Retirement – Page 4 – Greg Fok Advisory

My investment strategy is getting me nowhere

December 9, 2020December 9, 2020
by Gregory Fok

A recent conversation with a client was investing into stocks. He was trying to study and buy into companies at low prices and exit them at higher prices, shifting between various companies he has been tracking that are typically stocks in Singapore. Unfortunately, some companies have been suspended, some gone down so low that it is not even worth looking at, some have done very well but he had exited way too early.

After several years of investing, he was getting nowhere near his goals as he was always happy with that few thousand dollars that he made along the way. He will pull out from his investments as he was also afraid when the next wave of change might hit that made the company go south or obsolete as many other blue chip companies had gone in that similar direction. Some examples would have been SIA, Hyflux, Kepcorp, Singtel, SPH, Kodak etc.. When we calculated his retirement goals, it was a big amount and he knew straightaway that he had to change strategy.

Core and satellite strategy

He needed a core strategy that builds wealth in a global diversified manner across the world, not just focused only in specifics like US, Europe, China or a concentration into a few technology stocks. He needed it to remove the pain of seeing some companies go up and down with no bright future ahead as well. He wanted to be able to sleep in peace in downturns which could come in various forms. This is for a long term retirement strategy. He needed the money to be there available for retirement when he has slowed down in his income or stopped work totally. Isn’t that what most of us are hoping to achieve in our lives?

The satellite strategy varies from person to person and one needs to take a small allocation to position that in place to give the icing on the cake. I used to have this problem as well and after shifting my strategy about 5 years ago, I have managed to build a CORE portfolio of 7-8x in size from what it used to be previously.

Do you have a CORE portfolio strategy built in place for you for retirement that you can invest with peace of mind and yet achieve better than average market returns than most retail investors? Connect with us to see to share your experience and see if we can help you get you to your goals in a more comfortable manner.

Why do I need a financial advisor?

November 6, 2020November 6, 2020
by Gregory Fok

One of the common questions I was asked is to the one above. Not everyone needs a financial advisor but most people would want one if there can be value. Value to bring you limitless possibilities to design your life the way you want it.

1) I cannot see my own blindspots.

We always see what we know and plan ahead. But there are blind spots that are not within our experience to notice or look out for. Having a 3rd party see your blindspots allows for awareness and reduction of blindspots and risks.

2) We help you be your gatekeepers.

When we are emotionally charged up due to fear or greed or just affected by life, we tend to make the easiest decision which most of the time is not the wisest one. We help you to make decisions in your favour and not just take instructions.

3) We stretch your financial imagination.

When you plan on your own, you limit yourself to what you can see. When you plan with an advisor, often, you stretch your financial imagination beyond what you can even imagine. As iron sharpens iron, so does one man sharpen another.

4) We help to put things in perspective.

When we are in our own world, we seem to be struggling in many areas of life, especially financially. But when we put things in perspective, we either have an awesome life or the small things do not matter that much.

5) We help you peer into someone else’s experience.

We learn from older folks who have gone through much of life and bring that experience into the lives of those we meet to learn from the wise and learned.

6) Wisdom of life that is not just found in money.

An experienced financial advisor does not just talk about the financial aspect but more importantly the family and emotional aspects that hold more weight in decision making.

7) Provide you insights.

Nuggets of insights brings the ability to marry money, values and emotion to bring together proper financial planning for a human being.

8) Gains you time and quality of life and not have to worry about money.

Money is probably the number 1 worry most people have in life. An experienced financial advisor minimizes the fear through prudent planning and allows you to focus on the important things that money can bring to life. Eg dignity, maturity, quality of life, stewardship.

Interview and speak with an experienced and trusted advisor to provide you some insights.

Should I leave my children properties as an inheritance?

October 14, 2020October 14, 2020
by Gregory Fok

Properties are an asset that is generally large in value and very illiquid. If it is designed to be given as a way of transferring wealth to the next generation, it would be actually one of the most ineffective tools, from experience. Why do we say that?

