Published on June 27, 2005

Three financial experts explain how their strategies are suited to their situation

Three financial experts recently discussed with The Nation how they allocate their assets to build up nest eggs. Even though they have different investment styles, they have something in common: they know what their goals are, how to achieve them, what their current situations are and how much investment risk they can stomach.

The other common factor is that they have tried their best to be free of debt.

Reungvit Nandhabiwat, managing director of Ayudhya JF Asset Management, sets his sight on becoming affluent before he retires in the next decade.

Aware that the real value of money in the bank decreases, Reungvit has invested 47 per cent of his assets in fixed-income vehicles, enjoying a higher return than he would have had he put the money in government bonds. He has less than 3 per cent of his assets in bank accounts, both savings and current.

“The bank account is for monthly payments like petrol, meals, phone bills, electricity charges, UBC cable TV fees and things like that. If I have an additional expense like taking a trip abroad or buying special things, I’ll pay with my credit card. Then, I’ll sell units from mutual funds to pay the card issuer when the payment comes due,” he said.

With a stable job at AJF, Reungvit shuns investing in government bonds because he doesn’t need the guaranteed returns. Instead, he prefers less sure things, like investing in equities.

Assuming that he has 10 years left to work, he is not concerned about the vagaries of the stock index today.

Reungvit has invested 25 per cent of his assets in long-term equity funds and retirement mutual funds (RMFs), which concentrate on the stock market.

He uses the mutual-fund service because his job doesn’t leave him time to monitor stock movements minute-by-minute.

“If I didn’t have a permanent job, I might have been a day-trader. But being job-bound, I let the mutual funds work for me,” he said.

Besides retiring comfortably, his other big goal is to pay for his two children’s studies abroad. Hence, Reungvit has put 25 per cent of his assets in foreign mutual funds.

“I know that I will have the expense in foreign currency, so I have to have the foreign currency to support the expenses. This way, I don’t have to worry about the currency exchange rate in the future,” Reungvit said.

His asset allocation is designed to meet his current circumstances. He may adjust his investment portfolio when he gets older and circumstances change.

Despite managing other people’s money in the fixed-income market, Teerasan Dutiyabodhi doesn’t invest a single satang of his own money in such financial tools.

The fixed-income fund manager at Aberdeen Asset Management said that he adjusted his investment portfolio last year after he got married.

“As we have a child, we had to prepare what’s best for our child. So, I adjusted my portfolio to be more secure,” Teerasan said.

He put 20 per cent of his funds into an insurance policy to cover his child. He shifted 50 per cent of his money into bank savings accounts, even though he knows it produces nothing when the inflation rate is taken into account.

“There are a lot of unexpected expenses when you have a kid, so I have to allocate more to my savings accounts in case I need money urgently,” said Teerasan, who’s in his early thirties.

Before getting married, Teerasan had 50 per cent of his wealth in the stock market.

He keeps 20 per cent of his money in mutual funds that invest purely in equities and another 10 per cent in the stock market.

Teerasan, who manages a fixed-income fund worth Bt2 billion, said he plans to move some of his bank savings into the fixed income market.

“If it’s about myself, I can take high risks as I expect high returns. But when it comes to the family, I need more of a cushion, and fixed-income seems to be another alternative for my investment money,” Teerasan said.

Wipada Jira-panich, a 29-year-old equity-fund manager at Asset Plus Fund Management, is single and therefore can take greater risks than Reungvit and Teerasan.

After analysing the market, she has put 50 per cent of her savings in the stock market through mutual funds.

“At my age, I can tolerate higher levels of risk. But just to avoid conflicts of interest, I choose to invest through mutual funds rather than invest directly in the stock market,” Wipada said.

“Although the SET has been hit by negative factors for months, the index has been able to hang around 680. I think it makes sense for me to invest most of my savings in the stock market now. The Thai economy remains resilient. I think investing in the stock market should yield the highest return among all other assets for at least the next 3-5 years,” Wipada said.

The manager of funds worth Bt3 billion, Wipada has diversified her own investment portfolio by putting 20 per cent into fixed-income funds.

Although she can take high risk, she doesn’t forget to keep the remaining 30 per cent of her assets in bank deposits as backup funds.

So, if you spend your money wisely and manage your investment portfolio properly, your dream of becoming a millionaire can one day turn into reality.

Piyarat Setthasiriphaiboon

The Nation

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