Food to Avoid

When was the last time that you had a hunger for Fish and Chips, Barbeque Chicken Wings, or even a Ham and Bacon sandwich? And do you also know that these foods are all hazardous to the human health?



In JNP, we have a “Wellness Department” formed by our leader, made up of advisers who are dedicated to organizing sports event and sharing health tips. They do this out of care and concern for our fellow colleagues; spending their personal time researching on health information and wellness tips for the good of not only our advisers, but also our clients.


In the most recent sharing, we learnt that there are 3 kinds of food that we should avoid. They are:
• Deep Fried Foods,
• Barbeque Foods, and
• Food preserved with nitrates.


The occasional deep fried meal never fills to satisfy our craving for sinful food. However, while cooking the food in hot oil, a series of harmful chemicals are released. Cancer causing Polycyclic Aromatic Hydrocarbons (PAH), and carcinogenic Acrylamide are released during the cooking process. Furthermore, the harm is not only limited to the consumer of deep-fried food. In 2006, Dr Rajasekhar Balasubramanian from the National University of Singapore published on the Journal of Environmental Monitoring, that the kitchen with the highest occurrences of deep frying also has a high concentration of PAH in the kitchen air.


This translates to a poor working environment for our loved ones who are preparing the meals for us. In contrast, a kitchen that mainly boils and simmers their food has a lower concentration of PAH in the kitchen air. Fats from the deep frying also has a high calorie content, which can increase the risk of gaining weight and also increase the risk of heart disease, diabetes and cancer.


Barbequing of foods also exposes the food to high temperature. PAHs are also released during this grilling process. In addition, a 2-hour barbecue can also release the same level of toxic dioxins as up to 220,000 cigarettes.


The last food to avoid, are processed meats that contain Nitrates. These range from ham, sausages, bacons, to even luncheon meat. Nitrate is a preservative and is used to keep the color of processed meat from changing over time. Nitrate is harmless, but it can convert to nitrite, which can form nitrosamines, a powerful cancer-causing chemical, in your body. The FDA believes that small amounts do not pose a risk, but advises that pregnant women and infants do not consume foods containing this additive. In fact, the USDA does not allow foods marketed to babies, infants and toddlers to contain nitrates or nitrites. This is because the consumption of nitrates can lead to methemoglobinemia in babies, children, and even some adults.


In JNP we have always emphasized on the need to maintain our focus on Health, Relationship and Wealth. None of this tripartite pillar can exist without the other. Since a calculated selection of food can help us in maintaining our good health, let’s eat our way towards a healthier future.


Quoted from See, S W, S Karthikeyan, and R Balasubramanian, "Health risk assessment of occupational exposure to particulate phase polycyclic aromatic hydrocarbons associated with Chinese, Malay, and Indian cooking". Journal of Environmental Monitoring, 8 (2006): 369-376.

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In Decision Not Indecision

Every mother knows when to ignore a child throwing a tantrum and when to heed an actual cry for help. This is the same for certain attention-seeking noises that have been wailing out of the market recently. We will address just two of these concerns.



First, the Dow Jones has been rising steadily while the Chinese market has moved sluggishly at best. All in all, a total of $6.5 billion has been redeemed from emerging markets like China this year. On the flip side, developed market equity funds like the US have booked inflows consistently for weeks, attracting more than $52 million in the same period. Yet, there has been no call from your adviser to make any adjustments to your portfolio. You may be interested to know why we remained seemingly indifferent in reacting to these fund flows. Take a closer look, and you will see that our inaction, is not indifference.

 Short Term Pain, Long Term Gain


Let us explain it this way. China is working out some teething problems with inflation. The pressure of escalating inflation in emerging markets has spurred policymakers to take drastic cooling measures starting from late 2010. These measures have caused short term fund flows to flow out from the emerging economies to the developed markets, as investors are concerned that the cooling measures would cause slow growth, thereby affecting corporate profits. These teething pains while uncomfortable, are an unavoidable part of China's growth story.


However, we understand that investors such as yourself may have entertained the thought of avoiding these short-term discomforts. Should you have reduced your holdings in emerging markets, and direct the funds towards large caps in the US? Let us pause a moment to reassess the situation. In the art of warfare, the ancient Chinese war adviser, Sun Tze always does a detailed assessment of his enemies. He goes to war only when he has done his risk to reward calculations.



Why Less is More


Our call to buy into Malaysian equities two years back is an example of how we took advantage of capricious market trends. At the time, speculative funds, known as 'hot money' flowed into Malaysia due to positive changes in their foreign policy. Hot money typically flows from one market to another unpredictably. In that case, we rode on this trend in order to make short-term profits for our clients.


So why do we not see the need to attend to these market noises now? Isn't the media focusing most of its attention on the speculative net redemption from markets such as China? Shouldn't we do something about the situation? Well, we continue to believe that cooling measures taken by the Chinese government will come to a halt eventually. Funds will then flow back to the Chinese market. If we take action to pull out of China now, we may risk missing out when hot money comes flowing back into China. That would mean a huge opportunity cost for your portfolios. Since the JNP Investing Commitee has never taken interest nor liberty to time the market, we choose to stay status-quo. And we will continue to faithfully invest in China on a regular basis in anticipation for the Chinese market to rebound. We believe the rather annoying market noises will soon stop when your portfolio starts behaving as desired. For the moment, it is our belief that inaction is a better way of achieving long-term rewards in your portfolio.




