Thinking Big Is the Plan

Thinking Big Is The Best Plan

Years ago, when I was just starting my real estate investing career, I came across a property with a for-sale sign on it. I called the broker and asked, "What can you tell me about the property, and how much does it cost?"

The broker politely and patiently said, "It's a commercial building with six tenants. There's a chiropractor, a dentist, a hairstylist, an accountant, and a bail bondsman. The price is two million dollars."

Losing Big
I almost choked. "Two million dollars?! That's way too expensive!"

Thirty years ago, $2 million was a lot of money. And instead of looking at the property, I let the price frighten me off. I never looked at the deal, and just assumed that the seller was crazy, greedy, and out of touch with the market.

Today, there's a luxury hotel on the same site. It's spectacular. I estimate the property to be worth at least $150 million, and maybe more.

Cheap Lessons
Not seeing the potential of that deal taught me many lessons. Here are two important ones:
• Sometimes you learn more by being stupid and making mistakes.
• The person with the better plan wins.

In the above example, my plan was just too small. In fact, the only plan I had at the time was to collect the rent money from the tenants, cover my mortgage and expenses, and put a little in my pocket. And 30 years ago, I knew that the rent from six small tenants couldn't possibly pay for a $2 million property.

I later learned that the property's eventual owner bought it for full price – with terms. He put $50,000 down as an option and asked for 180 days to put the rest of his plan together. During those 180 days, he gathered his investors, a builder, and his tenant, a major hotel chain.

If he hadn't been able to put his plan together, he would've lost his option money. Instead, before the 180 days were up, his investors paid the $2 million in cash, and he spent the next three years getting the project through the city planning commission and finally began construction. He won because he had a better plan.

Mind Expansion
Donald Trump often says to "think big." He definitely does so, but by nature, I don't. My excuse is that I come from a small town in Hawaii. My family wasn't rich, so when it comes to money, I tend to think err on the side of caution. Over time, my thinking has become medium-sized when it comes to spotting opportunities, but I'd still like to think bigger.

One of the reasons I enjoy doing business in New York and having Trump as a partner on different projects is that he makes me do just that – because if you don't think big in New York, you get kicked out. If I thought small, I wouldn't be on television, cutting book deals with major publishers, or talking in front of tens of thousands of people in arenas like Madison Square Garden.

Currently, I'm working on a real estate project to present to Donald. Consequently, I find myself pushing my thinking, expanding my context, and thinking of luxury, not just price. Even if Donald doesn't like the project and we don't partner on it, just preparing to present the project to him has required me to think bigger and come up with a better plan.

A Blast from the Past
About a year ago, someone called to say that there was a spectacular condominium that had just come up for sale. She wanted to know if I was interested in looking at it. Of course I said, "Yes." I wanted to see what her definition of spectacular was, and trust me – it was spectacular. She then said, "And the price is only twenty-eight million dollars. But I believe you can pick it up for twenty-four million. At that price, this condo is a steal."

Once again, I heard myself saying what I said so long ago: "That's too expensive." But, as I said, that lesson from 30 years back proved to be priceless: After hearing the think-small person in me comment on the condo price, I took a deep breath and asked myself, "What's my plan?" Then I asked myself, "What's wrong with my plan?"

I didn't buy the condo, but I did come up with a better plan. Over the next few days, I realized that the reason I couldn't afford the condo was because my business was too small. If I wanted to afford such a luxury residence, I needed to come up with a better plan for my business. Today, I'm working harder than ever to improve it – not because I want the condo, but to be able afford such a condo if I someday decide I want one.

Plan Ahead
In many of my Yahoo! Finance columns, I've written about my concern over the devaluation of the U.S. dollar. As the dollar drops in purchasing power, it often pushes up the prices of real assets – quality real estate and equities. My fear is that many people may not be able to afford tangible assets and become poorer as the dollar declines. This drop in purchasing power also widens the gap between the rich and everyone else.

