Financial planner's advice to young people is to set aside half of what they make to invest
When it comes to money matters, senior financial services consultant Monalisa takes a prudent and practical approach that reflects much of her upbringing.
She not only benefited from the sensible money management lessons from her parents but also from the dire circumstances that hit her family.
The end result is that Monalisa, who goes by one name, like most Indonesians, has become a firm believer in spending wisely and saving for a rainy day.
"I would rather spend money on sharing a good meal with friends. But unnecessary expenditure, like taking a taxi where public transport should suffice, will upset me," said the 32-year-old.
Growing up in Indonesia in a well-to-do family which ran two small businesses, Monalisa - now a Singapore permanent resident and mother of two - credits her parents for inculcating the habit of financial management in her and her younger brother, Jackson.
Simple things like keeping an accounting book of their daily expenses and encouraging them to handle personal expenditure with their allowances went a long way towards instilling a sense of responsibility on money matters in the children.
She says: "I want to share with my daughters what my parents have taught me."
Worst and best bets
Q. What has been your biggest investing mistake?
A. I invested in a financial stock counter in July 2008, shortly after which the global financial crisis followed with the fall of Lehman Brothers. My investment was reduced to nothing. It was not a very big amount but I lost 99 per cent of my capital within two months.
It was a learning experience, which taught me to invest in things that I am familiar with. I don't try to trade any more. One can never outperform the market.
Q. And what has been your best investment?
A. I think my best investment is in myself and in my financial planning business. Every year, I upgrade my knowledge by doing some industry-related courses. I set aside time and finances for these upgrading activities.
I have learnt estate planning, where I work with clients to create positive estate and healthy distributions within families. My business grew by 30 per cent last year.
I am also a member of the Million Dollar Round Table, an organisation representing the top 6 per cent of financial consultants worldwide. This is a result of my investment in myself.
Twin misfortunes hit the family in 1997 when her mother was diagnosed with stage four lung cancer and, a week later, the Asian financial crisis struck, reducing the family assets to a 10th of their value. Circumstances forced the teenager to grow up faster.
Soon, the family was selling the assets to pay for her mother's medical bills. And, by the time her mother died four years later, they were in debt.
Yet, a determined Monalisa gained admission to Nanyang Technological University to study electrical and electronic engineering and worked part-time to take care of her expenses here. She found a full-time job here and followed her parents' advice to save at least 20 per cent of her income each month.
"We hear stories of young people today frittering their salary away and being short of cash within the third week of the month," she says. "My advice is to set aside half of what you make to invest. Seeing your money grow can be addictive."
Q. Moneywise, how were your growing-up years?
A. I learnt the importance of money and the ways to manage it at a young age. My parents gave my brother and me full responsibility to manage our own expenses.
We got a monthly allowance which we used to pay our school fees, bus fare, food and recreation costs. Our mother taught us how to maintain a simple balance sheet to record our expenditure.
We were paid for helping with household chores during the Ramadan period and for working in my parents' real estate and offset printing businesses during vacations. These experiences helped me know the value of money.
Q. How did you get interested in investing?
GOOD RELATIONSHIP WITH MONEY
I believe in treating my money well, just like a good relationship, and it will grow. My husband and I also believe in saving, as well as in giving, by way of charity. Being a good steward of money will allow you to do all this and more.
MONALISA, on her attitude towards money.
A. In Indonesia, we had a scheme called Time Deposit - a savings scheme which fetched a good interest rate of 10 to 15 per cent per annum back then. It was satisfying to see my investment grow. It was one of the push factors.
Another was my mother's illness. Her coverage was only US$50,000 but the total medical costs were well over US$500,000. Our assets, which had to be liquidated to pay for the medical bills, fetched very little during the financial crisis.
Learning from these experiences, I made sure I now have good insurance policies in place.
Q. Describe your investing strategy.
A. I take a long-term approach to investment, with an eye on returns in the short term. Shares and high- risk trading is not for me. Property is a good long-term investment. I go for exchange-traded funds with a three- to five-year investment period.
My husband Manfred Han, 36, and I have personal insurance such as early-stage critical illness coverage and critical illness coverage. We have this coverage for our daughters as well.
We are adequately covered to ensure that we protect five years of our income in the event of illnesses. We also have term insurance to cover our liabilities and provide for our children if anything were to happen to us. Our endowment savings guarantee returns on our retirement.
We also try to balance liquid investments with illiquid investments. We keep six months of our expenses in cash in an emergency fund to tide us over any crisis that may arise.
We review our finances every year and adjust our planning according to our changing needs. Our second daughter was born last year, and providing for our children's health and education is a priority. So we review gaps in our insurance needs and reallocate funds.
Q. What does money mean to you?
A. There is a saying: If you have a careless attitude towards money, you will not attract wealth. I believe in treating my money well, just like a good relationship, and it will grow.
My husband and I believe in saving, as well as in giving, by way of charity. Being a good steward of money will allow you to do all this and more.
Q. What's the most extravagant thing you have done?
A. I spent a lot on getting two new tyres and a maintenance package on my first car, a Kia Cerato. It was almost 5 per cent of the car's total value.
Q. What are your immediate investment plans?
A. My husband and I are planning to upgrade from our HDB flat to a freehold landed property by the end of this year. Land is scarce in Singapore. So, if this goes through, it will be a very big achievement for us, very dear to our hearts. It is a very practical investment, considering the long-term returns. We believe that this will be a good legacy to leave behind for our children. So we are setting aside funds to fulfil this goal.
Q. What's in your portfolio?
A. My overall portfolio is a six-figure sum. I invest mostly in commodities, gold and silver, to be precise. I hedge the precious metals against currency. I also own an overseas commercial property which has grown in value by around 15 per cent in the last three years.
I invest in oil exchange-traded funds for the medium term, which has also worked well for us. My returns from them have increased by nearly 10 per cent in the past six months.
We save 30 to 40 per cent of our income each month, of which at least 20 per cent is diverted into long-term savings like insurance and real estate. The rest is in medium-term investments.
Q. How are you planning for retirement?
A. As long as my husband and I are active financial planners, there will be no official retirement for us. Our plan is to have a passive income of at least $5,000 per month, inflation-adjusted, for the rest of our lives. Our financial planning business as consultants with AIA has started generating passive income for us and we plan to grow it.
Q. Home is now...
A. A four-room HDB flat in Telok Blangah.
Q. I drive...
A. A second-hand white BMW 5 series that I bought in 2015.
A version of this article appeared in the print edition of The Sunday Times on January 08, 2017, with the headline 'Monalisa and the art of making money'. Print Edition | Subscribe
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