Investment Basics

Date: August 12, 2009

By Romesh Navaratnarajah

Tips to better Investment Planning and Management

When it comes to planning your investment portfolio and managing it, getting the best financial advice is very important. This is because a lot of hard-earned money is at stake, money that will help you achieve financial security when your retirement rolls around.

Before you start looking for a financial advisor to help you, come up with your own concrete plan or strategy of what it is you need, what you intend to invest on and how you want to make it a money-making endeavour.

Mr Christopher Tan, Chief Executive Officer for Providend Pte Ltd has some tips to help you get started with your investment planning. They include:

  • Monitoring the market and market trends. This will help you determine whether it is an opportune time to invest in something and whether other people are looking into the same type of investment.

  • Getting advice. If you are not savvy when it comes to financial matters, don’t worry. That’s what financial advisors are there for, to guide you along step-by-step and give you sound advice. However, it is important to choose the best financial advisor that you can feel comfortable with.

Approaching financial planning
If you are serious about looking for the best financial planner, Christopher says that there are a few areas that you can look at for help. Insurance companies, banks and independent financial advisers provide tips on how you can better manage your finances and grow your wealth.

It really pays to find a good financial planner, because at the end of the day, this is a business and they all want to have you as a client. So what are some of the some of the traits that a good financial planner should have? They include:

  • Good character

  • Competence

  • Education and certification

  • Experience (A minimum of three years)

  • Independence

  • A relevant license

At the end of the day, your planner must understand your needs and must be able to relate to you. It’s no point having someone who snubs you because you don’t understand a certain financial term or concept. So go for someone who you can gel with!

Apart from looking for a financial planner with good credentials, it’s also important to research the company that they work for. A corporation with a good reputation is something you should be looking for. Also, every financial planner should have the backing of a team at their company to help them out. Do not worry too much about how much it costs to employ a good financial planner because getting them is usually quite affordable.

Apart from your research, you should also interview your advisors to get a better understanding of how they work and whether you will feel comfortable with them. Interview around three to five advisors and make it a point to ask thorough questions. As a guide for you to follow, here are some questions that you can ask them before and during the interview, such as:

  • Providing you a resume with a cover letter stating why he or she should be your advisor.

  • Ask them to share with you how they helped a client.

  • Ask what they did wrong.

  • Will there be a conflict of interest.

  • Ask him if solutions come from a team at his company.

  • See if they possess empathy and sincerity.

Looking for a good financial planner involves hard work but it’s worth it if it means that you’re going to reap significant financial rewards. Remember that when it comes to financial planning, it should be you that hunts for an advisor. Don’t let an adviser hunt for you. Happy investing!


The presenter, Christopher Tan, is the Chief Executive Officer of Providend Pte Ltd. Christopher brings with him more than a decade of experience in the wealth management and financial planning industry. He is the Chief Executive Officer and Cofounder of Providend Limited, an independent private wealth and investment management firm. In 2008, Chris led Providend to be the first and only Independent Private Wealth Management firm to be given The Singapore Prestige Brand Award – Promising Brand. Christopher’s financial views are much valued and often quoted in the media such as The Business Times, The Edge, The Straits Times, Channel News Asia, etc, for his expert opinion in financial matters. As a result of his expertise, Christopher has trained professionals from more than 100 entities locally and in Mauritius, China and Indonesia, wealth management issues. In early 2005, Christopher was awarded the First Prize for the Best Financial Advisor of the Year by Asia Financial Planning Journal. Christopher is a Certified Financial Planner, and holds a Bachelor of Financial Services degree (Hons) the National University of Ireland and an MBA from University of Warwick.

Boldly go the brave…

If you read the headlines in all the major newspapers last year, you would have seen that many financial institutions such as AIG, Lehman Brothers and Merrill Lynch were in very bad shape. Investors had put lots of money, in some cases their life savings into those companies stocks, only to see them being wiped out in the blink of an eye.

First-hand experience tells us that we should be extra careful with our money this year, especially with economic data still so negative. Figures show that unemployment is still moving up whilst GDP is down. But can we afford to be overly negative? What are the analysts predicting for the rest of 2009?

Ever the optimist
Albert Lam, Investment Director for IPP Financial Advisers believes that we should not be too hung up over the negative economic figures. “The market is six to nine months ahead of the data,” he said. He points to the fact that the derivative market almost collapsed earlier this year but has now stabilised, albeit in negative territory.