One method of staying ahead of rising asset prices and the declining dollar is to think bigger and come up with better plans. As important as financial and business planning is a plan for personal development and self-improvement. I'm often asked to invest in people's business plans, and one of the reasons I turn many of them down is because a big plan requires a big person who's spent time on personal development. In a lot of cases, a business plan is far bigger than the person with the plan – that is, the dream is bigger than the dreamer.

Today, I'm glad I missed out on that $2 million property all those years ago. The best lesson I learned from it is that I can have a better life if I have a better plan – and a plan to become better person. So what's your plan?

Persistence

What is it that separates those who are successful from those who are not?Successful individuals have a strong personal vision of what they want and why they want it.That vision gives them the strength to stick to their strategies even when doing so is uncomfortable. It gives them the determination to persist when they are discouraged.

Back To Basics to Grow Money

Back to basics to grow money
By Larry Haverkamp

DO you know the difference between a stock and a bond?
It is this: a stock means you own part of the company. A bond means you loaned it money.

Stocks and bonds are also called 'equity' and 'debt'. All investments fall into these two categories.
Both are ways for firms to get money to pay their bills or buy more assets for expansion.
A typical debt-equity split is 50/50. It means the business is financed half with debt and half with equity.
Companies get debt by borrowing, usually from banks. The equity comes from owners as well as past income that was never paid out as dividends.
It accumulates and is called 'retained earnings'.
That brings me to a new buzzword from this recession: De-leveraging. It means everyone wants fewer risks and it changes the world's debt to equity split from 50/50 to something less, like, 33/67.
Then, assets are financed one-third from debt and two-thirds from equity.
De-leveraging in action
Take 2006. A company may have had $200 million in assets, financed by $100m in debt and $100m in equity.
Now, in 2009, it still has $100m in equity, but debt would have fallen to $50m. It means only $150m in assets can be financed, and leaves the company no choice but to operate on a smaller scale than before.
De-leveraging hits households too. Banks now require that you put down more of your own money to buy a car or a home.
This is the 'new normal' and is likely to be with us for a long time.
Is it good or bad? Well, on the plus side, fewer risks mean not as many ups and downs in the economy. We will have fewer big recessions.
As explained, however, less debt means fewer assets to work with. The world will operate on a smaller scale. It will need fewer factories, office buildings and workers too.
It means lower growth and higher unemployment. Incomes will grow more slowly. Prepare to tighten your belt.
How to invest in the future
A company with more equity (ownership) and less debt (borrowing) is safer.
For an investor, it's the opposite: You take big risks when you own shares of a company (equity), and the safer investment is bonds (debt).
Which should you go for, high risk or low?
Most people say: Low risk. Why take chances?
The trouble with that is you also get lower returns.
Ok, let's try for high returns instead. Sorry. Then you have the problem of big risks. Hey, you can't win!
It is true. The pluses and minuses are exactly offsetting. As risks increases, so do returns.
Neither choice is better. Both are equal and fair. The choice depends on your risk preference. It is a personal decision.
Women, for example, often prefer safer investments while men take more risks.
Retirees usually go for safety while young people don't mind taking risks.
Here is a good rule of thumb: The per cent of safe investments should equal your age.
It means at age 50, you would divide your money equally between bonds and stocks. At age 90, you would have 90 per cent in safe assets like bonds and fixed deposits.
Risk v returns: advanced
A word of caution. Most people think higher risks mean higher returns. It's not always true.
Take gambling. The risks are very high but returns are low. In fact, they are negative. You are sure to lose in the long run.
It is also true for investments in contracts called 'derivatives'. Examples are options, futures, warrants, swaps and forward contracts.
(i) They expire after a few months and (ii) all gains and losses are offsetting, making them zero-sum before commissions. These two features make them more similar to gambling than investing.
Worse still, derivatives often come with high leverage. It magnifies the risks by 10 to 20 times while the average returns remain negative.
It isn't all bad. Derivatives can also reduce risks through 'hedging'. This is done by big companies and banks.
Most people use derivatives for 'speculation'.
This article was first published in The New Paper.

