Retirement – Page 5 – Greg Fok Advisory

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.

Correction and bear markets – good or bad?

February 26, 2020February 26, 2020
by Gregory Fok

A correction normally refers to a drop of at least 10% in the price of a stock (or stock market) from a recent high.

A recent movement in the market has sparked some huge responses in the past 2 days and it would be interesting to note that speculators tend to flee the market while long term investors start to take this as an opportunity. Here’s an explanation of the difference between a correction and a bear market.

A correction is different from a bear market as the bear market is defined as a fall of 20% or more from a stock market’s most recent high.

Corrections and bear markets may sound terrifying, but we shouldn’t fear them as they are common features of a healthy stock market. They are usually short-lived too.

According to Fidelity, since 1920, the US’ S&P 500 index has experienced on average a pullback (defined as a brief 5% reversal in the price of an asset) 3 times a year, a correction once a year, and a bear market every 3 years.

For those investors with a long-term view of the stock market, corrections and bear markets provide great opportunities to buy stocks in wonderful companies at lowered valuations.

Is this a good time to invest?

February 17, 2020February 17, 2020
by Gregory Fok

Is this a good time to invest?

Wherever there is crisis in the economy, the question comes up more often than ever.

And during the past month, this has been a common question that came up so I thought to pen my thoughts down..

I had a doctor friend who was recommended to speak to me after he exited the market when Singapore turned DOSCORN Orange and realized his losses because there was so much fear on that day. Herd instincts took over Singapore by storm at the supermarkets just like how it had taken over in the stock markets. My friend figured that I could possibly help him better.

Inexperienced investors can be caught on the wrong side of the coin at that time.

Traders and analysts are trying to predict the trend in the markets of what will pen out over the next 6-12 months, but how many actually get it right? Let’s go back a bit in history. During the 2018 US-china trade war, everyone thought that 2019 will be a washout year, instead it turned out to be one of the better years of investing. And investors who stayed on the sidelines would have missed out on that massive gain of almost 20% in 2019 in a total PORTFOLIO.

The important thing to note is that markets are always forward looking and they would have priced in the forecasts of the markets ahead of time as well.

Anyone who tries to tell you where the markets are heading are mostly making guesses. The honest answer to the title would be that it is impossible to know where the markets will turn on the road ahead given that the markets are also driven by emotional sentiments and mostly not by logic.

With the current growing concerns of the COVID 19, supply chains would be severely disrupted. Those countries that rely heavily on international trade and tourism like Singapore, would be a huge cause of concern. However, just like SARS, H1N1 and the other flu like outbreaks we had in the past 2 decades, over time, life will eventually go back to normal and that is when markets will float back up again.

So since it is almost impossible to predict which countries or economies will go up and down, we believe a well-diversified portfolio across the entire world (US, Asia, Europe, emerging markets) with a good mix of asset allocations that fit your risk profile would be best suited to invest for the long term. Ensure that there is active rebalancing done as well, so that you do not hold on to losses nor get too excited with significant gains. Rebalancing helps to create a smoothening effect to your portfolio.

In fact, any pull backs in the markets present buying opportunities for LONG term investors.

Go back to the basics of planning of patience, prudence, discipline and pray before you make a decision and work with an experienced advisor who has gone through multiple crisis and you will eventually turn out better over the long term.

Should a doctor invest in stocks or his/her own…

January 20, 2020January 20, 2020
by Gregory Fok

I have met some doctors recently with insightful conversations.

There was this doctor who was proud to mention he made 10% on his
investments on a long term basis. It worked out to be about $10,000 from his principal of $100,000 put aside for stocks.
And that would include the emotional swings in the
company stock prices and decisions to make, which he shared that it took time to track and monitor
which sometimes gave him a “heart attack” especially in 2018.

Based on his overall portfolio of cash around $500,000, if you do a total
portfolio calculation, it would actually work out to be less than 2%!

I gave him 2 suggestions..

1) Invest time into his practice. By focusing on career, he could easily have generated more than $10,000 over the years.

2) Pay someone to create a CORE portfolio with a worldwide objective,
constantly managed and rebalanced to keep your risks in check. This
eliminates risks of specific companies and markets and with a diversified
portfolio, with less volatility and reasonable returns which easily can be
more than $10,000. And this offers a peace of mind which moves the
portfolio within a range of comfort for the individual.

Does it still make sense to invest into property?

December 30, 2019February 16, 2020
by Gregory Fok

Does it still make sense to invest in property today?

Some factors have changed today’s environment.

