With all that life throws at you, it can be difficult to carve out time to focus on the financial side of things and especially to be constantly monitoring progress along the way. Steve Settle, Partner at Select Investors, shares some of the key considerations when planning your financial future.
Aim to take the emotion out of your investment decisions
In times of uncertainty (i.e., most of the time), emotional decisions can overtake rational views. This can be a serious threat to long-term financial health. It is understandable for investors to be influenced by the constant hype created by media and other external speculation, but it is the tide and not the waves that is important. Emotion-driven behaviour contradicts the investment principle ‘buy low, sell high’.
Don’t try to time the markets
Nobody can predict the future (and if they say they can, head for the door). The only certainty is that it is impossible to be sure how markets will move – they will recover, and the global economy will continue to expand over time. The sharpest falls and the largest gains are often concentrated into short periods of time and if you try to time the market to avoid the falls, you are highly likely to miss the gains.
Segment your requirements
Everyone needs a security blanket should an emergency arise (you lose your job, need to relocate, emergency travel etc.) invested in short term liquid assets, typically generating very low rates of return, as liquidity and capital protection are the key drivers. In contrast, we will ultimately need passive income later in life and will also need money along the way for major capital requirements (property acquisitions, children’s education etc). Immediate access is not required, so all money on hand today that is surplus to current requirements and emergencies should be invested for a time frame that is not influenced by short term events. Statistically investment returns are significantly more predictable over the longer term (if invested correctly – see below).
Diversification is important to investment success
Invest in assets that have the potential to grow in value and protect you against inflation. There are different ways to diversify and the more you can utilise the better. For example, you can diversify by number of holdings, asset category, sectors, geographies, currencies and use investment managers with different investment styles.
Keep focussed on the reasons why you invested in the first place
Working in Singapore offers a unique opportunity for expats to accumulate capital that should not be ignored. No plan is perfect, but the most important thing to do is to make one, to revisit it regularly and adjust where necessary. Don’t let perfect be the enemy of good – the plan and the review process are the building blocks for success. Getting help from someone who has done it before – a guide through an uncertain and changing landscape – makes the process easier and more likely that the plan will be reviewed and followed.
Steve Settle works in tandem with Tristan Perry, Head of Tax at Select Investors Australia, to support expatriates with their financial wellbeing, through integrated tax and wealth planning during their time in Singapore and beyond.
Contact Steve on firstname.lastname@example.org or +65 9776 0969 to arrange a consultation and discuss your planning needs for your financial future.