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by Strong Eagle » Sat, 28 Sep 2013 12:39 am
I have yet to meet a financial adviser in Singapore that was worth even a bucket of warm sh*t.
Most of them are flogging products for the company for which they work, and I have a rule of thumb: The farther away, geographically, the offered investment is, the worse it will be.
The second problem is that if you actually were to find an independent advisor in Singapore, they don't know enough about international finance to deal with an expat's needs... and I never did find a decent independent financial advisor.
None of these guys has any insight or experience into an expat who might own various assets in various countries... no concepts of asset allocation, or tax treatment.
My view is that you should do these things in preparation for investing activities.
a) Contact a knowledgeable tax accountant to discuss the tax ramifications (income and capital appreciation) encountered by investing in your home country versus elsewhere. For example, as a US citizen, it doesn't matter where I invest, they want my money.
b) Become at least passingly familiar with the basics of investment products... stocks, bonds, alternative investments (commodities, metals, REIT's, arbitrage, M&A plays, and the funds that invest in them). I believe the "traditional" ratios of cash/bonds/stocks are bullsh*t numbers in this world of today.
c) Determine your own appetite for risk. You can Google for websites that let you test yourself. You might think you are aggressive but might rethink that if I offer you an investment that requires a 5 year lock in period.
d) Work backwards to determine your retirement requirements. Assess how much money you need to live on. Subtract out any social insurance you will get. Assume that the rest of the money will come from investments generating 4 to 6 percent a year. Now you have your investment targets.
e) No one works for nothing, and even independent advisors have to have an investing philosophy. Avoid people who work only for one company or represent only one fund (or set of funds)... for example, can offer you only ING products. I suspect you'll need to find someone in your home country or the US... if you find one in Singapore, it will be a miracle.
f) Look for the following additional qualifications.
i) Can offer you multiple investment alternatives.
ii) Is compensated roughly equally by each of those alternatives, that is, he is compensated by the funds or investments, not by you, but has no real incentive to steer you one way or the other on the basis of his own income.
iii) Understands that "traditional investments" like stocks are available through mutual funds and ETF's at very low management costs, and will allow you to make your own selections not subject to his management fees (he can offer you nothing for "managing" a Fidelity or Vanguard fund).
iv) Is thoroughly able to describe to you such basics as the trade offs between bonds and bond funds, risks and rewards in alternative investments, his views of international markets, capped risk and return funds, etc. You want to know that the guy has a framework within which he provides his investment advice... knowledge of world economics, his take on them, and impact to you personally in your investment package.
v) Will offer you advice on an hourly basis for things like stock portfolio selection outside of any funds for which he is compensated.
Unless you plan to spend a lot of time with your investments, I don't see much point in chasing individual stocks and bonds, except for maybe some small percentage investing to see what kind of a player you are, or, if you know someone that can provide you an investing advantage... a brother in law running the company that gives you insights into future performance.
Instead, you really dice up your investment picture into several categories, then work with your advisor to decide the percentage of each based upon required returns, risk tolerance, and his views of the world.
a) International stocks and bonds versus "home country" - for me, the USA.
b) Large cap versus small cap investments. Doing an ETF that tracks S&P 500 gives you a large cap portfolio, the Russell 2000, small cap.
c) Mix in alternative investments. I have chosen funds/ETF's which offer a variety of trading alternatives, depending upon the degree of focus of a particular line... foreign real estate, commodities, BRIC/BRAC investments, etc.
Stuff your money in and watch what happens.