FINANCIAL PLANNING

ing and investing. Our upbringing has led us to believe that there is no substitute for hard work . However, although many of us work very hard to earn and save money, few of us take the time to ensure our existing money is working hard for us.

If you re a part of the majority and have neglected (con-

nances, do not curse yourself for not having focussed on this in the past as it is never too late to act. Financial planning is a specialised discipline which diagnoses one s current

der to determine

tions required to achieve

goals.

BACKDROP

Do you know that one in nine Singaporeans is a millionaire? No wonder the country is touted to have the world s great-est density of millionaires , registering a 35.4% year-on-year increase over 2009. However, given a spiralling cost of living

be aiming for a comfortable, if not luxurious future, with the

“I don't know much about being a millionaire, but I'll bet I'd be a darling at it.”

– Dorothy Parker (1893-1967)

UDAYSINH JAGTAP

INVESTMENT ATTRIBUTES

Compared to the spending culture in developed nations, a large part of the Indian diaspora seems to be following the saving habits passed on by our parents. This is great news since it only means that we are already one step ahead. But are you a structured saver, or do you just save what is left over each month? What's more, the rising cost of living

of you are now accustomed to the western lifestyle and

circumstances, investment horizon and risk appetite, facili-

A recent survey (March 2011) published by MasterCard on Financial Literacy amongst women revealed that the av-erage Singaporean has poor investment knowledge; the fairer sex just managed to pip Japan securing penultimate position amongst the 14 APAC countries! Remember in-vestors men and women, amateur and seasoned the key to investing is informed decision making . This is the only way to create, protect and enhance your wealth, both for existing and aspiring millionaires.

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SAFETY FIRST

of 2008 are still fresh. Today, investors remain concerned about the safety of their money at the backdrop of regu-lar news that rattles their trust in some of the largest global banks. Let us look at two such incidents that occurred last month. The latest High Court ruling directed British banks (including the likes of Barclays, HSBC and RBS) to compen-sate clients to the tune of S$12 billion for mis-selling of Pay-ment Protection Insurance. In addition, Citibank has been banned for a year from accepting new clients for their Wealth Management business in Indonesia. However, there are two sides to every story but it is clear that in a post-Lehman

Legendary investor Warren Buffett has nicely articulated his value investment philosophy I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen

Do you appreciate that there is a trade-off between risk and return? Interestingly, there is a sizeable population who are cautious investors, yet they expect abnormally high returns. Having an understanding of investment horizons (short, me-

risk will impact potential returns on investments, is key to ensuring you are content with the returns you make on your

investment perspective and appetite to take on the risks and provide appropriate recommendations.

CALL FOR ACTION

clear understanding of the following:

Your appetite for risk (risk vs. reward)

Your investment horizon

Suitable actions required to achieve your goals

Potential investment solutions

Back home, the MAS (Mon-etary Authority of Singapore) has adapted a two-fold strat-egy maintain sound and progressive regulation, and

by raising competency and standards of conduct for the advisors. The MAS is mak-ing continuous efforts to up-hold Singapore as a trusted

need to complement this en-deavour by demanding qual-ity, transparent and impartial investment advice.

For your comments and queries, send email to: uj@thehenleygroup.com.sg

Remember, the longer you wait

they would become to achieve!

TRANSPARENCY

Renowned American economist and Finance Professor at Harvard, Michael Jensen has rightly pointed out that av-erage investors who try to do a lot of trading will only make their brokers rich . A substantial cost of trading is in the

commission the agent (individual or institution) takes when you are advised to make changes in asset allocation. The key issue is to be aware just how they affect the portfolio returns.

As an investor, you might have noticed that there are only six broad asset classes in the world today: cash, bonds, equities, property, commodities and alternative invest-ments. Of course, if anything else comes to mind, please send me an email and we can both be billionaires! Most

underlying assets. In subsequent editions, I will be provid-ing an in-depth analysis of each of the asset classes.

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