Money Law

In Personal Finance or Financial Freedom . “Financial Principles” which are as useful and practical today.I’ve personally benefited tremendously and applying the principles therein and have experienced improvement in my own finances. Knowing and not doing it, is not yet knowing”. For example, You know that exercise is good for your Health yet many people are lazy to exercise. Knowledge is only POTENTIAL power. Knowledge is ONLY power when APPLIED.
1. Money comes gladly and in increasing quantity to any person who save at least 20% of his/her earnings (first step to Financial Freedom).
There are only 3 Cashflow Scenarios:
a. You spend more than you earn: This person has negative cashflows, spending future money and likely to end up owing other people money (eg. credit cards, friends, relatives, loan sharks). b. You spend all that you earn: whether this person is earning SGD$500 a month or SGD$300,000 a month, he/she is still "Just over broke".
c. You spend less than you earn (eg. save 20% or more of your earnings if possible). as time goes by, this person will automatically get richer and richer. I read SUNDAY TIMES this rich man say “every dollar you earn, do not spend more than 30cents” .Which cashflow scenario do you want to CHOOSE for yourself? 2. Money can work for you, if you become the “wise owner” of money and make money work for you. (note: you’re the Master, money is the slave, while many people are guilty of being slaves to money).

FOR EXTRA VALUE, FOCUS ON YEILD

For extra value, focus on yield
By Dennis Chan , DEPUTY MONEY EDITOR
As a value investor, I am naturally attracted to investments that produce decent yields. This is because these investments tend to be more stable and less likely to give one a heart attack.
Other more gung-ho investors may prefer investing purely for capital gains, even if they are to get little or no yield.
My interest was therefore piqued when The Straits Trading Company last month offered for sale 10 units of its Gallop Gables condominium at Farrer Road by dangling a big carrot in the form of a guaranteed rental yield of 7 per cent for two years.
For those who are unfamiliar with the term, yield is the recurring annual income you get divided by the amount you paid for an investment. In properties, yield is derived from rental income. In stocks and shares, it is based on dividends that companies pay.
With savings in banks drawing a paltry annual interest of half a per cent or less these days, Straits Trading's offer was understandably snapped up by eager buyers.
Seasoned property investors will tell you that it's rare to get rental yields as high as 7 per cent, not unless you convert your property illegally into a workers' dormitory. For residential properties, a yield of 2.5 per cent to 4 per cent is the norm.
As an investment class, real estate generally provides a lower yield compared to investing in corporate bonds and equities. This is an acceptable trade-off as the risks of investing in physical properties are lower than those for stocks and shares.
The focus on yield, however, is only half the picture.
Another pertinent question an investor should ask is whether the current yield of a property is real or sustainable.
According to the Urban Redevelopment Authority, rents for private homes in the first quarter fell by 8.5 per cent. They had dropped by 5.3 per cent in the fourth quarter of last year.
In a prolonged economic downturn such as the one we are probably experiencing, there is further room for rents to fall. This is notwithstanding the recent revival in the residential property market.
On the demand side, numerous companies have slashed or are reducing head counts. Some have stopped operations altogether while many more have cut the pay of their staff. There is less discretionary income all around.
On the supply side, vacancy rates are likely to rise as more new homes are completed while some older developments that were earmarked for demolition have been put back into the rental market as their redevelopment plans get frozen.
Rising capital prices combined with falling rents spell bad news for yields, something property investors should be mindful of.
