You said…

Market is too high, you will buy when it crashes.

Market crashes, you said the worst is not over.

Market recovers, and you said it is a dead cat bounce.

Market breaks new high, and you said it is expensive.

Sounds familiar?

Look, the market is never the problem.

You will never know the right time, just like you never know when the whale will jump out of the water to let you take that perfect shot. However, evidence investing shows that decades after decades of investing, the markets will only continue to go higher over time, punctuated with a few recessions from time to time. But markets always go up over the long term.

Instead, determine your personal goals and time horizon and allow us to construct a CORRE portfolio with an asset allocation according to that.

Indeed, it is hard to time, just buy the entire market across the globe with the ability to get higher expected returns. Then, sit back, enjoy your coffee and focus on your life dreams!

If you really still need an answer to the question… If you had started to invest into a CORRE portfolio at least 10 years ago, you would be kicking yourself for not doing anything despite the swings of the markets. This statement would have been true 98% of the time.

Let time and I be your best friend.