The American Tale


We were not surprised by the upside of US equities either. Global news reports have long flooded investors with gloom and doom warnings of investing in the US. Yet, the committee decided to sweep up many strong large caps at a cheap value. While funds flowed out of the US, we continued to secure our foothold. We retained a minimum exposure of 15% in US equities throughout the crisis. The reason is simple. We did not want to see our clients missing out on the surge of US equities when the recovery took place. Often, the rally begins subtly and by the time the media captures the rally, it is already too late. 'Sexy' prices remain elusive to those who are reactive rather than preemptive.




Russia on Santa's List


Should good little kids always be rewarded with candy? It depends, doesn't it?


While money has been flying out of Brazil, India and China, Russia has been an exception. Global fund managers believe Russia to be the only country now to attract new money among the major emerging markets. We believe that Russia will benefit greatly from rising oil prices and is likely to grow in economic earnings this year. Globally, many even see Russian shares as proxies for investments into commodities.


For these reasons, fund managers are keen to build up their Russian exposure. In fact, the number of global fund managers now recommending Russian securities and assets as a good investment rose from 50 percent in January to 88 percent in February. If Russia were a kid, I'd say he would easily make it to Santa's 'Good' list.




Good Kid Bad Teeth


Our investing committee was naturally interested to explore this market, and capture any opportunities if present. We are well aware that the Russian Trading System (RTS) is still trading at a good value.


Nevertheless, a number of reasons persuaded the committee against investing into Russia. We have not given candy to this good little kid. Because on closer inspection, we found that he has tooth decay! What do we mean?


The political structure of Russia remains heavily influenced by their ex president, the current prime minister, Mr Vladimir Putin. On one hand, this can mean political stability and should induce us to see Russia as an attractive investment. However, the political dominance of this one man raises some concerns. What will happen to the RTS should this prominent figure be removed from the political scene?




Plagued with Plaque


With the dominance of state in major Russian corporations, the market is rather unfriendly to investors. Such an environment may not be able to retain foreign funds for the long term.


Most importantly, the recent fund flows into the Russian market is most likely induced by surging oil prices. Admittedly, there is a huge correlation between Russian mutual funds and energy funds. However, our research shows that the former has not outperformed the latter. As such, we concluded that sticking to energy would make more sense than taking a chance on Russia. We may increase our exposure to energy, or energy related investments due to the potential we see in this sector. However, we are unwilling to take a chance on Russia due to the inherent political risks on the economy. At the moment, we remain comfortable with the allocation in this sector. We believe that it is the optimum percentage to balance the risk-reward ratio.


From history, too many investors attempt to leverage on the news in hopes of riding waves of hot money. Too often, they find themselves entering the trend too late and unable to exit on time. To ensure your portfolio behaves up to expectations, it is critical to carry the right investing attitude.


In JNP, while others time the market, we tame our framework. We will continue to help you position your monies ahead of the business cycles, being opportunistic to profit from situational anomalies, while preventing permanent loss of your capital.

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Normal or Natural Living

As adults, we proudly believe that we are mature and wise enough to make decisions for ourselves. Ironically, we may not be making our own decisions at all. We may simply be programmed to act in certain set patterns. Throughout our lives, our family, schools, communities and society have shaped our individual beliefs. Influence and experience socialise us into mediocrity. Eventually, our future averages out to be so-so. Consciously or unconsciously, we've given up a huge part of our lives to be 'normal'.

Psychologically, being a part of the herd is comforting because we are the same as a whole lot of other people. There's strength in numbers isn't there? More often than not, this does more harm than good in our lives. It results in night after night of variety programes over TV-dinners. We laugh mindlessly, not knowing that the joke is really on us. Many of us have actually stopped thinking for ourselves and for our loved ones. With the bustle of each day, it is so easy to have 'no time' to think and reflect. Sadly, those closest to our hearts are the ones that will have to pay the price.


One example is in parenting. With the many parents we come in contact with, a huge number expressed their frustrations. Financial commitments can only be shouldered by double incomes. Both spouses MUST set off to work. The result? They don't get enough time with their kids. Despite these frustrations, most stay in these destructive patterns because everyone else is doing it. Why should they be any different? Such challenges are 'normal', aren't they? What can they do but deal with their 'normal' frustrations the 'normal' way? They talk it out over lunch and hope tomorrow will be a better day.


Albert Einstein once said that the definition of insanity was, 'doing the same thing over and over again and expecting different results.'



For many, Einstien's definition of insanity is what's 'normal' to them.


Parenting struggles are not the only challenges we witness. Deteriorating health and crippling family relationships are often the consequence of accepting these norms.