Equity investors tend to be more savvy when it comes to matters of investment yields and their sustainability.
Which is why the stock market today is littered with numerous instances of shares that seemed to be going for a song when measured against their historical yield. Stock investors are not buying these high yielding stocks because they suspect they will not repeat the high dividend payouts of the previous year.
To be sure, there are people who see real estate investing purely as a capital gain game. In the bull run from 2005 to 2007, many home owners were content to leave their units unoccupied while waiting for the right opportunity to resell them for a big profit.
Such windfalls are harder to come by in the current climate and a prudent investor cannot afford to look through the prism of 2007 and hope for a repeat of these fabulous gains any time soon.
For investors who acquire properties with the help of a bank loan, rental yield takes on added significance.
Mortgage rates currently vary from as low as 1.5 per cent to 3.75 per cent or more. As an investment, income from renting out a property should preferably be able to cover the monthly bank interest charges plus a portion of the principal repayment.
For those lucky enough to obtain a low rate such as Standard Chartered Bank's 1.5 per cent promotional offer for the first year, the bar for rental income is low.
But for those who are locked in to significantly higher rates, their rental income should at least match the interest they are paying for their mortgages if they don't want to end up working for the bank for free.
Don't forget, mortgage rates tend to rise over time as initial teaser rates give way to prevailing ones. One way for a borrower to maintain a low mortgage rate is through the regular refinancing of his home loan. But this assumes that the current low interest rate environment will remain benign.
Refinancing may not be feasible if the property's valuation has fallen sharply or if the refinancing bank decides to offer a lower loan quantum.
Unlike stocks and shares, yields on property investment are also more easily manipulated. A crafty seller can sometimes entice a buyer to overpay for a property by promising an abnormally high rental yield. To achieve this, the seller will sell his property and execute a leaseback agreement with the buyer.
In such a deal, the seller will guarantee the buyer for a limited period - typically not exceeding two years - a monthly rental income that will meet the promised yield.
The seller then sub-leases out the unit to a genuine tenant at the prevailing market rate. If the rent is below the guaranteed amount - as is likely to be the case for an overvalued property - the seller will top up the rental shortfall. But he does not lose out as he is able to count on the extra profit he had made earlier from selling his property at a higher price. The buyer ends up worse off even though he gets a higher monthly income rental for two years.
An example of how this can be done is illustrated in the accompanying table.
Rental guarantees are not illegal and, in fact, are the de rigueur practice of some developers that simply refuse to lower their selling price of unsold, completed projects during a downturn for tactical reasons.
They are also not necessarily detrimental to buyers.
Getting an attractive rental guarantee in today's market will appeal to investors who believe that home prices will recover by 2011 or 2012, as they will enjoy higher-than-usual returns in the next two years while awaiting the recovery to take place.
In the case of the Gallop Gables apartments, the buyers probably got a good deal.
Apart from getting guaranteed rental yield of 7 per cent for two years, these purchases were done, on average, at prices about 23 per cent below what Straits Trading had asked for last July.
The developer has since raised the price of the remaining few units to $1,400 per square foot (psf) from the $1,188 psf average it had sold at in the past six weeks.
But the cheapest unit still went for a tad above $3 million.
If only I had a few million dollars to spare.

