Me & My Money

Early blunders taught him to diversify his portfolio

Mr Prashant Aggarwal sought financial advice after a bad case of speculative investment left him with zero savings and a huge debt. The professionals made him realise that the most important investment is in the future security of his family.
Mr Prashant Aggarwal sought financial advice after a bad case of speculative investment left him with zero savings and a huge debt. The professionals made him realise that the most important investment is in the future security of his family.ST PHOTO: ONG WEE JIN

After suffering heavy losses in his youth, CompareAsia exec now invests with an eye on the future

When Mr Prashant Aggarwal first approached a financial planner, he was 25 years old, newly married and had a mortgage to pay on his two-bedroom apartment in Sydney, Australia. He was also suffering from a bad case of speculative investment that had left him with zero savings and a huge debt.

His investment instrument of choice - called contract for difference (CFD) - initially fetched him handsome returns, which had boosted his confidence but also led him to reckless behaviour. He poured all his gains into a higher wager in a get-rich-quick attempt.

The result was sleepless nights, constant pressure to monitor the markets and eventual losses.

Chastened by his folly, driven by guilt at letting down his wife and parents, and worried about his future, Mr Aggarwal decided to wise up and seek guidance from a financial adviser.

"I was so focused on being a millionaire quickly, I did not know when to stop," recalls the now 41-year-old chief commercial officer of CompareAsia Group, an online comparison site for financial, telco and utility products across Asia.

Advice from professionals made him realise that the most important investment is in the future security of his family in case he dies tomorrow. "Make sure you are insured and your mortgage is covered," he was told by one adviser, "so that your family does not have to live with your debt burden".

Sage words, which Mr Aggarwal has not forgotten.

Today, he has an insurance portfolio which is double his liabilities, a savings plan which fetches regular returns and a retirement plan that will sustain him for as long as 30 years after he calls it a day.

A healthy portfolio is like having a balanced diet, he says. Just like a good diet means having a healthy body and a healthy mind, a good portfolio means healthy finances and peace of mind.

  • Worst and best bets

  • Q What has been your biggest investing mistake?

    A I used to have a large portfolio of speculative investments such as contract for difference (CFD) in my younger days. They delivered some initial success which led me to become greedy and take larger bets in the instrument.

    It backfired, and I lost nearly US$30,000 (S$40,700) in two months. To cover my losses, I betted higher amounts and spent sleepless nights monitoring the US markets while I was based in Australia.

    This meant a lot of pressure, many late nights and less focus on my job. Unfortunately, I lost money again and my savings dwindled to zero.

    That's when I made a decision to stop chasing quick money and closed all my CFD accounts.

    Q And what has been your best investment move?

    A My best investments have been blue-chip stocks such as Visa. I invested in the Visa stock back in 2012 and have consistently bought more every year. My initial buy was at US$97, followed by lots at US$125, US$155 and US$170. After a 4:1 split, the stock is currently at US$80, hence it has given me more than 300 per cent return on my initial investment. Visa occupies 50 per cent of my total stock portfolio.

    Other stocks I own are BHP Billiton, Apple, Citibank and Bank of America.

    While I avoid reading the markets, I do take advantage of major market movements.

    For example, I exited 50 per cent of my positions before Brexit (to hedge my risks) and re-entered after the Brexit announcement, making a 7 per cent return within a month.

Q Moneywise, how were your growing-up years?

A I grew up in a humble middle-class family in Delhi, India. My father was a civil servant and my mother worked at a school. We lived in a two-room house provided by my mother's school to its employees.

This was before globalisation reached India in the late 1990s. Socialism was in the air, and sharing resources was part of the national psyche. So resources were limited and aspirations included performing well in school, completing our studies and landing a good job. If we did better than our parents, it was considered good enough.

I remember having my first bottle of cola when I was well into my teens.

Q How did you get interested in investing?

A My investment journey, subconsciously, started during my growing-up years. My parents lived in the house provided by my mother's employer most of their lives, and bought property of their own very late in life. I was witness to how hard they worked to save up for a house they eventually bought in Delhi after my graduation.