In financial planning, we often ask our clients to picture themselves in the future. We tell them to imagine the lives they wish to live. This helps us to tag a numerical figure to their financial independence. This figure however, does not take into account the hours that they have to be apart from their loved ones. It does not take into consideration the black moods that many take home from the office. In the end, hard-earned evenings and weekends with loved ones become even harder to enjoy. The pursuit of financial independance often comes at an expensive trade off for their health and precious relationships with their loved ones.


"Just My Luck? "



We often hear the refrain that not everyone is cut out to be an entrepreneur. When this rings in our ears frequently enough, we choose to believe we're not cut out fot it. We begin to believe that successful entrepreneurs have some sort of guardian angels. Or that such fortune must be restricted to the lucky few.


Truth is, most successful entrepreneurs share only one thing in common. They don't just want success. They want success badly. Their compelling reasons may be different. But it is their willpower to succeed that sets them apart from the rest. This powerful combination of mental and physical hardwork sets a business thriving. Deciding to make it work is a decision anyone and everyone can make. And that includes you.



Imagine, Decide, Create!


Don't read on if you are truly happy and satisfied in all areas of your life. But if you're frustrated with trading your time with an unhappy experience, a change is in order. Accidents happen and you may have sent out your resume not really knowing what you were in for. You want a different life, but somehow you ended up in this current state. The good news is that we can live our lives differently. We can break out of the cycle that the herd creates. We can start making the right decisions for ourselves and for our loved ones. All it requires us to do is simply to take the next step with an end in mind.


Wherever you are in your life right now, it is never too late to change. Let your mind focus on what kind of life and future you really want to give to your loved ones and yourself. If you are a parent, are you satisfied with the attention you are currently offering to your children? As a child, are you craving more time with your aging parents? Do you wish for more financial means to give your loved ones a better life?


Angel's Advocate


Our boss Mr Patrick Tan, began his entrepreneurial journey with all these thoughts in his mind. (Do read our JNP Story to learn more about his life.) For all the major decisions that he undertakes, he often asks himself two questions: "How are my loved ones going to benefit from this decision?" and "How am I going to benefit from this decision?" As long as the benefits are plain and obvious, he will not hesitate to act.


He thus does not allow himself to toy with conflicting thoughts. Nor does he play useless mind games. He would much rather channel all his mental energy to think of ways to make his decisions work. Some that know him still speak of his success as an outcome of luck, Such comments merely whitewash his years of hardwork. Most importantly, it flushes out the love he has for his loved ones. And it is this that is the fuel that lights his dreams.



Think, Talk, Follow Through


With the decision he made, Patrick’s wife now enjoys life as a full-time mother for his two children. His parents now live out their golden years very contentedly; they live in a house that facilitates his mother's love for gardening and his father's passion for Tai-Ji.


Don't waste your life by resorting to just idle talk. When not dealt with, challenges are here to stay and multiply. If the career path of an employee seems like a nightmare to you, maybe it's time to dream up something new, Tap into your child-like imaginations and toy with new alternatives. President John F Kennedy once said, "Change is the law of life. And those who look only to the past or present are certain to miss the future." With a simple decision to serve your loved ones, your destiny gets altered right there and then. Live life naturally - the way that best fits you. Don't live someone else's life because it is what everyone else is doing.

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Chinese New Day

For the Chinese, celebrating the Chinese New Year is a tradition passed down from our ancestors. Over the years, this expression of celebration remains somewhat the same. Shops still beckon to those in need of new clothes for the New Year. Giving and receiving of 'ang baos' still continues. Even superstitions like avoiding sweeping on the first day of the New Year are hard to break. But the spirit behind the celebration, unfortunately, has long been altered.


Boss recalls how he used to look forward to the festive season the moment familiar Chinese New Year tunes began playing. It was a great chance to break away from homework and just indulge in play. He noticed that festive periods are a time of fun and laughter. But as soon as the season is over, life returned to everyday normalcy.

As he grew older and wiser, he came to understand what true celebration is all about. He also discovered the kind of spirit he should have towards the tradition.

Boss believes in authenticity. Anyone who knows him well knows how much he detests patronising people and events. When he shows up at a wedding or even a funeral, he goes with the right spirit and intention- to bless. He does not go so as to look charismatic or be politically right.

Every daily domestic affair is also a habit of authenticity. That is why, when he gives a word of encouragement or a compliment, we know he means it from the bottom of his heart. He does nothing mindlessly, as part of the herd, to gain acceptance. In being real, he goes to great lengths to pursue compassion, integrity, respect, wisdom and loyalty. It is the same with what he does and advises us to do in business. Such decisions are made from sound strategies and ideas that deliver professional service to clients.
 The attitude he has may sound revolutionary to many. But to Boss, it is but how a normal human being should behave. He does not practice social norms for the sake of carrying on tradition. As such, he cannot comprehend why anyone could get hyped up without really knowing why. Is it just because everyone else is doing so, or simply because it is the highlight of the month?
 Like the majority, he too, enjoys a stroll down Chinatown. He too, dresses himself in new clothes. And definitely, he visits his family and relatives, just like everyone else.