ER, What is a bear market rally ?

Er, what is a bear market rally?
By Alvin Foo
Where do you see this?
In newspaper articles and stock market analyst reports.
What does it mean?
A bear market rally is a temporary increase in stock prices during a period when prices are generally plunging over months or years.
This rise usually ranges from 10 per cent to 20 per cent, and even as high as 30 per cent, from the lowest point. Trading volumes also surge.
However, market fundamentals remain weak and do not offer a clue as to why the markets are going up.
Overall investor sentiment would still be negative and cautious.
Why is it important?
This term has been used commonly in recent weeks, as stock markets have seen a substantial rally since early March.
For instance, the Straits Times Index has charged up more than 30 per cent to 1,920 on Thursday, after plunging to a six-year low of 1,456 on March 9.
In the United States, the Dow Jones Industrial Average saw a six-week rebound - its best streak since 1938.
A bear market rally favours nimble traders, who are quick to buy but also swift to take profit.
So you want to use the term? Just say...
'Be wary of investing in equities despite the recent rebound. Experts have warned that this is a bear market rally as the world economy has not yet seen a turnaround.'

Make Market Cycles work for you

Make market cycles work for you
By Dennis Ng

Observing nature, we will notice cycles.
There are, for instance, four seasons, with the cold winter followed by blossoms in the spring. And just when everyone is having fun in the sun, it is good to be mindful that temperatures will drop as autumn approaches. Those who are not prepared with sufficient clothing might freeze when winter returns.
Similarly in the financial markets, there are market cycles where busts follow booms and vice versa. That is why the 'party' ended with a market crash last year, after global stock prices shot up by between 200 and 500 per cent in the last four years.
According to historical analysis, 2008 was one of the worst years for stocks since 1937. For many, this might be depressing news but for me, this is exciting news. By observing market cycles and investing accordingly, one can try to time the market.
I would say that in the short term, it is difficult to time the market correctly on a consistent basis. However, it is definitely possible to roughly estimate at which stage of the market cycle we are in.
For instance, in 2007, the stock market was in its fourth bullish year. Back then, the Straits Times Index (STI) had risen about 200 per cent from a low of 1,226 in March 2003 to over 3,600 points.
As far as I remember, the Singapore stock market has never had a bull market that lasted more than five years. Believing back then that we were near the tail end of a bull market, I sold most of my stocks and avoided the market carnage that followed a few months after that.
The steps to 'market cycle investing' are simple.

First, we try to estimate at which stage of the market cycle we are in.

Secondly, we try to identify the major trend direction - upwards or downwards.

Finally, we position ourselves accordingly; basically, the strategy to take is to go with the trend instead of going against the trend.

For instance, if you bought stocks during 2004 when the stock market was on an uptrend, it was easy to make money since most stocks were moving up in price. However, when stock markets were in retreat last year, it was very difficult to avoid losing money on stocks, simply because most stocks fell in price in accordance with the general market direction.
Some people firmly believe in the 'buy and hold' strategy, holding on to their stocks through thick and thin, whether the stock market is moving up or down.
I used to be one of them until I realised I lost out on a lot of opportunities by not selling out when markets were high and buying back again when markets were low. We do have to be mindful of opportunity costs. In the last bear market from March 2000 to March 2003, I also observed that when the tide turned, almost all stock prices went down, including blue chips.
Let me give an example: DBS Group Holdings' share price was as low as $8 in 2003; it hovered between $8 and $10 for close to one year. If you practised market cycle investing, and even if you had missed the bottom, you could have easily bought the bank's shares at about $10.
In 2007, after four years of bull runs, DBS' share price shot up to as high as $25 and hovered between $20 and $25 for more than one year.
Again, even if you missed the top, you could have easily sold DBS shares when the price was about $20. By buying at $10 and selling at $20, you would have easily pocketed a 100 per cent return over four years. Not bad at all.
Similarly, by practising market cycle investing, after selling out at $20, and after one year of a bear market, you can now easily buy back DBS shares at less than $10 again.
On the other hand, if you had bought DBS shares at $10 in 2003 and steadfastly held on to them through 'thick and thin', you would have basically enjoyed the 'roller-coaster ride' of the market but would have no profits to show after five years.
Of course, nobody knows when the market will bottom. My experience is that I was early and invested all my money by early 2002. However, I was one year too early as the Singapore stock market bottomed only in March 2003.
Despite missing the bottom by 12 months, I still managed to achieve over 200 per cent in returns riding the four-year bull market that followed.
Thus, by practising market cycle investing, one would inevitably buy when prices are low, and sell out when prices are high.
By doing so, you have also reduced your risks of losing money.