Common property disputes

If it is given to more than one party, there are many decisions to make along the way. For example, should the beneficiaries decide to keep the property, rent it out, sell it and at what price and for how long do they wait before the decision is made. We had an incident where a 3 room HDB flat was sold by one of the children too quickly before even trying to get “3 quotes” to get the best price. A small incident like that could also cause potential unhappiness. And throughout the decision-making process, anyone of those decisions made mentioned above can create a point of contention without even knowing it could have hurt a family member unknowingly along the way.

Costs incurred is high

When you buy a property worth $1.5million, inadvertently, you end up paying way more than $1.5million due to renovation, stamp duties, loans, interests incurred. This probably might end up even as high as 1.7 – 2x the amount the value of the property to about $2.55mil to $3mil.

Maintenance costs increases with age of property

As a property ages, there will be costs incurred like maintenance, painting, wear and tear of parts of the house. The older the place gets, the higher the costs of upkeeping it and the beneficiaries will have to bear the costs of maintenance which can get quite high with time.

Sways your asset allocation significantly

When you buy a property, it usually forms a fairly significant portion of a person’s total asset allocation. A person should have a balanced approach towards retirement planning and start of liquify his assets as he gets older for ease of management as well. Uncontrollable events like an illness, a disability, medical needs or loss of job can also create an additional stress on the person or family who might need liquidity for whatever reason and the property is known to be a very illiquid asset.

Tax issues

Here in Singapore, we face huge tax issues through normal stamp duties, ABSD (Additional Buyer Stamp Duties) and SSD (Seller Stamp Duties) which can affect beneficiaries if it is not designed well for estate distribution purpose. The total tax can compound to be more than 20% as a whole.

Restriction from purchase of HDB

When a person inherits a property, it could also hinder a child’s ability to buy a HDB as a privilege given to all Singaporeans as a level playing field.

What other options?

We find ways to value add to the family overall through detailed understanding of the intention, potential issues and eventual objectives of the family or business. We use instruments that are more liquid, cost effective, hassle free, maintenance free, guaranteed and free from tax implications with an ease of distribution of wealth to future generations as well. This is through proper education and understanding of how we can value add to the entire family where the first generation gets to maximize their retirement and the children still get their fair share of inheritance.

And you still eventually will have your last property you are staying in to be given, please plan well for it to be distributed. Plan well on both the financial and the legal aspects of it.

Planning for short career lifespans

August 28, 2020August 28, 2020
by Gregory Fok

We have worked with individuals with short career lifespans through our time.

They typically have very high earning abilities in a short span of about 2 decades.

Historically, sportsmen, celebrities, surgeons, media personalities fall into this category.

So they have to make the most of their youth and their time and expertise.

Unfortunately, when they are in the prime of their careers, they usually assume that this will continue for them all the way forever. The reality is that once that season is over for them, things can change pretty drastically pretty fast.

More recently, joining the spotlight comes high level corporate staff who are Managing directors and C level management as well of MNCs. Adding to the list are also consultants who work extremely hard and travel non stop and health easily can take a toll.

Due to the covid 19 situation, companies cut the senior levels very quickly when times are bad. And if that same senior executive had just committed to a huge mortgage or is used to a certain lifestyle, he either finds it difficult to take a humble pie to start on a different track or accept a much lower package elsewhere.

We all know someone like that, don’t we.

If you knew that you only had a good 15-20yrs of high income, what will you do differently in financial planning?

Maximized retirement funds

July 23, 2020July 23, 2020
by Gregory Fok

What if you could spend every single cent that you have for retirement and expand it more? And on top of that, you will leave a guaranteed legacy to your children with minimal cost?

When we work with people reaching retirement or already retired, they tend to worry about these few things.

Will my money be enough for my retirement years?
How long will I live?
What if I fall critically ill or become disabled due to health or accident?
What if inflation eats into my future spending?
Can I leave a legacy for my children at a minimal funding whilst still spending my way through retirement?
What if financial markets cause havoc on my investments?

