wealtharticles-investment_advice_my

Investment Advice, My Way.

The iFast Insight magazine was launched early last year, with the aim of providing financial planning tips and investment advice to readers. We have been giving the magazine to the financial adviser representatives, who now account to more than 1800. They, in turn, would give the magazine to their prospects and clients. In terms of content, the magazine also tracks the rapid developments in the financial advisory industry in Singapore.

We have now decided to retail the iFast Insight magazine to the public, with effect from this current issue. We hope to broaden the reach of the magazine to the investor public, with the objective of getting investors to focus on the importance of financial planning, and they can get from financial advisory companies, besides having to rely on channels such as banks or insurance companies.

My Technology Lesson
Proper financial and investment planning is very important. I believe most, if not all people would want to grow their wealth, so that they can take care of their family's needs, improve their standards of living and retire comfortably in the future. In the older days, most parents would rely on their children for their retirement needs. However, some of the older folks may have regretted leaving their retirement planning in the hands of their children. Therefore, the importance of financial planning cannot be underestimated.

When I started working at iFast Financial Pte Ltd in April 2001, one of iFast's founders told me that he did not build his wealth from his salary - in fact, most of his wealth came from his investment decisions. Initially, I could not appreciate what he was saying to me. However over the years at iFast, I have come to realise the importance of investment planning and would like to share my personal experience with you.

When I first joined iFast, I wanted to prove that I could also make money from investments. Back 2001, I had a very strong gut feel that the technology sector would perform well. I thought the sector had reached its lowest point then, with the Nasdaq Composite index dropping from its peak of 5,048.62 points to 1,800 points. So I decided to invest S$5000 in a global technology fund. Guess what happened? I lost alomost half of my investment, an sold the fund in August 2003 after holding it for almost two years! The lesson I learned: don't invest based on gut feel!

Fortunately, as an Account Manager then, I had a good understanding of something: the iFast business. Based on my work here, I had the confidence that we would do well over time, and I had bought some iFast shares then. But those were difficult times. If you recalled those days in 2001, the world economy was suffering from a severe recession. Furthermore, in 2002 to 2003, the economy was badly hit by SARS and the Iraq war. In my initial years at iFast, our business of supporting the financial advisory firms and financial advisers was moving very slowly. And in 2004, we were facing very fierce competition from another competitor as they tried to gain market share from us.

Know The Business Well
With the markets in the doldrums, some of my colleagues decided to cash out by exercising their options and they sold their iFast shares. One of them sold all his shares and rewarded himself with a nice car. But I stayed invested as I was confident the business would perform, despite the fact that the initial years had been tough. Although it was very tempting to sell my shares and pamper myself with a new BMW, I chose to stay invested, knowing that the value of my shares will be worth much more later.

We stayed very focused and persisted despite being a company with much lesser financial clout. The key thing is that we have continued to grow strongly over the last few years. As of end-2007, our total assets under administration (AUA) are close to S$4 billion. We have also expanded our business to Hong Kong and we are seriously looking into expanding in even more markets.

Based on our 2007 estimated earnings, the paper value of iFast shares and options I own would be worth more than a million dollars based on a Price Earnings (PE) ratio of about 12 times. While we are not a publicly-listed company, I would still be able to sell my shares at future shares-matching exercises. However, I view this as a long-term investment and the dividends generated from the shares are sufficient to cover my cars' yearly installments.

By staying invested during the bad times and knowing what I am investing in, I get to enjoy the fruits when the business picks up. A very important lesson I have learned over the years is that if you must invest in something, you really need to understand the business, so that you have the confidence to stay invested - even during the bad times. From my personal experience, I finally began to appreciate what my boss was trying to tell me.

Save & Invest First
Despite having a decent income, I know it will take me many years to accumulate enough for my retirement. It is true that we need to properly invest our money to grow our capital fast. My advice is to save and invest your savings. While it is very tempting to spend on something expensive when we receive our bid bonus, we should always remember to accumulate our savings first. We should only spend when our assets are generating sufficient recurring income (such as dividends or coupons etc.) to cover our so-called 'luxury' expenses. This is what I learned from the book, "Rich Dad, Poor Dad".

If you have embarked on the investment journey, start doing so soon. If you have no time to look into the numerous investment instruments out there, or you do not know how to start investing, it would be good to start finding a financial adviser who can help you.

By: Lim Wee Kiong, General Manager of iFast Platform Services