BIG INVESTOR BUT FRUGAL SPENDER

Big investor but frugal spender
By Lorna Tan
Despite being a multimillionaire, entrepreneur-cum-motivational speaker, Adam Khoo still hesitates before spending on consumer products like his iPhone.
However, when it comes to investments, the founder of Adam Khoo Learning Technologies Group wouldn't even think twice when investing, say, $50,000 in stocks. This is because stocks are expected to potentially generate more money, he says.
A conservative and long-term investor, he prefers to invest in cash-rich, large-cap companies that have low debts and the potential to consistently increase their earnings.
His group, which focuses on education, comprises 16 firms in seven countries with an annual turnover of $15 million. He also took over his father's advertising firm, Adcom, in 1999.
A business administration degree holder from the National University of Singapore, Mr Khoo - who is all of 34 - is also known for his motivational books. Last month, he launched his ninth book, Profit From Panic, which gives practical tips on how to deal with the current economic crisis.
He is married to Ms Sally Ong, 38, who is a director at one of his firms. The couple have two daughters - Kelly, five, and Samantha, three.
Q: Are you a saver or spender?
One of the factors that helped me build up my wealth over the years is that I am relatively frugal.
I have always saved at least 50 per cent of my income and I don't believe in spending a lot of money on luxuries. I buy clothes once a year only when I'm in Bangkok or Indonesia. Usually I visit a shop for half an hour and pick up 10 shirts and trousers at one go. I am a person of simple taste, except when it comes to cars. I like fast cars.
I invest 100 per cent of my savings consistently. But when the market gets too overvalued, I hold a larger proportion in cash as a precautionary measure.
Q: How much do you charge to your credit cards each month?
I have three credit cards but I use only one regularly for my personal expenditure. I chalk up about $2,000 to $3,000 every month. I use my credit card instead of cash whenever I can for easy tracking purposes. I withdraw about $200 from the ATM each time.
I pay my credit card bill every month and if I get charged 10 cents for late payment interest, I will scream. I don't believe in paying the annual fee too and will ask the bank to waive it.
Q: What financial planning have you done for yourself?
My portfolio, which I manage myself, is made up of the following investments: property that I rent out, private businesses, Singapore stocks, US stocks and exchange- traded funds (ETFs). My investments have generated an average return of over 20 per cent per annum.
Currently, I have about US$400,000 (S$611,000) in US stocks, such as Boeing, Google, Nike, Pepsico, and ETFs, and another $400,000 in Singapore stocks, such as CapitaLand, OCBC Bank, the Singapore Stock Exchange, Bestworld and STI ETF.
When it comes to insurance, I believe in buying term and investing the rest. Still, I bought seven traditional plans such as whole life and endowment when I was young, because my wife is a former AIA agent and I had bought them from her. About four years ago, I bought a term with cover of $1 million which brings my total life cover to about $2 million.
Q: What property do you own?
In 1998, I bought a 1,300 sq ft condominium in East Coast for $480,000 and rented it out for about $3,000. I sold it for $650,000 in 2004.
I also have a 5,000 sq ft semi- detached house in East Coast which was bought four years ago for $1.3 million.
Early last year, I bought a 900 sq ft condo at Robertson Quay for $1.3 million. I'm renting it out at $4,000.
Q: Moneywise, what were your growing-up years like?
I come from a wealthy family where my father and uncles are savvy business people and investors. That background influenced my values, beliefs and attitudes towards the possibility of building immense wealth when one is prepared to work hard and educate oneself.
My father started his advertising firm Adcom in 1972 and mum was editor of the women's magazine, Her World. I was the only child. We lived in a bungalow in Changi.
However, what gave me the drive to build my own wealth and to value money is that my father is an extremely frugal man, and that rubbed off a lot on me. In those days, my dad would not even buy a brand-new car despite his wealth. He would compare prices of toilet paper and toothpaste all over the supermarket before deciding what to buy.
Q: How did you get interested in investing?
Every Chinese New Year, from the time I was 15, my grandfather would give me hongbao with cash plus Malaysian shares like Genting, Kuantan Flour Mill and Hicom.
When I was in the army, I started dabbling in shares.
At about that time, I was inspired by a book I read, Buffetology, based on the success and work of Warren Buffett. I was amazed by a man who was able to build his wealth purely through investing.
Q: What's the most extravagant thing you have bought?
A $230,000 red Lotus bought last October. It's a reward for myself.
Q: What's your retirement plan?
My passive income from book royalties, dividends and business profits is enough to cover my expenses so, technically, I can stop working if I really wanted to.
Q: Home now is...?
I live in the semi-detached house in East Coast.
Q: I drive...?
A red Lotus Elise and a red BMW convertible.
This article was first published in The Straits Times.

Missed ! Now, How to pick yourself up ?