What is different however, is his appreciative spirit towards the event. This appreciation is rooted far deeper than most and stems from a real appreciation of life itself. To him, visiting loved ones during the festive season is but another opportunity for him to show respect and care. It is an opportunity for him to nurture the lives of others - something he does on a daily or weekly basis anyway.

He does not get drawn into the hype created by a clever marketing department. After the event is over, he doesn't look forward to the next big event to indulge or distract him from responsibility. Neither does he give up on tradition or hold a disinterested contempt for it. He treasures both life and time-honoured traditions dearly. But he does so purposefully and for the right reasons.


Everyday without fail, he dedicates time to ponder deep into his life and his daily actions. The weight of taking care of his family, his friends and JNP clients does not allow him the luxury to be idle even for a moment. Even his time for exercise or rest is carefully set aside so he can push himself further in the service of others. Constantly, he refines his thoughts and ways of doing things, to stretch himself further and further. His overriding purpose is to ensure the people under his wings are well taken care of.


This may sound torturous to many, and he has received such comments more than once. They tell him to enjoy life with the millions he has made. But to him, nurturing relationships is enjoying life. Any moments he spends with his loved ones, or even by himself thinking of ways to help them, IS celebrating life. He simply derives immense joy when he serves. Though he partakes in them, Boss knows festivals and holidays are unnecessary to make his life any more enjoyable.


To get the best out of life, Boss' philosophy is simple: It is an honor to serve others and count your blessings daily. This is the meaty main dish of life, the staples as he calls it. Any festivals or holidays simply top off or garnish what is already there. We should partake in holidays and festivals and ride on the exuberance of the festive mood. But we should never to rely on such events to keep our spirits buoyant throughout the year. When we learn to serve others daily, and count our blessings daily, every other moment spent with our loved ones becomes something to celebrate about.


This New Year is surely not our first. But perhaps we should approach this tradition with a brand new attitude: not to look forward to the next New Year, but rather, a New Day, Everyday!

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Beware: Inflation Running on a Full Tank

Inflation is probably not a new term to you if you have been in touch with the news. But, have you ever paused for a moment and really thought of how it might impact you? For those who have been treating this as another fascinating topic to be discussed over coffee, here's something for you. At JNP Kakis, we've prepared a special news brew that will keep you wide awake:


2010 ended well for many of our clients, families and friends. Employment opportunities have picked up, bonuses that were frozen in previous years were paid out and many even got a pay raise. All in all, things seem to have thawed out and many feel richer this year. Caught up in the festivities, they have embraced this Chinese New Year with more warmth and thicker red packets than the years before.



But, is this feeling of prosperity real?


Like the proverbial frog in a simmering hot pot, many are comfortably unconscious of rising prices. And while you may not drive, the escalating oil price is a telling indicator of where inflation is going. Imperceptibly, inflation begins turning up the heat when economies first emerge out of recessions. The trick is to jump out of the hot pot before you're cooked!


As Warren Buffet recounts,"The world went mad. What we learn from history is that people don't learn from history."


So let's backtrack in time to glean a lesson or two from history. In the year 2000, the world was badly hit by the burst of the dot com bubble. Still reeling from its impact, September 11 packed another punch to the world economy in 2002. In those three years, crude oil prices hovered at an average of US$25 per barrel.


In 2003, when the bull first reared its head for a rally, crude oil prices quickly responded. Initially, the rise was modest as many Asian countries were still battling against SARS at that point. But by 2004, most if not all major economies were gaining momentum. Consequently, the average crude oil price for 2004 scaled up to US$37 per barrel. And by 2008, it had hit a historic peak of US$145 per barrel!


Common sense would tell anyone that this increase in oil prices would have something to do with why bus fares increased in 2005. Oil prices had indeed crossed the US$50 per barrel mark by then. As a result, SBS Transit reported that costs had increased by $16 million within 3 years from 2002 to 2005. This was due mainly to (surprise, surprise) the rising fuel prices. SBS had no choice but to increase its fares to stay profitable. So what could one expect when oil prices hit its historic peak in 2008? Its simple mathematics- both SBS Transit and SMRT further increased their fares so as to stay in business.


Bus fare hikes were not the only things affected by rising fuel prices. Rising costs of transport translates into rising costs of production for just about everything. Food, utilities, goods and services have all become more expensive as well.


We have yet to experience the full impact of an economic recovery. But this has not stopped oil prices from rising steadily over the past months. In fact, oil prices have crossed the US$100 per barrel mark once again. Concurrently, the local rate of inflation also advanced steadily, hitting a two-year high of 4.6 percent in December 2010.


If history has taught us anything, it is that the oil price usually finds room to not only stretch its legs. It also has the power to take a steep upward hike. And with the emergence of China, it most probably will. This is what will make this recovery different from the rest. This time, the key driver of oil prices will come largely from China, which has now overtaken Japan as the world's second largest economy. This hungry economic giant has an appetite for growth so huge that it will be consuming crude oil at a rate incomparable to rest of the world.