His advice to investors? “Look to invest prudently.” Albert adds that one bright spot is falling interest rates. And whether it’s a bullish or bearish market, there are still options to make money. “Just don’t take an all or nothing approach,” advises Albert.

According to Albert, the key to investing wisely is to strategise and manage your cash flow. If property is something that you’re investing in long-term and it’s giving you returns, then make it a point to lock in the profits that you make at the end of each month and put it into a safety net.

Despite his somewhat optimistic mindset on the investment front, Albert believes that we are still in the midst of a slowdown and any predictions that economic growth for the remainder of 2009 and next year will be strong should be taken with a pinch of salt. “People say that the market is rallying and the economy is improving, but that’s not because everything is fine. It’s because the system did not collapse,” warned Albert.

According to Albert, the economic foundation in the US is still very weak. “Corporate earnings are still plunging despite many companies releasing better than expected Q3 results.” He reckons that much of the good news we are hearing about is due to massaging of accounting.

However for the time being, Albert does not believe that the slowdown we are going through is as bad as the dotcom burst or Asian economic crisis. He highlights China as a positive economic role model. “China has the highest reserves, a strong and stable government and an economy which is consumption based and domestically driven,” Albert said. For these reasons, he hopes that more organisations look to emerging markets such as China and India as growth areas. But to be on the safe side, go in trenches.

And what about the rest of the world? What changes does Albert hope to see in the coming future that will help jumpstart their economies? Long term, he hopes that consumer sentiment improves. “The foundation of any economy is consumption, and people are not consuming enough right now. This has a spill over effect and contributes to lower imports and exports,” said Albert.

However, will consumption alone be enough to prop up a country’s financial system, or should governments carry on with economic reforms and stimulus packages, as has been the case in the US? Albert believes that countries might want to “shoot more bullets” (financial reforms) if they want to carve out a profitable future.


The presenter, Albert Lam, is the Investment Director, with IPP Financial Advisers, heading the Investment Division. Albert has more than a decade in investment products and services, including property financing, stock analysis, fund management and investment advisory. He regularly contributes to the Business Times Weekend and is quoted often in The Straits Times and Channelnews Asia. Albert holds a degree in Bachelor of Arts in Economics form the York University, Canada.

The low-down on Unit Trusts & ETFs

The global economic situation has somewhat improved but investors are still cautious about taking their cash out of the banks. However, financial experts like Lam Chern Woon, an Investment Strategist for Phillip Managed Accounts believes that consumers can look to secured products such as unit trusts and ETFs.

But will these investment options succeed in bringing back the hordes of consumers, many of whom still have a fresh memory of getting burned over structured products? And ultimately, will they fill consumers’ needs?

Unit trusts
Unit trusts constitute a pool of money that’s invested under a trust deed. Scratch beneath the name and you’ll find open-ended investments where the fund is divided into units which vary in price in direct proportion to the variation in value of the fund’s net asset value. Each time money is invested, new units are created to match the prevailing unit buying price; each time units are redeemed the assets sold match the prevailing unit selling price. In this way there is no supply or demand created for units and they remain a direct reflection of the underlying assets.

The underlying market risk of holding on to unit trusts is that the value of units can go up and down. However, you’ll have the security of having your money professionally managed, by choosing a good fund manager. To reinforce better financial security practices, unit trusts in Singapore must be approved by MAS. A list of them can be found at the MAS website. For more information, log on to

In the investment arena, unit trusts are nothing new, but the roll-out of ETFs in a mass targeted way is an innovation. What are ETFs?

ETFs are open-ended investment funds that are traded on stock exchanges, much like stocks. Only authorised participants in the form of institutional investors can buy and sell these shares directly from a fund manager.

The actively managed ETF claims to satisfy the investor who has a hankering for active fund management, offering a number of benefits including:

  • Diversification. ETFs offer exposure to a diverse variety of markets, including various types of indexes and commodities.

  • Cost effectiveness. ETFs have lower costs than other investment products because most ETFs are not actively managed and because ETFs are insulated from the costs of having to buy and sell securities to accommodate shareholder purchases and redemptions.

  • Tax efficiency. ETFs have low capital gains as they have low turnover of their portfolio securities. Their tax efficiency is further enhanced because they do not have to sell securities to meet investor redemptions.

  • Buying and selling flexibility. ETFs can be bought and sold at current market prices at any time during the day.

