Retirement – Page 4 – Greg Fok Advisory

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.

9 new year financial resolutions 2021

January 8, 2021January 8, 2021
by Gregory Fok

1. Save more money.

2. Start a proper CORRE investment strategy by reallocating your assets to reduce risks while getting similar returns.

3. Review your insurance especially for critical illness, personal accident and loss of income due to the above.

4. Pay off your debts.

5. Find ways to reduce your tax.

6. Review your existing investments to find a way to reduce risk whilst achieve similar or higher returns.

7. Review your mid and long term goals to see if you are on track.

8. Find a charity of your choice or family to give to.

9. Plan your estate and wills.

Markets are at all time high

December 15, 2020December 15, 2020
by Gregory Fok

Now that markets are at all-time high, most speculators will probably feel very uncomfortable now. “What should the next step be? Should I sell, wait or top up?” How do I invest with a peace of mind?

For those who are invested into single stocks, seeing your stock go up sky high can be scary because you never know what might happen next. Some of these examples include Hyflux and Kodak or even SIA which could potentially have changed their future outlook.

However, if you are a long term investor, looking back in history all the way back to evidence from year 1926, you would realize that the broad diversified markets always go up. And if an investor had just held a CORE asset allocated portfolio and rebalanced along the way, he would have been handsomely rewarded over the decades (as shown in the picture). Individual stocks would not have performed the same way. There are only a handful of stocks that might have been around for the same period of almost 100 years. Most of the individual stocks would either have been obsolete, closed down or disappeared over the years with the evolving markets and industries.

If we are building CORE portfolios that are broadly diversified across the world with proper rebalancing done over the years, it would be fair to say that the values in the future will be higher than it is today, whilst going through some crisis along the way (this is based on evidence investing).

If you would like to find out what CORE portfolios that can help you achieve your individual dreams and goals, whilst giving you peace of mind, you should always reach out to have a conversation.

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.