The emergence of China simply implies that we are possibly being chased at the heels by hyper-inflation. Are we prepared for another round of possible bus and train fare hikes? Will we be able to swallow an increase in prices at hawker centers and foodcourts? The truth is that Singapore is an economy dependent on imported resources. Such adjustments are simply inevitable.


Before you throw your hands up in despair, feigning nonchalance or harbouring a sour attitude doesn't really help anyone. What we must do is to actively seek for ways to hedge against these inflationary pressures. And if we look hard enough, money-making opportunities are just around the corner.



Inflation Risk Management

It is our strong belief that non-investors will be seriously affected by inflation. The quality of their lives can only deteriorate in tandem with the rise in their living costs. Just ask any bank what interest they pay for saving your money with them and you'll understand the importance of wise investments. If we assume the rate on interest to be at 0.125% per annum, with inflation estimated at 3% per annum, our money is devaluing at -2.88% per annum.


Let's do a little experiment. Let's say you have $100,000 in the bank today, and you leave it there for 25 years. At the end of this tenure, your $100,000 will have shrunk to an estimated $48,000. Do you realise that you would have effectively thrown away half your cash by leaving it idle in the bank? How many months or even years of hard-earned pay is that for you?


Trying to make up for it by working harder and waiting for a pay increase is not the solution. For most, the average estimated yearly growth rate in wages is about 3-4 % only. Taking inflation into consideration, the real wage becomes zero or even negative. Unwilling though we may be to accept this fact above, it is a harsh reality we must all face. If we do not grow our money aggressively, our financial future is most likely to be bleak. For the sake of our future-selves and our loved ones, we must invest our money today, and continue doing so. Whether we like it or not, the fact remains that inflation will impact us as long as we are consumers of goods and services.



Turning inflationary pressures into opportunities


With the big bad wolf of inflation out there, we wanted to arm you with a few battle strategies. So, we've roped in the ancient war-adviser, Sun Tze for his expertise. Among his battle strategies, Sun Tze has one called 以攻为守, which means 'attack, in order to defend'.


When the big bad wolf of inflation begins to huff and puff, retreat is not an option. We must examine what makes the wolf tick. It is akin to windsurfing. An experienced windsurfer knows when the wave is coming, and where is it coming from. He can then ride the wave blissfully and graciously. A good surfer will not allow himself to get swept under the wave. Similarly, what we have done for our clients, is to position their monies like a stake, through to the heart and source of inflation. Our calls for China and energy, to name a few, exemplify how we turn the defeat of inflation into an opportunity for victory. When the Shanghai Composite Index collapsed by 70% from its peak, we continued to believe its potential. We knew the upside could easily offset the devaluation of our money owed to inflation.


Whether we give it its due attention or not, inflation will dog our every step. It will not go away. By not facing up to it, we have made the decision to be victims. For the many hours we put into making money through physical toil, it is pure foolishness to leave our doors wide open for inflation to rob us. Let's take the proper safety precautions if we haven't already done so, and start taking control of our lives and our future.

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Our Investing Footprints of 2010

Stock markets have always been characterized by volatility and 2010 is no different. Amidst the uncertainty, we remain committed to ensure your portfolio thrives. Looking back, we're glad we seized some good opportunities to buy in at a discount, while holding on to our steadfast belief in prudence and conservatism. Our investing philosophy has not changed, even as we continue to push the boundaries of our economic research. Through our discussions with you, you will know that we remain adamant that capital preservation should, and must come before capital growth. Hence, the 'three bags theory' that your adviser has executed for you would, and should still be in place throughout 2010 (and beyond as well).

A quick recap on the three bags theory:

1) The first bag has your emergency fund set aside and taken care of. This bag of funds must remain liquid to prepare for activation anytime.

2) The second bag of money will be invested for you to build your portfolio with us. It will also include money allocated for dollar cost averaging.

3) The last and final bag is the opportunity fund – to be activated only when we see good

bargains in the equity market. This is usually triggered by events or fears leading to massive sell downs.

The rationale behind these three bags is simple. Invested capital should stay invested till your investment objective is achieved. The first bag reduces the possibility of you withdrawing your investment prematurely.

The second and third bag takes care of the three possible directions the stock market may take – upwards, sideways or downwards.

In 2010, our investing committee met bi-weekly, putting together the research done on global macro-economics. We were prepared to change our asset allocation recommendations where necessary.

Our Investment decisions

From as early as March, the financial system was once again shaken by news brewing out of the PIGS (Portugal, Ireland, Greece and Spain). Many investors who had barely recovered from the sell down of US equities saw their portfolios heading southward once more. Thankfully, as early as June 2009, we made our exit from most of Europe and protected your portfolios from this Euro crisis. Though we seem to have averted danger, we are still vigilant on the further threats Europe may have on the global financial system. We do not rule out the possibility of a double dip, even though we are more inclined to believe the chances of that are quite slim. But if a double dip should happen, the world financial system could take a much longer time to recover. Thus, our asset allocation recommended to clients for the entire year is a fair split between capital preservation and capital growth. This allows us to swipe up equities at value, should a double dip happen. At the same time, we can also afford to buy up immediate opportunities that we discover along the way.