By proper asset allocation and planning, you can easily enhance your wealth by up to 4-5 times what you currently have. The earlier you start planning, the smarter your planning becomes. Engage your first conversation to see if there is a fit, trust and experience with your advisor and journey with them on a long term from there.

Should I be my own doctor?

June 15, 2020June 15, 2020
by Gregory Fok

If you had an option, you could go to a part time junior doctor under going training and ask him to do a surgery on you.

Or you could go to a trusted experienced surgeon who has seen 1000s of patients and have been doing this for the past 15yrs and could immediately understand your problem, get a diagnosis and help you to draft a treatment plan.

Which will you prefer?

When it comes to family wealth planning and investing, you might unknowingly be doing the same.

We have seen consumers trying to DIY. They take an approach where they try to read the markets, trends, study companies and grow their wealth, protect their income, family and do all this part time whilst they are busy working in their main job.

At best, after all your effort you put in as a consumer, you become a part time surgeon with minimal experience to speak of.

Would you be confident to allow yourself to be operated by this part time surgeon, who does not have enough experience seeing enough patients to operate on you?

If you do not, please instead spend time to interview and look for a trusted advisor whom you can journey with on the long term and provide holistic financial advice.

It saves you lots of time, money and emotional pain. All that time and energy can be then converted to spend time with your loved ones and fill it up with your passions in life that are important to you.

Go and spend your time to live a life of possibilities!

Common overlooked fact by doctors

June 10, 2020June 10, 2020
by Gregory Fok

As doctors, you spend most of your time focusing on your craft as a medical specialist..

Your work demands long hours and you even sometimes have to skip meals. We specialize in working with doctors so we understand what you go through. All your time is spent either working or studying with hardly any time left. If you get married and have kids young, it accelerates the sleep deprivation cycle.

Time passes so quickly and by the time you get a little more control on your life, you are probably about almost 40 years old. That is the main reason why most doctors might eventually decide to move to private clinics or set up their own medical practice before the control happens.

Whilst the busyness of life takes over, health deteriorates and some doctors might get hit with the same medical conditions that they were treating the patients for.

When that happens, the income flow suddenly stops.. Life is affected, work is affected, income is affected, but expenses of the house mortgage, the car, the family continue. If you have your own clinic, you still got to pay rental, pay for equipment, pay for staff salary and the list goes on…

What if you took a few minutes every year just to review your overall financial situation and ensure that your income can be intact and even have a sinking fund that can tide you and your family over the next 10-20yrs without a need to worry when bad things happens?

Wouldn’t that few minutes of that precious conversation allow you to have more financial freedom and protection?

We specialize in working with doctors and know what you go through. Let us have an initial chat.

Shall we pick the winners ever year

May 28, 2020May 28, 2020
by Gregory Fok

So often, we have tried to outperform the market by doing our homework and trying to decide where the next winner will be for every year.

Picking the winners

It reminds me of the time many years ago, when I tried to pick out the stocks as winners every year to get my hard earned savings to work harder. And after investing for about 10years or so, I realized that I could make 7 right decisions out of 10 companies, which probably is quite good, if you ask most seasoned investors out there. But all it took was one wrong move and that could wipe out all the other good decisions made through the past 10years.

Mental cap

One top of that, when investing into stocks, there was a mental cap of how much I will be willing to invest into that company. Everyone has that mental cap. You will know it yourself. When it became too much for comfort, I stopped investing and the amount just hovers around that region for many years and when market risks increased, the emotional roller coasters take over and wrong decisions are usually made. If I believe so much in the company, I should be adding on even more when companies are at a cheap. But the haunt of Kodak, AIG, Hyflux and SIA keep coming back and we know not all companies last at a previous price forever.