Missed! Now, how to pick yourself up?
BUYERS now have another 'beware' to add to their long list. Beware of those who call themselves financial advisers.
Well, with faith in banks shattered, what else would you expect?
Trust no one now?
Mercifully, it's not that grim. You can still turn to the Financial Industry Dispute Resolution Centre (FIDReC) for help.
When contacted, former NTUC Income CEO Tan Kin Lian, who has been helping affected investors in his private capacity, feels that brokerages and financial advisory firms should share the responsibility, together with their clients.
He said: 'How can brokerages sell a risky product, then say that they are merely order-executors? Similarly, the financial advisers cannot make themselves out to be advisers, yet not make their roles as introducers clear to their clients.
'I cannot sell a drug which causes the people who take it to die, then say that it is not my fault. I have to make sure that the medicine I sell is okay.'
He said: 'It would be fair if the customer bears 50per cent, while the brokerage and the financial advisers bear 25 per cent each of the losses.'
Can't afford, don't buy
Mr David Gerald, president and chief executive of the Securities Investors Association of Singapore, said: 'We live in a buyer beware market, people have to be responsible for the choices they make.
'So, I always advise investors that if they do not understand the product, don't touch it. If they cannot afford it, don't buy it.'
He said that the elderly couple mentioned in the report on page 2 have two means of recourse: FIDReC or a civil suit.
At FIDReC, mediation is free, and legally-trained people will be able to advise the couple, said MrGerald.
They could also engage a lawyer, he said, but he felt it was not advisable to do so, as it was an expensive process, and they might end up paying the legal costs of the other party if they lose the suit.
The learning point is that it's not enough just to know the product you are buying now.
You also need to know who you are buying from.
Ask if independent financial advisers are only 'introducing' you to a product.
Compare this to, say, bank relationship managers who 'advise' you to buy the same product.
Not knowing the difference between the two roles can really cost you.
Getting your money back is about proving mis-selling.
Put simply, it's about proving you were given bad, wrong, or unsuitable advice.
Some independent financial advisers may even produce a document you signed, confirming they were 'introducers' - a document which, you realise too late, actually absolves them from responsibility if things go wrong.
What if you argue that some of the things said to you during the 'introduction' sounded like advice?
Well, it's your word against theirs, always difficult on either side to prove.
So how about the brokerage companies that these clients get 'introduced' to, to buy the product from?
Sorry, we were just 'executing' the order, say some of the companies. We didn't 'advise' you either. So don't blame us.
The numbers are telling. Among those who bought from stockbroking firms, only just over 10 per cent received any settlement.
The lesson for the small-time investor is this: Make it clear that you're seeking advice. Put it in writing. Fill the questionnaires to make your concerns known. Keep copies.
Trust no one, I say.

