The Value of a Good Investment Decision

Mr and Mrs Lin (not their real names), who are in their early sixties, sold their business in 2014 for an approximate $20 million. They are now enjoying the fruits of their labour, relying on their hard-earned savings for retirement. They have 2 grown children who are now working in the corporate world.  

Although Mr Lin has amassed enough to be financially independent, he also hopes to retire comfortably in order to maintain his lifestyle and social network. Like most men of his stature, he enjoys the finer things in life – luxury watches, fine art and fine wine. Mr Lin is also accustomed to traveling around the world with his friends for golfing holidays. Depending on what he buys, his annual expenses can range between $500,000 – $1 million. 

Will his savings out run his lifestyle? It’s a thought that has crossed his mind. On top of that, inflation has caused Mr Lin’s expenses to increase, with no new forms of income. 

When Mr Lin was referred to us, he was growing indifferent with his private bank investments. His investment decisions then were made largely by hunches, ie if the price of an investment has gone down for a long time, it must be a low price to buy. Decisions then were also largely misinformed and guided by emotions, without a firm understanding of the markets.

As a result, when the markets subsequently rebounded, he was persuaded to buy again, at much higher prices. Mr Lin’s spirits were dampened by the uncertainty of his next move, and the unpredictable markets. He became cautious, not only in his investment decisions but also towards advisors who were hired to speculate with his money.

We were recommended by a mutual contact, so some form of goodwill was already established. However, Mr Lin was apprehensive at first about moving his money from a multinational bank to a boutique Singaporean enterprise.

How were we able to win him over? By showing him how we are not competitors of banks, but rather their partners. For Mr Lin, and for all of our clients, his money will continue to be custodised by the bank. As an independent asset management firm, Eu Capital acts as a sub-contractor who helps him in the research, management and monitoring of his portfolio. 

We started Mr Lin’s portfolio in the same way we started our own; by conducting primary research and making independent decisions rather than relying on reports of other institutions. We analysed and calculated valuations based on each investment’s merits. We would discuss with Mr Lin as needed about the correct and sustainable investment values. Slowly but steadily, trust was built, and we turned from clients to friends. 

Despite the market volatilities in recent years, Eu Capital is proud to deliver the financial objectives that Mr Lin set out for us. To date, he has the freedom to draw out 5% of his savings every year to continue enjoying his retirement without eroding capital, effectively turning his fund into an endowment fund. The rest of the returns remain in the portfolio to be compounded.

Most importantly, he is stress-free. In Mr Lin, we see how a good investment decision is able to deliver good value to our clients and friends in the long-run.

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