Buying low and selling high

It does not help with the need to make educated decisions of what to sell and who to sell when markets were soaring and which to buy in the rotation during different times of volatility. Again, this time is different is a mantra that most stock holders find difficult to understand at various periods. If you just look at the chart above, you will see that every year, different asset classes hold the pole position. It’s almost an impossible job to do to ensure that you get it right every year!

Change needed for better results and lower risks

I knew about 5 years ago that change was needed and I adopted a different approach which could relieve me of the emotional roller coaster, save me lots of time so that I can spend it on my career and family, allow me to confidently add on aggressively during a downturn without worrying about companies collapsing in front of me. With the change, I built up about 5x of investments what I used to have in my previous strategy, in half the time.

Coming back to the question, can we pick the right winners every year? If you are a seasoned investor, you know what the answer is.

If you want peace of mind with more time on hand to do things you love, why shouldn’t you have an initial chat with us to see if there is a right fit.

Our brain is wired to lose money!

May 14, 2020July 13, 2020
by Gregory Fok

Do you know that our mind and brain is designed to lose money?

Imagine this with me. You are walking happily along the streets and suddenly, in front of you, there is a huge explosion! What is your first response? Is it to stand up and run towards the explosion? Or to duck down and run away from the explosion?

The amygdala or “the alarm” part of our brain reacts to fear, danger and real or perceived threats. It was designed to protect us from threats and regulates our emotional state.

Likewise, in a market crisis and stocks are falling, your brain’s initial response is to avoid the markets. This is called behavioural finance and our natural response to market crisis.

There was a survey done on participants with damaged amygdala who were invested during a market crisis. In fact, they were able to make better decisions when it came to investing before, during and after the crisis.

In short, our human brain is not designed to help us be successful in investing.

There are seasoned investors who have invested for many years and when the amount gets very large and the market falls are significant in the later years, wrong decisions are being made at the worst of times.

However, when you have a gatekeeper to keep your emotions in check, whilst trying to achieve your own long term personal goals, this helps to minimize the likelihood of emotional decision making. We are here as licensed financial advisors, who are gatekeepers for your wealth to ensure that you make sound decisions that do not detract you from your personal goals. On top of that, we help you make great decisions in times of crisis to build you further propel you towards your goals.

Measuring the distance

March 21, 2020March 21, 2020
by Gregory Fok

With the volatility in the market, it can be very scary and unnerving at the same time.
This also leads to potentially making emotionally charged decisions – which leads to decisions based on fear or greed. That normally leads to regrets further down the road on hindsight.

The important thing to do now is to focus on your goals.
For example, if I asked you to measure the distance between Changi Airport to Jurong Point, would you take a measuring tape and stop to measure every 3 steps before you reach Jurong point? Or would you use a vehicle, chart the starting point and end point and move towards your goal. Maybe you might stop to check every 5km to see if there is a faster route available, but definitely, you do not need to check every 3 steps.

It’s the same when it comes to retirement planning. Most of the time, we invest because we have a long-term goal like retirement which is a far distance away. So it does not make sense to keep checking our investments every other day. Whenever we check it, it might just lead to stress and emotions of greed and fear take over.

At the same time, there will be opportunities for a faster way to get to your retirement. This will be one of them and you might just miss out the “Sale” that comes a few times in your lifetime. This kind of sale of this magnitude will not come very often but it will be the road less travelled.

So here are a few tips.

1) Focus on your long-term goals and not get distracted.

2) If you have extra cash over and above your 6-12 months emergency funds, you can find strategies to deploy this money during this opportunity.

3) Find risk and non-risk instruments to give you peace of mind.

4) Invest into Global CORE portfolios that are rebalanced by professionals so that you do not need to stress about doing that on your own and after you invest during this period.

5) Do NOT peek at your statements if you are already invested or going to be investing this period.

6) Finally, pls do not read the news too much. It can be mostly depressing because bad news sells. Instead, spend more time with your family and do things you love and go out into the sun more often.

If you have a doctor, business owner or senior management whom is trying to get an opinion from their wealth advisor and is not able to do so, I will be happy to connect with an initial chat.