EVERY year, around the world, millions of people make resolutions. One of these is often saving more money. Business Day asked some local financial planners how they help people achieve their money goals.
Angus Young, CEO of NCB Global Finance Ltd
"Financial planning should never be considered at the start of a new year, financial planning should be considered from the moment you are born," Young said. The current economic times in TT is the new normal, he said. "Accept that, pivot, if you have to, and focus on the next move because there are always opportunities in crisis."
His advice was blunt: don’t save, invest. "Coming into a lump sum of money for most people does not secure their future. What it is, is simply a ticket to a secure future, in that it gives them a chance to invest and be exponential." In today’s environment, he said, cash is not the gift that keeps on giving. But cash can give you access to a gift that keeps on giving if you invest well.
The two most popular requests Young gets from people at the start of a new year are gaining access to foreign currency and where to invest TT dollars.
"It really depends on what their aspirations are. The first step would be having a conversation with the person to understand that and what their current status is."
In the case of a private wealth management (PWM) opportunity, and once the person can explain how they obtained their wealth, Young suggested using an asset manager, like NCB Global Finance or Guardian Asset Management. For ultra-high net worth individuals with hard currency, he suggested NCB's off shore banking facilities in the Cayman islands or its Clarien Investments business in Bermuda. PWM experts also work with the individual to tailor a portfolio that suits personal needs and aspirations.
"Not all investors are alike, some have more tolerance for risk than others."
For people who want to start their own business, Young said, "The discussion would be geared more towards identifying the ideal capital structures for their business and then working with them to identify what are practical and available options."
When saving money or planning for retirement, he suggested where disposable income is concerned, save first and spend the residual as opposed to spending first and then trying to save any residual if any. Regarding debt, he said, it can be a very useful thing once it's being used for appreciating assets like real estate but not such a great thing (even though it may be necessary) if it's being used for depreciating assets like cars.
"My wife Teneille has a saying about people who want to start a business. 'Everyone likes business, but business does not like everyone.' In other words, 'Gopaul luck is not Seepaul luck,'" he added. "Entrepreneurship is not for everyone. Entrepreneurs are very special people who have innate abilities, like a sixth sense."
To people who want to start a business in 2020, Young said, "My advice would be to work with a financial professional to build a financial model." Then, they should spend a lot of time researching and understanding the risks to that model and whether those risk can be effectively mitigated. That said, he did note that he knew of many people who threw caution to the wind, started their businesses without considering the risks and are hugely successful. "In these cases, ignorance is bliss.”
With regard to insurance, Young quoted Chinese billionaire Jack Ma.
"Ma said that buying insurance cannot change your life, but it prevents your lifestyle from being changed. (Medical bills) can wipe out an entire family’s savings, which might have taken decades to accumulate. You will not turn bankrupt because of insurance but you might cause your loved ones to become bankrupt if you don’t insure.”
Young also quoted his friend, Dale McLeod, who is an insurance agent.
"Life insurance is like a parachute. If you don't have it when you need it, it's too late. In my career, I have four competitors – death, disability, critical illness and old age. My job is to get to my clients and prospects before they do."
Richard Demming, a financial planner since 1987 and a senior manager at Guardian Life
"It is important to have a financial plan and to review it at least once a year," Demming said. He also believes saving money should be an everyday goal and not something people should try to start as a New Year's resolution. "My overall advice is that if you save money today, money will save you tomorrow."
Saving more money is always a priority, he said, but the easiest part is the numbers – the hard part is discipline. At the start of the new year, he said, people generally come seeking advice on how to manage their expenses to live within their means.
"So, we help people develop an accurate budget and set realistic goals."
People wanting to start their own business is another popular request.
"People often ask about ways to make additional income. My advice varies depending on circumstances." Typical considerations include whether people want to start a business alongside their current job and when to go into that business full time. He also tailors his advice to these clients based on factors such as how much start up capital they have and how much time they can devote to a business.
"The right person can be successful in this career no matter what the prevailing circumstances."
Sarodh Ramkhelawan, chief investment officer at Bourse Securities
The start of the year is usually a time when people reflect on where they are and where they want to be, Ramkhelawan said, however, financial planning is really an ongoing exercise.
"Life happens, things change. We always need to focus on ensuring our financial position remains as stable as possible, so that we can enjoy other important aspects of life."
At the start of a new year, people often ask him, what financial assets (stocks, bonds, and the like) they should be investing in, and which to avoid. Other common questions include, how to invest despite not being a professional or consistently following financial markets and if there are ways to invest for the long-term.
"People come to Bourse either knowing that they should invest but not knowing how, or with a fairly defined plan to invest and their objectives, but may need professional guidance." The company helps to guide them with investment solutions that best match their unique circumstances.
Ramkhelawan viewed discipline as key to saving money, planning for retirement, keeping out or getting out of debt.
"You have to be disciplined to stick to a budget, which includes setting aside funds in the form of investments. Depending on how disciplined you are, there are different financial solutions available." To people seeking financial advice and planning for future contingencies, Ramkhelawan offered this advice: "Firstly, investing shouldn’t be a one and done type exercise. Building wealth is something that requires discipline in how you invest and how you spend." When people have this discipline, Ramkhelawan said, planning for future, unforeseen events becomes that much easier. So, the earlier you start saving or investing, the better.
"Spreading the financial commitments of saving and investment over a longer period make it easier on your lifestyle. Don’t wait until you are close to retirement to start."