Stay focused on your financial plan (Part 1)

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This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on October 12 - 18, 2015.


Investors would do well not to neglect their financial affairs in this challenging economic situation. Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui suggests ways to optimise your personal financial plan.


INVESTORS should not overlook their personal financial plans in this bleak global economy, warns Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui.


“Don’t [just] talk about the big issues. [Also] talk about your personal balance sheet, whether it is balanced or not. Your net asset value, whether it is positive or negative. Is your income in deficit or surplus? Can you afford to invest or not?” he says.

“Focus on your personal finance [rather than on your] circle of influence because what I have discovered is that a lot of people spend time talking about a lot of issues but don’t spend enough time reviewing their own plans.” 

Many are finding it hard to cope in the current economic landscape, with the plunging ringgit, rising inflation and imposition of the Goods and Services Tax. The constant unfavourable news flow is a cause for concern among institutional and retail investors alike. 

“There are a lot of issues surrounding us, all of which are very disturbing, negative and largely affecting our emotions. There is a great deal of uncertainty in this economic condition,” says Yap. 

Yap has 15 years’ experience as an independent financial adviser. He is also an author, TV personality and columnist. His clients range from middle-class investors to some of the major owners of public-listed companies on Bursa Malaysia and CEOs of multinational corporations and successful small and medium enterprises.

In times like these, he says, it is very important for investors to mind their own financial position and not to follow the herd. “A lot of people make decisions based on the grand economic movement — they follow the grand universe, but forget their own little universe, which is even more important. Don’t follow that nonsense because a lot of the time, it is irrelevant to you.”

Instead of acting purely on news flow, investors should review their personal financial plans to see if they have enough holding power, says Yap. “For example, oil prices are currently low. Do you have the holding power if it takes five years for oil to go from US$50 to US$100 a barrel? Will you be happy waiting for the price to rise?”

To determine whether you have enough holding power, calculate your expenditure during the time that you are willing to wait, and only invest what you have left over. “Say you have RM3 million, and you calculated that you will use RM500,000 over the next three years. That means you still have RM2.5 million to invest with,” says Yap.

While waiting for the right opportunity to invest is very important, investors should avoid waiting too long to invest their funds, says Yap. Some people have a lot of cash to invest but they never see opportunities as opportunities. This is a very big loss, he points out. 

“I still remember when I went to Intel to give a talk. It was in 2008 or 2009, during the global financial crisis, and I knew all the good stocks were at their lows. So, I told them that since they are earning quite a good income, they should invest. And they agreed that they should invest.

“A year later I got invited back, so I asked them if they had invested. They replied that they had not. When I asked them why not, they said they were afraid that the prices would drop further. But instead of falling, the prices started to rise rapidly and soon they were more expensive than before.”  

Investors should continue to enhance their financial knowledge and not be narrow-minded when it comes to reaching their goals as many roads lead to Rome, says Yap. “In this very complex world, one has to be very open and broad-minded and explore all possible options to achieve [one’s financial] goals. The goals could be very specific, but the options have to be very flexible. Don’t lock in the goal and method together.”