Strategise with care to maximise investments
Mr Edy Hartono says investors may consider a diversified portfolio of unit trusts recommended for their risk profile in the new year.
PHOTO: KELVIN CHNG
The Sunday Times Sunday, December 30, 2018
Edy Hartono
PRESIDENT OF FINANCIAL PLANNING ASSOCIATION OF SINGAPORE
Q What were the best and worst things (financially) that happened to you this year?
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A The best thing this year was when I was conferred the Institute of Banking and Finance Singapore (IBF) financial planning industry title, the IBF Fellow 2018.
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This is conferred upon industry specialists and veterans who have demonstrated mastery of the profession, and have exemplified thought leadership and commitment to industry development.
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The income from my financial planning practice with the Professional Investment Advisory Services (Pias) also grew this year. I have been with Pias for 13 years and manage a team of 43 advisers under the Polaris Advisory Group.
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The worst experience involved my investment in Hyflux's 6 per cent perpetual preferential capital securities (Hyflux PPCS).
MORE VOLATILITY AHEAD
Global growth is slowing, liquidity is tightening, geopolitics in Europe is rising, the interest rate in the United States has been on an upward trend and there is no sign the US-China trade war is ending soon. With all the uncertainties in the market, investors should be prepared for greater volatility in 2019.
EDY HARTONO
I bought in when the price dropped to 80 cents around November last year. My average cost of acquiring Hyflux PPCS was 81 cents.
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Hyflux PPCS was suspended from trading this May and the last transacted price was 50 cents.
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I am still holding the preferential shares.
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Q How has 2018 been for the financial advisory/planning industry?
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A It has been a good year. Based on the latest Life Insurance Association figures, total weighted new business premiums in the life insurance industry jumped 15 per cent to $3.17 billion from the same period last year.
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Total weighted new business premiums in Singapore was $4.1 billion for 2017, compared with $1.66 billion in 2007 .
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The average growth rate was 9.4 per cent over the 10-year period from 2007 to 2017. The growth this year was above the average growth rate of the last 10 years.
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In terms of distribution channel, there was growth in both the bancassurance - which refers to the selling of insurance products by banking institutions - and the financial adviser representative segments.
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The bancassurance market share has grown to 37 per cent as at the third quarter of this year, up from 28 per cent in 2008.
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During this period, financial adviser representatives' market share has increased to 21 per cent from 8 per cent, while the tied representatives' market share has fallen to 37 per cent from 60 per cent.
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As the industry continues to grow, we hope to enhance the level of professionalism of the representatives.
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In April, the Financial Planning Association of Singapore introduced the inaugural Financial Planner Awards 2018 to recognise financial planners who excel in their professional knowledge, demonstrate financial planning skills at the highest level and uphold best practices in financial planning in Singapore. Do visit www.FPA.sg for the details.
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Q How do you see 2019 panning out?
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A We will be expecting more volatility in the financial market next year as we enter into the very late cycle of the longest bull run since World War II. The bull run cannot continue indefinitely, and at a certain point, the market will go into correction.
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We are not sure when it will happen but we are certain volatility will continue in 2019.
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Global growth is slowing, liquidity is tightening, geopolitics in Europe is rising, the interest rate in the United States has been on an upward trend and there is no sign the US-China trade war is ending soon.
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With all the uncertainties in the market, investors should be prepared for greater volatility in 2019.
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Q Going into 2019, please give some tips to retail investors.
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A I would urge investors to put aside an emergency fund for at least three to six months of your living expenses before starting any investments. Refinance your property loan into a fixed-rate loan, as I believe the interest rate will continue to rise.
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Make sure that your debt service ratio (total annual debt repayments/annual take-home income) is below 35 per cent.
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Set your financial objectives and time horizon, and understand your risk profile to work out a regular monthly amount for your investments to achieve your financial goals.
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I would suggest investing in a diversified portfolio of unit trusts that is recommended for your risk profile.
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This strategy works well in a volatile market and it takes away the "greed and fear" elements while maximising your investment through the dollar-cost averaging philosophy.
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Back in 2003, during the severe acute respiratory syndrome period, my family and I had our meals at home, as we were worried that we might get infected. However, after staying at home for two weeks, I was bored and decided to take my wife out for dinner.
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We were the only guests in the restaurant. I believe most were unwilling to take risks.
I was worried about investing in the market at that time too, as Singapore's economy was affected.
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I put money in only dollar-cost averaging investments, which refers to investments made with a fixed sum on a regular schedule. It proved to be a wise decision to stay invested and to ignore the "intermittent noise" as my portfolio grew after the episode.
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The investments bore fruit, thanks to the disciplined approach of monthly investments through my Giro account.
Lorna Tan