Stamp duties, including ABSD

Hefty stamp duties to the government are laid out right at the beginning of the purchase of the property. Depending on the number of properties, it can be as high as about 20%.

Tax

Properties attract tax over the income and the property tax that needs to be paid. This is usually glossed over and ignored.

Potential growth value

Due to the government measures, the rate of growth will be different in order to keep housing still relatively affordable.

Rental income

The yield for rental income has been dropping over the years with a larger supply of units.

Macro environment

There’s an addition of housing supply of another 30,000+ units in the market in Singapore. Developers are also looking outside Singapore due to the increased risks.

Property is still an instrument that is needed for people to stay and live in.

However, if a person would like to invest, there are numerous other instruments that can potentially do the same or better in the longer term with reduced costs and risks.

What is the average investor returns?

June 12, 2019June 12, 2019
by Gregory Fok

What is the average investor returns?

I was in a conversation with a ex remisier..

He had been investing for the past 15yrs and has gotten no where when it comes to his investments.

He tried all kinds of investments, stocks, options funds and even forex.

His verdict:
I made lots of money. I also lost lots of money. After the very volatile 15yrs of his life, investing by himself gets him nowhere close to his goals.

There is a study done that shows that average investors tend to underperform the market, largely due to one main reason – irrational human behaviour when it comes to investing which is multi faceted.

The human mind is designed not to make good decisions when it comes to investing. And that is the main reason for the huge gaps between the average investor and the actual market returns.

For those who have experienced it before and know about it, they will fall into various different traps from an emotional perspective.

There are 9 factors that cause an average investor to invest poorly.

If you would like to find out more, let me know and we can connect.

Speak with your experienced advisor so that you are confident of investing for the future.

Photo credits : Dalbar

Tip #1 Financial Planning Advice

April 30, 2019April 30, 2019
by Gregory Fok

Be clear of your financial objectives.

We all know this feeling. Money is flowing in all directions and there is always something that comes up which is a priority.

When it comes to financial planning, there are multiple objectives as well. We need to save for retirement. We need to get the insurance. We need to pay the mortgage. We need to send our kids to university. We need to invest our money…. and the list goes on.

If you are not clear of your priorities in life, you will keep shifting your priorities and along the way, lose money and you say that financial planning does not work.

You just need to get it right from the start of what you want to do and why you need to do it and stay focused.

The truth is – this is probably the hardest part of the planning.

How to buy low and sell high

October 1, 2018
by Gregory Fok

How do you buy low and sell high?

One of the most difficult strategies to implement in investments is to buy low and sell high.

In a roaring market, no one likes to be left behind and have to take on less risk.
In a bearish market, everyone is fearful that it might just get even worst so people hold on at the side lines.

We put a system in our wealth management strategy to consistently rebalance at particular points irregardless of market conditions.

Rebalancing helps us to take the emotions of investing away and make very rational and logical decisions. And that is to buy lower and sell higher.

Speak with us to take the emotions away from systematic investing.

https://www.bloomberg.com/view/articles/2018-09-27/no-taper-tantrum-here-emerging-markets-look-like-a-haven

Investing in a volatile market

September 20, 2018September 20, 2018
by Gregory Fok

What to do when markets are volatile?

How are you feeling?

With the backdrop of the increased volatility in the markets, it can be
unnerving to be seeing your portfolio too frequently. There is going to be
a US-china talks held on the 21-22nd Aug in the United States, to speak on
the tariffs.

Not much might change, as both sides are still going strong with their
views but it seems that both countries eventually want to achieve a win
win situation.

It is also time to bring you back to the
fundamentals of investing.

1) Time is your friend
Speculators who have short time horizons will be very fearful at this point because of uncertainty. Long term investors will be happy because it
can be good time to buy in when markets are discounted right now. You get
to buy more when markets are cheaper.

2) Stick to your original objectives
Do not shift your long goals just because markets have shifted in value.
In fact, any downward shift is good for long term investors.

3) Do not let emotions take over.
Back in 2008, there was extreme fear in the markets especially when
markets collapsed unexpectedly. However, if a person stayed the course
of investing and topped up, he would have emerged much better off today
than 10years ago.

4) diversify
In volatile markets, single companies could collapse and never recover. In a portfolio of diversified investments, continuing to buy in a downtrend market is fine.

A 100% equity allocation like China would have dropped by about 25% by
now, but because we are widely diversified in a portfolio, we are still
affected, but slightly affected, down in the range of 5-6%.

In short, what should you do now?
a) Stay calm and relax, drink your coffee.
b) Stay invested and TOP-UP if you have extra money meant for the long
term now.
c) Continue to rebalance regularly.