Wanting to do better, I started saving as soon as I landed my first job. I was offered a two-year stint in Australia by my company.

While working there, I saved every penny. While all my colleagues were encouraging me to go travel round the world, I was saving up to buy an apartment, which I did.

But saving was not enough. I realised that I needed to grow my money if I were to pay off my mortgage before I got old. That was when I started investing (and got burnt) in contract for difference.

Q Describe your investing strategy.

A What my early investment blunders have taught me is not to put all my eggs in one basket.

So I have built for myself and my family a portfolio that is a good mix of insurance, equities and retirement benefits. Besides that, I have also invested in property in a few cities, and plan to buy a house in Singapore some day.

I also compare my financial advisers. It's like going to the right doctor. My financial health is as important as my physical health.

Q What's in your portfolio?

A My portfolio is a mix of insurance plans, a long-term retirement plan, wealth management instruments and speculative investments. It includes real estate, shares and other individual investments - together amounting to about US$2.5 million (S$3.4 million).

Twenty per cent of my portfolio comprises insurance policies and retirement funds.

I have enough life and medical insurance policies to protect my family's present and future needs.

My life insurance value covers all my mortgage liabilities and my child's education, with some surplus. This is to ensure that my family's financial future is fully secured in case of my untimely death.

Since I don't believe in putting all my eggs in one basket, half of my life insurance is covered by life-term plans and the other half via investment-linked policies.

Another 20 per cent of my portfolio comprises long-term shares of blue-chip companies, which are part of my wealth management portfolio. At any given time, I invest in a maximum of five stocks, which are manageable and do not need to be reviewed on a regular basis. The idea is to hold them for at least 18 to 24 months before exiting and re-investing in other shares. My target is to get a return of 8 to 10 per cent per annum on these stocks.

Then there are funds set aside for speculative investments. They are the smallest part of my portfolio, around 10 per cent, and are meant for investments in relatively high-risk instruments like exchange-traded funds and cryptocurrencies.

Besides all these, 50 per cent of my funds are in property investments in various parts of the globe.

I also have a US$200,000 investment-linked plan for my daughter's education, available to her when she turns 18.

Q How are you planning for retirement?

A My retirement plan is to continue to enjoy a similar lifestyle as I do now. For this, I need an adequate retirement pool which will help me sail through 25 to 30 years of my retired life in comfort. For this, I need to make sure that I save enough money for the next 20 years, which will fund my expenses for the following 30 years.

To plan this, I set aside a fixed amount of funds with Zurich and Friends Provident Fund. I've worked backwards on my retirement needs and invest a monthly sum with a plan to earn a consistent 5 to 6 per cent return on an annualised basis.

My retirement funds, along with CPF money, should be sufficient for funding my retirement expenses for 25 to 30 years post-retirement.

Q What does money mean to you?

A I think money needs to be managed well to work for you.

I was brought up well in a humble environment by decent parents, and yet I lost control and speculated away my savings.

My two-year-old daughter is growing up in a much more privileged environment, and if she comes into sudden money as inheritance, there is a high chance she would make the same mistakes as I did, or more. So, I have made sure she gets her inheritance in small chunks during important milestones of her life - like when she wants to study abroad in a university, or when she wants to get married.

It is important to teach the younger generation the best way to make use of the money and financial knowledge we have, so they don't make the same mistakes we did.

Q What are your immediate investment plans?

A I am a permanent resident of Singapore. This place is like a second home to me as I frequently visit this city. My plan is to buy a house here and build a permanent base.

Q Home is...

A A three-bedroom rental apartment in Hong Kong, where I live with my wife, daughter and two dogs.

Q I drive...

A I don't. Cars are a depreciating asset and Hong Kong has high parking charges. But its public transport is world-class and that takes care of our needs.

A version of this article appeared in the print edition of The Sunday Times on September 03, 2017, with the headline 'Early blunders taught him to diversify his portfolio'. Print Edition | Subscribe