Her foray into financial investments started early for Ms Lynn Gasper. Now in her late 30s, she started investing when she lived in the United States for 20 years. She returned to Singapore two years ago.
Currently OCBC Bank's group head of unsecured lending, she joined General Electric (GE) after graduating from Indiana University in 1990 with a degree in finance and economics.
As part of her work in GE's internal audit division, she and her colleagues were sent to various countries, each for a few months. She would save and invest the bulk of her take-home pay during these overseas work stints. She worked at GE for 16 years.
In 1999, she did a two-year MBA programme at Duke University, North Carolina, while still working at GE. In 2006, she returned to Singapore and joined Citibank as its regional director of credit cards. She joined OCBC in April this year.
|Ms Gasper, seen here with her partner Glenn Liptak, counts a plucky bet on Brazil in 1998, before it allowed its currency to float, as one of her best investments.
Ms Gasper, a Singaporean, has two financial advisers - one for her US assets and one for her assets in Asia - and reviews her portfolios three to four times a year. She is single.
Q: What are your money habits?
On average, about 25 per cent of my take-home goes to housing and living expenses and 5 to 10 per cent goes to discretionary spending. Of the rest, whatever doesn't go into taxes goes into savings and investments.
Q: Under what circumstances would you utilise unsecured credit?
I would consider taking unsecured credit only when the financing cost is lower than the returns on my investments, or for emergency cash needs.
For example, in 1999, I took out a car loan even though I had enough cash for the car, which cost US$28,000 (S$41,000), because my investment returns were much better than the annual 1 per cent loan interest rate, which was the rate back in the US for two years.
Q: What financial planning have you done for yourself?
In general, I am approximately a quarter each in fixed income bonds, higher risk equities via funds and stocks, value/growth funds, and real estate along with other alternative investments. Currently, I have invested in pharmaceutical firms which I believe are fairly resistant to economic cycles.
To keep tabs on my investments, I do my research online. As pharmaceutical products have long development product cycles, it is critical to understand what's happening with the firm. I also have East European, Russian and Asian funds.
In the last five years, I have enjoyed annual returns of 9 to 12 per cent. I'm comfortable with what I've invested in, so it's a matter of riding out the current volatile market.
Q: What about insurance planning?
At this stage of my life, I have bought insurance largely to mitigate against unforeseen circumstances: that is, for health, disability, accident and property protection. My life cover is about $500,000.
Q: What's your investment philosophy?
I'm a strong proponent of dollar- cost averaging when building or shifting portfolios, although sometimes it's not possible with structured investments. This means investing the same dollar amount at regular intervals regardless of how the market is doing. As a result, the prices paid for unit trusts are averaged out.
I set my portfolio allocations based on my long-term goals and review the portfolio performance three to four times a year and rebalance as necessary. I also review my risk appetite given the market conditions and adjust accordingly. I adhere to the discipline of investing for the long term with my retirement goals in mind.
If I decide to take a calculated risk, I limit my 'speculative' investments to less than 10 per cent of my total portfolio.
Lastly, I invest only in instruments or assets that I understand, and keep my portfolio diverse across geographies, industries and types of investment vehicle.
Q: Money-wise, what were your growing-up years like?
I grew up in a working class, middle-income family of four here. I have a younger brother. Both my parents worked and I learnt frugality and how to save from them. My father was running a human resource consulting business while my mum was a secondary school teacher. When I started earning my own income, I loosened up and learnt how to spend on things that I enjoyed while saving enough for retirement.
Q: What has been a bad investment?
I really can't think of a bad investment I've made. It's often a matter of timing and whether I could have made better returns. For example, when I took a leave of absence to pursue my MBA in 1999, I had considered whether I should cash out of my General Electric employee stock, which was riding at a high of US$66 per share at that time.
I decided not to because of the company's consistently strong performance and the fact that I did not need the cash at that time.
Of course, as we know, the Internet bubble burst in 2000, deflating most companies' market values. I eventually liquidated some of my GE shares at prices above cost in 2005, but that's an example of where the investment decision and outcome could have been better.
|'To retire as early as possible and travel... My target age for financial independence is 55 but, for planning purposes, I'm aiming for 45...I believe a lump sum of $2 million is sufficient.'
MS GASPAR, on her retirement plan
Q: Your best investment to date?
Tough to pick one, but the most memorable - and counter-intuitive - one was probably when I was working with GE in Brazil in the second half of 1998. It was exactly at the time the Russian rouble crisis occurred, and to defend the flight of investment capital out of Brazil, the Brazilian Central Bank dramatically increased its interest rates to as high as 50 per cent.
My simple savings account in Brazil was earning an annual 38 per cent interest rate and compounded monthly. The risk was always that the Brazilian real would be equally drastically devalued.
However, being on the ground in Brazil and getting first-hand economic insight that the newly elected President Fernando Henrique Cardoso would fight hard to prevent devaluation, I decided to move un-invested cash that I had into my Brazilian account.
Eventually, by early 1999, the Brazilian government did devalue the real and floated it against the US dollar. It was probably inevitable, but by then I had moved on to a new role in Japan and had netted roughly a 26 per cent annualised return on my cash holdings in less than six months.
Q: What's your retirement plan?
To retire as early as possible and travel around the world. My target age for financial independence is 55 but, for planning purposes, I'm aiming for 45. I will plan to work after that. I believe a lump sum of $2 million is sufficient.
Q: And your home now is...?
A breezy 1,600 sq ft three-bedroom condo along East Coast which I bought in November last year. I live there with my partner Glenn Liptak.
Q: And your car is .......?
It was a red Lexus SC30 when I was in the US. But back here in Singapore, I'd rather let the taxi driver battle traffic while I sit in the back and work on the BlackBerry.
This article was first published in The Sunday Times on Oct 19, 2008.