  • Transparency. ETFs, whether index funds or actively managed, have transparent portfolios and are priced at frequent intervals throughout the trading day.

Costs, transparency and other benefits aside, will investors catch on to ETFs? For the time being, Chern Woon points to the fact that unit trusts are 30 times more popular with investors than ETFs. It’s early days yet and ETFs won’t replace unit trusts overnight, but we bet that investors will jump on to the bandwagon soon.

For more information on unit trusts and ETFs, please visit


The presenter, Lam Chern Woon,CFA, is the Investment Strategist with Phillip Managed Accounts. Chern Woon focuses on macroeconomics analysis, investment strategy and asset allocation. He was previously with the Monetary Authority of Singapore and Neptune Orient Lines, with 7 years experience in macroeconomic analysis, corporate strategy and valuation. Chern Woon graduated with a Bachelor of Social Sciences with Honours in Economics and a Masters of Science in Mathematics.

Is the global economy over the worst?

The much anticipated news that Singapore’s recession is officially over will undoubtedly jumpstart the local economy. Recent figures already indicate that property prices and developer sales are on the upswing. So the question remains: Is the worst behind us?

Mr Manish Jaradi, Investment Strategist at Standard Chartered Bank cautions that the major industrialised nations, such as the US, UK and Japan are technically still in recession. “Unemployment in the US has hit a high of 9.5% and could go up even more,” said Manish. He adds that while companies are sacking less, they are also hiring less too.

But he believes that despite the retrenchments and other negative news, we are seeing a peak of the financial spread. “GDP may be in negative territory but PMI is on the upswing in the UK, Canada, Japan and the US,” said Manish.

The improving economic conditions are already contributing to a more optimistic mindset among the public. “Consumer confidence is coming back and this has resulted in better spending. Retail sales have gone up especially in Australia and the UK,” enthuses Manish.

This is a far cry from just three to four months ago when economic sentiment was still bad. Manish remembers that equity markets in the US were scraping the bottom of the barrel, subsequently bottoming out on the 9th of March. Today, there are upward revisions in the equity markets, with analysts predicting that we might see a sharp V-shaped rebound. With sentiment improving and pent-up demand being met, Manish thinks the recession in the US will come to an end sometime in July.

“Investors who were pessimistic have moved on to becoming optimistic. Things have definitely turned around significantly as sentiment is concerned,” said Manish. He adds that while valuations are not as cheap, they are still well below the long term average. Meanwhile, mutual fund flows are slow, but have not reached a full rebound.

The China effect

With so much attention being focussed on the current economic situations of developed countries and how it will affect Singapore, another growing trend is being overlooked. As belts are being loosened and iPod sales are on the rise, emerging markets are continuing to outperform, especially China. Money supply growth in the Middle Kingdom has been very high. Little wonder that many investors from Japan all the way to the US have been eager to take their piece of the pie, especially in the Chinese property market.

Who can blame them? Housing prices in the US are still weak, at about 30% to 35% lower than normal. And Manish believes that homeowners can expect a further decrease of 10% to 15% this year. “The cheaper prices are because of a massive supply overhang of property in the US,” said Manish.

Clearly with home markets in Europe, the US and the UK improving, many business sectors will aim to make growth a key target to help regain ground that has been lost as a result of the financial crisis, but will economic activity go back to the way it used to be?

Manish believes that the debt-ridden culture that used to exist since the 1990’s, when debts compared to disposable income shot up especially in the US, and which contributed to the current economic situation will have a long term effect on the consumers psyche. “People are definitely saving more,” said Manish. While that equates to better financial planning, it also means that it will take a longer time for economies which are so dependent on consumer spending to stabilise. How much longer? According to Manish, that means around two to three years.


The presenter, Manish Jaradi is an Investment Strategist at the Group Wealth Management, Standard Chartered Bank, based in Singapore, covering foreign exchange, equity, commodity, and interest rate markets. Prior to his current position, Manish was Chief Technical Analyst, Asia-Pacific, Dow Jones Newswires, based in Singapore. He is a Member of the Market Technicians Association, USA, and holds a Chartered Market Technician (CMT) designation. He is also a member of the Technical Analysts Society (Singapore) and holds a Certified Financial Technician qualification from the International Federation of Technical Analysts. Manish also holds a Masters in Development Economics degree from The School of Oriental and African Studies, University of London.