Our Outlook on South Korea

The two additions your adviser may have made to your portfolio in 2010 would have been the South Korean and Energy funds. These have been added to your portfolio to replace the healthcare and MENA funds. I say 'may have added' because recommendations are tailor-made for each client. Every client's financial situation is unique and only through a personal relationship is the adviser able to design the ideal portfolio for you.

South Korea was added into your holdings when Kospi was about 1,580 points. By the end of 2010, Kospi rose to 2,051 points. This comes as no surprise as we could see that a gradual rise in the Yuan might spin off in earnings for Korean companies that export to China. Moving forward, we remain optimistic about South Korea. The policies that the leaders in China will be adopting in 2011, which is to be less export oriented and more reliant on domestic consumption, may imply that China may continue to import technology to improve their internal infrastructure. South Korea, well reputed as a pioneer in multiple innovations, is likely to be a beneficiary of China's strategy. Hence, despite Kospi having risen close to over 30 percent from the day we added it to our portfolio, we still believe it has not realized its full potential. We're closely monitoring the political tensions between the two Koreas but we don't see a need to alter our recommendation as yet.

Bullish on Energy

On the other hand, the our exposure in energy fund was increased in our recommended portfolio in August, when oil prices hovered around US$74 per barrel. At the time of writing this article, oil prices had advanced past the US$90 mark. We chanced upon this great find when the extensive coverage of BP (British Petroleum)’s oil spill, led many of its shareholders rather unhappy (to say the least). Happily, we took this as an indication for us to comb the energy sector for investment opportunities. While precious metals have risen steeply over the past couple of years, the increase in oil prices have been relatively modest. Yet, the potential demand for oil (especially from emerging economies like China) is so huge that it's unimaginable. In the latest five-year development plans of China, there aims to be a shift towards environmental protection. This means the reliance of coal will be greatly reduced to prevent pollution. In its place, oil became the major import of China and things will probably stay that way for many years to come to complement the domestic production of Petro China and Sinopec.

Most oil companies will have both upstream and downstream activities, with an emphasis on upstream activities. This implies that a rise in oil price should translate to healthy earnings for these companies. Even so, we kept exposure to the energy sector down to a modest 10%. This is because we believe a steep rise of oil price is unlikely to take place unless major economies like China and US pick up their growth rate.

In short, we continue to keep a watchful eye over the global economic situation and measure the risk to reward ratio of our recommended portfolio. We want to position your monies to ride the bull and prepare for the next crisis to come. We continue to stand firm on the belief that as your partner in investment risk management, it is not in our liberty to take hindsight perspectives. Preparation and action, not reaction remains our commitment to you.

Let 2011 be another year of triumphs as we look forward to celebrate another year of friendship with you!

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Power Up with a Power Nap!

Since the first day we stepped into JNP, we have been encouraged to take naps. While it may seem strange to you, it's actually encouraged by our boss. To Boss, taking naps are as essential as drinking water and eating rice, brown rice that is! To the uninitiated, welcome to Boss's wonderful world of healthy living. No matter how busy his day is, Boss still does his best to take a power nap daily. Let's explore deeper into this little discipline of his, which perhaps forms one of his secrets to success.

Research shows that we can make ourselves more alert, reduce stress and improve our cognitive functions with a nap. Mid-day sleep, or a power nap, means more patience, less stress, quicker reflexes, increased learning, more efficiency and better health.

Taking an effective power nap is really an art in itself. Not only does the duration matter, the timing at which we take the naps also makes a big difference.

Studies on restorative naps have shown that the best time for a short siesta is at midday. Some people take it before lunch but some will wait until right after lunch. Based on our body's natural sleep rhythm, midday is the time where we will have a natural tendency to fall asleep. And this is what makes it the best time to nap. Interestingly, most people choose to nap after 4 or even 6pm when this may in fact disrupt or even reduce the quality of our sleep at night.

It is advisable to keep naps within 20 minutes at most. Stretching it to 30 or 40 minutes may cause us to enter into a deep sleep and create what is called, sleep inertia. We may wake up feeling drowsy, groggy and generally worse off.

When we nap (or sleep at night), it will also make a difference when we lie flat to allow our blood and oxygen to flow back to nourish our brains and eyes.

Under the care of our leader, we have learned to soak up life's 'five essential supplements' (五朴) in order to achieve a life of joy and prosperity. Namely, to sleep well (神朴), to eat well (食朴), to replenish our energy and oxygen intake (气朴), to be to take herbal supplements (药朴) and lastly, to be financially sound (钱朴). In order to enjoy joy and prosperity, these five supplements are all essential. Since a short 20-minute power nap can make a difference to our mental and physical well being, let's pick up this great habit and snooze our way towards longevity!

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Precisely Kek Wee

For the third time in a row, Kek Wee stops to think. His bespectacled face is serious and I can detect no movement at all. “Is he breathing?” I wonder. Only after careful thought does Kek Wee speak in earnest. Meticulous and very attentive to details, it comes as no surprise that Kek Wee was once an Audit Manager from PricewaterhouseCoopers.

