It was a very unfortunate event that investors lost their hard-earned money and retirement funds with Six Capital (Read the story here: Angry investors file police reports against FinTech firm Six Capital).
I am rather concerned with this statement in the Straits Times article on Six Capital: A few retirees indicated that they had poured in significant retirement sums. One lady was the age of my mother. She said that she was going to the temple to pray.
What can we learn – as retail investors – from this incident?
Let’s use the SABO model to analyse this incident. By the way, this SABO is NOT the Singlish word for “sabotage”.
SABO stands for Suitability, Affordability, Benefit and Objective.
Before we invest, we need to have a very clear objective in mind on why we need to invest, how long is our investment horizon, what is our risk profile, how much time we can allocate to monitor our investment portfolio, etc. Setting the right objective is very important because it serves as our foundation to identify, select and understand the right asset classes that meet our objective.
Once we are clear with the objective, the next step is to select the asset classes which are suitable to our risk appetite, lifestyle, availability of time to do our homework, and investment horizon.
Here are examples of how one’s lifestyle, personality and risk appetite are wrongly matched with asset classes and investment strategy:
Due to the mismatches, the above examples are all headed for disaster.
If you are struggling with your current investment, you should immediately do a review on your current investment portfolio or your trading strategy before you commit more time and more money doing something which may not be suitable for you.
The following are questions investors have to ask themselves to see whether the investment is suitable for them:
Next, the investor ought to ask:
Finally, the investors should have these questions:
My recommendation to retirees on their retirement fund planning:
The first priority is Capital Preservation, not Chase for Return, because you can’t afford to lose your retirement fund unless you can replenish your capital easily if you lose all of it.
Look for investments which are less volatile and pay consistent dividend, such as Bonds or REITs.
Nothing is guaranteed in this investment world. Please don’t believe in marketing materials that indicate “Guaranteed Return”, etc. Countries, banks, insurance companies can all go bankrupt, so, where does the guarantee come from?
Do have a diversified investment portfolio and manage the risk. Don’t put all your eggs into one basket. You cannot afford to make any costly mistake at retirement age. One big mistake may wipe out your entire retirement fund.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Kenny Loh is a distinguished Wealth Advisory Director with a specialization in holistic investment planning and estate management. He excels in assisting clients to grow their investment capital and establish passive income streams for retirement. Kenny also facilitates tax-efficient portfolio transfers to beneficiaries, ensuring tax-efficient capital appreciation through risk mitigation approaches and optimized wealth transfer through strategic asset structuring.
In addition to his advisory role, Kenny is an esteemed SGX Academy trainer specializing in S-REIT investing and regularly shares his insights on MoneyFM 89.3. He holds the titles of Certified Estate & Legacy Planning Consultant and CERTIFIED FINANCIAL PLANNER (CFP).
With over a decade of experience in holistic estate planning, Kenny employs a unique “3-in-1 Will, LPA, and Standby Trust” solution to address clients’ social considerations, legal obligations, emotional needs, and family harmony. He holds double master’s degrees in Business Administration and Electrical Engineering, and is an Associate Estate Planning Practitioner (AEPP), a designation jointly awarded by The Society of Will Writers & Estate Planning Practitioners (SWWEPP) of the United Kingdom and Estate Planning Practitioner Limited (EPPL), the accreditation body for Asia.
