Thank you to all for coming to our "Invest Like a Billionaire" lunch & learn event last Tuesday. We know it wasn't easy with the traffic disruption last week but very happy to see so many participants eager to learn how to manage their wealth more intelligently.

 

 

A few wealth management tips:

 

 

1) Seek an investment advisor if you can

 

An advisor can help you improve your return particularly from a behavioral coaching standpoint (offering timely advice, keeping your emotions in check and keep you on track with your investment plan). Vanguard recently quantified the value add from a return standpoint from using an advisor at 3% (about 1.5% from behavior coaching).

 

 

2) Invest with a portfolio anchor

 

Allocating 40-50% of your investment portfolio to a longer term stable (diversified) investment 'anchor' will make sure if markets get a turn for the worse and your risky investments are negatively impacted, you can still feel safe with the majority of your investment portfolio. This is the same concept as having an emergency fund to fall back on.

 

 

3) Utilize a diverse range of investments especially illiquid ones

 

There are only a few things you can control as an investor (how long you invest, size of investment and cost). Taking a smaller portion (10%) and investing into investments that 'lock' up your money for a longer period of time (real estate, private equity etc.) beyond providing diversification will also help you achieve higher returns while keep risk in check (since you are mainly sacrificing time). If these investments are out of reach can consider their retail reversions like REITs listed on a stock exchange (which although a bit high right now still provide 4-6% yield and real estate exposure). One thing to keep in mind is the listed version of alternative investments in many cases do not perform as well like the original investment and they may not provide the same level of diversification (much more correlated to the stocks in your portfolio).

 

 

4) Hold a sizeable amount of cash

 

Beyond having cash for emergencies the main purpose is to invest this cash when the market is weak and other investors are selling. That's how you improve your chances for sizeable returns. Although holding cash doesn't provide returns in the short term can also consider cash alternatives like time deposits which return 1-2% for locking up your cash for 1,3,6,12+ months and are fully protected up to HK$500K by the Deposit Protection Scheme.

 

 

5) Be sensitive to fees and cost

 

Although the ways fees/costs are displayed are never super clear for most investments the erosion of your performance over time from small increases in fees is significantly. This is often one of the most overlooked areas by individual investors. Stay diligent with keeping the fees/costs of your investments as low as possible.

 

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