Tay Shi'an
Mon, Feb 02, 2009The New Paper

HOW TO MAKE MONEY in 2009

How to make money in 2009
By Lorna Tan and Michelle Tay

What a roller-coaster ride the year 2008 has been.
Stock markets have tanked, rallied, then tanked again. Home prices are dipping, the economy is shrinking, and wages have hit a plateau.null
And let's not even talk about the people who have lost millions and millions in Lehman Brothers- linked structured products.
While the peaks have been few and far between, the troughs have left people scrambling to find the bottom - and everybody is tightening their (seat)belts and hanging on for dear life.
Yet, despite the projected gloom in 2009, the new year represents a new start for many.
If you still have the funds to invest, should you buy stocks, a car or a house?
What lessons have financial experts learnt that you can also glean wisdom from?
Invest brings you the best investment advice from 10 savvy investors.
Mr Jim Rogers, Singapore-based American investor, author of A Bull In China: Investing Profitably In The World's Greatest Market, and creator of the Rogers International Commodities Index
What was the best and worst thing that happened to you financially this year?
Best: Being short on Fannie Mae and the United States investment banks. These stocks collapsed, some by 100 per cent, so I made huge percentage gains on them in 2008.
Worst: Being long on anything at all.
How do you see 2009 panning out?
Most economies and financial markets will get worse as the year progresses.
We are in a historic period of forced liquidation which has happened only eight or nine times in the past 100 to 150 years. There is a forced reversal of positions with no regard to the fundamentals. One makes money in times like this by finding things with unimpaired fundamentals because they will become market leaders.
The only thing I know with unimpaired fundamentals are raw materials and commodities. In fact, their fundamentals are enhanced. Reserves and inventories of everything are declining while governments worldwide are printing huge amounts of money, which has always led to higher prices down the road.
So commodities are the best place to be.
Some parts of the Chinese economy will do well too.
What is one piece of financial advice you would give a person looking ahead in 2009?
Learn about real assets, raw materials and commodities as the fundamentals are improving there, while the fundamentals are deteriorating in most other sectors.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
No.
Is it a good time to buy a car or property?
I am not buying either.
One can get great deals on cars now so I guess it is a good time to buy a car, if one really needs one. Otherwise, I would wait. My view is that property will still be declining in much of the world for at least another year or two. There will be some special places in the world where property will be okay, but they will be few.
Mr Ben Fok, chief executive of Grandtag Financial Consultancy
What was the best and worst thing that happened to you financially this year?
Best: My equity portfolio was down by only less than 15 per cent. I had lightened the majority of my stock portfolio in September when the Fed was taking over Fannie Mae and Freddie Mac. I sold part of my equity portfolio bit by bit as the bad news was revealed one by one. Now I am very light in equities and heavy in cash. I also did not invest in, or advise my clients to invest in, any structured products.
Worst: I totally forgot about my Supplementary Retirement Scheme (SRS) account. I did nothing to it and it was down by at least 40 per cent.
How do you see 2009 panning out?
It will be an uneventful year for the financial markets. There will be bad news as the world slips deeper into recession and then tries to recover from it. Some people are calling a market bottom but I think, at best, the stock market will be in a tight trading range until there is strong evidence from macroeconomic indicators that growth is beginning to stabilise. But that does not mean ignoring the market at all. On the contrary, I believe it is time to take calculated risks as equities tend to react ahead of an improvement in the economy.
What is one piece of financial advice you would give a person looking ahead in 2009?
Proceed with caution when entering the stock market. While many stocks are heavily sold down and are looking very attractive, the world macroeconomic picture is not that bright.
Therefore, attractive valuations of certain stock markets must be weighed against the risks stemming from a global recession that will trigger a cyclical contraction in corporate earnings.
The world economy will take at least a year to recover from this financial shock and we cannot rule out further corrections in the coming months. Invest with what you can afford to lose and remember the stock market has no human emotions.
To protect yourself from downside risk, look to invest in undervalued stocks or stocks that are selling below net asset value. Look also at sectors with stable earnings.
Would your answer be different for a) a single, working person; b) a married couple with school-going children; and c) a retiree?
a) Now is the best time to stock-pick. Usually, this group of people has fewer liabilities and a longer time horizon to hold on to fundamentally sound stocks. The recommended asset allocation is 100 per cent equities.
b) Invest in the stock market, with some exposure in bonds. Currently, corporate bonds are attractive despite rising default rates. The recommended asset allocation is 60 to 70 per cent in equities and 30 to 40 per cent in bonds.
c) As they need to create an income stream and have a shorter time horizon, investing in bonds is the best asset class and the least volatile. However, a small exposure to stocks is also recommended. I would recommend 20 to 30 per cent equities and 70 to 80 per cent bonds.

Given the financial situation, is it a good time to buy a car or property?
Certificate of entitlement (COE) prices are down substantially...and interest rates are at rock-bottom prices. However, bear in mind that a car is a depreciating asset and the benefits of convenience also come with price tags. So before you buy that car, ask yourself if you really need one.
If you are looking for a home or even an investment property, now is the best time to shop around and you may get it at bargain prices from a fire sale. Again, before you do that, review your financial situation, make sure you can afford the monthly instalments and remember that this is a big ticket item. Buying a car and a property requires a loan which adds to your financial burden.