Kek Wee is now part of the JNP Investing Committee, an in-house committee that decides how to best position the approximately $100 million in assets under advisory. That's $100 million that not only survived the sub-prime fiasco but even managed to make a decent return.

Yet, when Kek Wee shares about his growing up years, it is a simple, heartlander’s story. It explains why he pushes on in his career with quiet determination to succeed.

“My grandpa died very young and my dad took over the family business, selling chicken in the wet market. We were an average family in terms of wealth but my mum and dad have different values towards money.”

“My mum is someone who stinges on herself to give my brother and I the best she could afford. I still remember her buying dresses exclusively from the wet market. This was so she could save more money to send me to organ, English and art classes. These cost her almost her entire savings. But she never let the lack of money limit what she could do for us. My dad has a more liberal spending habit and is generous to his friends. It is this difference that often leads to conflicts over
money which taught me to appreciate the value of good financial management as the foundation of a joyous life.”

By equipping clients with proper financial education, Kek Wee knows how much it will benefit countless clients, families and friendships. He says it is only through JNP that he has been able to do this and become the person he is today.

“Years into the business, I have grown so much that I am now on a different level. I am able to build on past experiences to spur me on. I find I end up gaining the most when I contribute on the JNP Investing Committee. I now cut through theory, market noises and speculation like a knife by sharpening my skills of deduction with Boss and the team. I would never have the sort of perspective I have now if I had spent double the time researching on my own. It is only in JNP and with Boss' guidance that I have a more futuristic outlook in terms of investing skills. It is the reason why my family and clients have a better tomorrow.”

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Honourably Bernard

Having a conversation with Bernard is easy. He is warm, engaging and animated. That is, until I make the mistake of asking the taboo question, “What was the name of the ship you worked on?”

The knee-jerk reaction is immediate. Bernard looks stern and he tells me politely that he is unable to reveal that information to me. Bernard was a seafaring soldier in his previous profession, patrolling the Singapore Straits and keeping us well-protected.

On average, more than 900 ships use the Straits of Singapore each day.1 Bernard's ship was deployed along this busy highway to protect Singapore's sovereign rights. In fact, Bernard was placed in charge of the whole naval security of Pedra Branca when Malaysia contested control of the island, which commands the eastern approach of these straits.

To say the least, Bernard is the kind of guy you can rely on. At the peak of his naval career, Bernard was second in command of a warship. With 60 to 70 men directly under him and a fantastic six figure pay, it makes one wonder what was missing in this prestigious career that made him jump ship.

“There was something that was lacking in there. My focus as a person was always being able to help others. I wanted to contribute to their life... I wanted to be doing that on board the ship.”

Ironically, it was not when things got difficult that Bernard wanted to leave but when things were on cruise-control. He was called on board a bigger ship, a frigate, which commanded ships for warfare.

“I was actually drifting further and further away from my core mission of wanting to help people... After a while, I realised that this was not the place where I could excel at personal relationships... I was just bogged down by replying emails daily and running operations.”

“Now, I can blend in my interaction with my client, friends and family very well. And through this interaction, I can understand them better. Through understanding their life, I'm able to help them do better in their finances. I can also help them in their lifestyle, healthcare, relationships with their friends and also help them improve on their own personal growth as well.”

He says JNP is the place which gave him the chance to realise his dreams. Not only that, mentorship with Boss has helped him become a better person. He says his heart has always been for the people around him that suffer for a lack of guidance. But he felt what he could do on his own was limited. In JNP, he now has the proper support in which to do this.

“I felt the change in me and I am filled with joy from day to day. It is not only through the coaching that I'm given practical solutions. It is the love and patience that Boss has shown me that makes me want to reciprocate by serving JNP in whatever way I can... through this process I've grown to be more caring and reach out to more people in better and more constructive ways. I still have to reply
emails and run the operations of my business. (I did not leave the Navy to escape that!) Now I know that even the most mundane things I do will work for the good of the people around me. I have a clear vision of what I am doing because I am in alignment with the purpose and values of JNP.”

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Exceptionally Huijun

She is like the older sister you wish you had. Affectionately known as Jun Jie, Huijun's funky leather jacket and well-pressed pantsuit look sleek and well put together with a touch of rockstar glamour. What amazes me is the aura of calm that radiates around her. She is unflustered despite the hive of activity going on around her.


There seems to be an X-factor about Huijun that draws people to her irresistably. Yet, none of it seems to be getting to her head. She gives her full attention to everyone's request with grace and poise. And, she is greatly apologetic for each minor interruption that puts the interview on hold.

Perhaps she handles the busyness of everyday life well because she has had much practice. It is definitely something she is accustomed to in her previous job as a Certified Public Accountant and a Regional Finance Manager for a major US software company.

She was very comfortable in her previous career until the company underwent a major restructuring exercise eight years ago. She found herself retrenched. It was her first serious job since graduating from Nanyang Technological University with a business degree.

“Even though I was ranked 13th in the final exams for ACCA in Singapore and 37th worldwide, it meant nothing and I was still retrenched.”

