Sean's        

     Answers    

For 

           Charles Koh

Here Is The Answers Specially For Your Questions, Charles! Sincerely From Sean Toh.

Dear Charles,

First of all, let me take this opportunity to congratulate you for taking actions to think about your retirement. In Singapore, a lots people can't retire because they didn't plan for their retirement when they were younger. " When you fail to plan, you are planning to fail!"

From the question you asked, I have to make certain assumptions before I can answer you. 

Assumption 1 : I shall assume you have a stable career.

Assumption 2 : You are already disciplined to save a portion of your salary for your investment and emergency funds.

Assumption 3 : You are a passive investor that will let your money works for you.

Assumption 4 : Your investment risk appetite is low or low-medium risk.

Assumption 5 : You have a bit of financial education to equip yourself to make choices but not an expert in using advance investing techniques and strategies to gain profits for short terms.

Assumption 6 : I shall only address this question of yours without bearing any responsibility to your loss if you follow the advice given. You bear all the responsibility for your own investment decisions taken and shall blame nobody but yourself for any losses. As I can't guarantee your investment and I'm answering your question just to share my opinions in this matter as lots of data and facts are not presented for proper financial analysis.

As my assumption is that you are a passive low risk investor, which investment vehicle is suitable for your above investment objective?

My recommended investment instruments are listed below: 

1. Fixed Deposit

2. Units Trust

3. REITS

4. Stocks

The question you might ask now is " But in each investment instrument, there are so many products! How do I know which product to utilize?" I don't believe you can park your money and do any investing if you do not understand your investment. Most Singaporeans just want to give their money to someone and hoping that they will help them make the money so that they can enjoy it. Please, there is no free money in this world! Either you lose it all or you start taking responsibility to care about your money. Even if you lose it, you feel good about it as you will gain the wisdom from that failure and become wiser for your next investment. You will gain financial independence because of the knowledge you gained. " Giving you the fish is not better than learning how to fish."

My advice to you is to devise a portfolio that manage your investment risks as my assumption for you is that you are a passive investor. Below is just an illustration how a moderately aggressive investor and a conservative investor construct their investment portfolio using Stocks , Bonds and Fixed Deposit as the investment instruments. The technique used by the investor is called "Assets Allocation". Assets Allocation is a technique used by financial planner to diversify the investment risks. Just for illustration purpose only for your learning today!

For a moderately aggressive investor, his investment portfolio might be something like that. For illustration purpose only! You will realize that the financial planner will structure some bonds in his investment portfolio so that the risks are reduced with the introduction of the new investment instruments called the “Bonds”.

For conservative investor, his portfolio might look something like this. For illustration purpose only! His investment portfolio will consist more Fixed Income. Example of Fixed Income is your Fixed Deposit or Cash Fund Units Trust.

From the above examples, you can see that they varied the percentage of the investment instruments to construct a low risk or moderately aggressive investment portfolio. Fixed Deposit and Bonds are normally used to preserve the investment capital and Stocks are normally used to create the wealth you need. 

As the stock market reaching a ‘high’ now at a STI Index of 3600-3700. Unless, the fundamentals and economical indicators can support good investment sentiments, the potential for growth might be limited. Most of the stocks tend to be overvalued. I recommend that you save even more for this coming 3 years and continue to invest your time on your financial education so that when the stock market crash. You can gain lots from it. Do you know why Warren Buffetts like baseball so much. You just need to wait for the right time to hit a hard one and you can take your time to run round the stadium. For the time being, teach yourself about Dollar Cost Averaging technique and modify the technique to gain advantage for yourself. 5-6% return is not too difficult to achieve but start to learn how to fish or hit the ball so that you can control your financial destiny.

Click Here to read an article about Dollar-Cost Averaging.

You will realize that I need to meet up with you to gather more information about your financial background before I could advise you on the most suitable instruments to use. Even if I recommend a particular investment instrument, that investor could not reap returns based on their investment psychological make-up. My advice is to understand your investment instruments well so that you can then invest. It’s ok to put the money in the bank and do nothing with it until you equip yourself with sufficient financial education and you have tested your investment trading system to reap return, then you can invest with confident. At least, you have your money for retirement. Take a few pieces of papers and draw a few circles and pick a few investment instruments and varied them and ask yourself what are the outcomes from the different investment portfolios you have designed in the short term, medium term and long term. Most of us learned simple Math in school but how many of us apply it in our life for the benefits of our life. You have the knowledge already, Charles! What most of the Singaporeans failed to do is to reflect on their life and apply their learning in their life. Start to ask a lots of "Why", "How", "What", "When" and "Where" and you will find answers to a lots of your questions. Have a day during the week for reflecting on your investment actions taken for the week and start to reflect how the world is evolving for your investment objectives. Here is a list of investment instruments and possible returns

Stocks – Varying return, return can be huge.

Bonds – 3-4%

Fixed Income – 1.5-2%

Units Trust – Varying, return can reach 15-20% if you know how to time your investment with strategies.

Reit – Unit Trust in Real Estate or properties (can be residential, commercial or shopping center buildings). Return possible 5-6% with dividends re-invested back for more investment.

Stock Warrants – Varying return, return cab be huge or lose every single cents of capital if warrants expire.

Charles, I could only give you a guide to the big picture. Achieving an investment return of 5-6% is not too difficult and is achievable. I hope I have provided you with a clearer picture before you decide on your next move. Always remember, you are in control and responsible for your investment decisions even if you ask a good financial planner to help you achieve your investment objectives. Never put all your eggs in one basket, only master investors like Warren Buffetts or George Soros know what they are doing. Assets allocation is the strategy to manage your investment risks and to help you reap 5-6% returns. Search the internet or read up books on ‘Assets Allocation’, and ‘Modern Portfolio Theory’. Last but not least, wish you all the success in your investment endeavors. Before I end, Charles!

Although I have recommended and advise you on lots of matters, it takes more than education, resources and advice for you to be successful. You need to be patience and committed to your plan to achieve a bit of success. It’s that bit of success that will motivate you even more to learn and apply what you learned in life for your future success. Just in case, if you have been waiting the whole day or week for all the answers. I will like to apologize for the delay to your answers because I believe in giving my best advice to you personally and sincerely from my heart. I needed the time to understand the problems you faced, understanding them and finding the right resources for your education so that you have a higher success rate when you implement your plan.

Last but not least, may I wish you all the success implementing the plan and achieving some results that you can see for yourself. Do consult a proper financial planner or advisor if you are really in doubts. It's you that make the decision to decide if you want to be successful? Enjoy creating wealth with health. It’s has been my pleasure providing consultancy service to you, Charles!

 Your Sincerely

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