That was when she realised her lack of financial security as a paid employee. She wanted to go into business but she didn't know how. After much searching, she found JNP and made the switch.

“In the past, working to me was just to get an income. But now, I think this is really what I want to do for a lifetime. So, I really want to serve and add value to the people around me. I think that's the biggest change I've seen in my life – focusing more on others rather than myself and my family.”

She attributes this change to Boss, who is also her mentor. In these two years that she has been in JNP, she has been striving not only to run a profitable business but also to master the art of living.

She elaborates on why she learnt qigong from Boss and is now also picking up wing chun as well. Her main concern is not about her own health but about not burdening those she loves. She even shares these lessons with clients who she feels can benefit from it. Her understanding of filial piety
has also deepened after guidance from Boss. She goes beyond visiting her parents once a week and opening the lines of communication to them. Now, she also gives them therapeutic massages and gua sha to boost their health and is working towards their retirement.

“So that is how important I feel Boss has become. He's a life coach to me. I think with him, we've built a personal relationship. And this includes his wife and two kids. It is something that is very different and it is a relationship that we will continue to build throughout our lifetime. So it's not just a working relationship, it is a personal relationship.”

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The Next Time You Want to 'Blast' Away, Think Twice...

Have you ever walked out of a car in a hot day ending up with an unbearable headache? A scientific research explains this. According to studies, the car dashboard, sofa, even the air freshener, emits benzene, a cancer causing toxic. When baked under the hot sun, the benzene level escalates. This chemical reaction though invisible, ought not to be ignored.

Benzene is the main toxin in the hydrocarbon fraction of exhaust. Benzene and other less known hydrocarbons are produced in petroleum refining, and are widely used as solvents and as materials in the production of various industrial products and pesticides.

A car parked indoor with the windows closed will contain 400-800 mg of Benzene. An acceptable level indoors is only 50 mg per square feet. When parked outdoors under the hot sun, the benzene level can exceed the acceptable level by 40 times!

Exposure to benzene can cause cancer, especially leukaemias and lymphomas. Benzene has a suppressive effect on bone marrow and it impairs blood cell maturation and amplification. In layman terms, benzene reduces your red blood cells over time.

Breathing very high levels of benzene can result in death, while high levels can cause drowsiness, dizziness, rapid heart rate, headaches, tremors, confusion, and unconsciousness.

How do you avoid inhaling benzene then?

Our boss Mr. Patrick Tan advises you to wind down two diagonal windows (if you unwind the driver seat's window, do the same to the diagonal passenger seat window), BEFORE you turn on your air con. This way, a passage is created for air-flow, and this can blow away the accumulated benzene fumes.

The next time you step in to a heated-up car and wish to blast your air con away immediately, think twice. Your life is certainly worth much more than that few more drops of perspiration!

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Sip Your Way to Greater Health!

Do you know that drinking green tea daily can improve your health significantly?

Green tea is known to be rich in anti-oxidant. This helps to prevent the growth of cancer cells, lower LDL cholesterol levels, and inhibit the abnormal formation of blood clots, the leading cause of heart attacks and stroke.

Do other Chinese teas have similar health-giving properties?

Green tea is unique because of the way is it being processed. Their leaves are steamed, which prevents its antioxidant compound from being oxidized. Black and oolong tea leaves on the other hand, are made from fermented leaves. This alters the antioxidant compound and as a result, they are not nearly as effective in preventing and fighting various diseases.

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Trodding into 2010

By Patrick Tan

As we cross farther into a new decade, we see a horizon of new promises and greater dreams. We stand at the threshold of a new beginning, with our vision cast towards the realisation of ever greater promises.

JNP can never be accused of setting mediocre goals for ourselves. For our clients, especially those with whom we share an especially close personal bond, the same holds true. Over the years, you have become more than clients. Most of you have become close friends. Ours is a bond founded on something more than just professional standards.

The trust you have placed in us has blossomed over the time we have been together, and will continue to nourish our relationship in 2010. Whatever we, as a family, seek to accomplish this year, know that the main reason, the sole impetus, for it is you: our client and our friend.

Please allow me to touch on a few areas for what you can expect from JNP in 2010.

China: A Strategic Buy; a Value buy.

China was and will continue to be a focal point in our investment strategy. We want our clients to own China at the cheapest price possible for the next many generations. This is not new or unique to JNP. However, for our clients who have been with us for awhile longer, they would know that we made the call on China before it acquired the celebrated status it did. We feel humbly confident our philosophy and methodology has served them well on more than one occasion and will continue to do so in the future.

While short-term punters may have also stumbled onto China's immense potential, our clients should understand that our approach is philosophically different. When we decided to get into China, it was not because we knew its stock market would also double, but because we knew it was going to be a powerful engine in the decades to come. So, China will remain a core component in our clients' portfolio for this year and the foreseeable future. Nevertheless, do expect volatility in the next one to three years as China sees itself possibly regaining grounds to where it fell from in 2007.

Playing Offensive and New Opportunities

If you think about it in soccer terms, the economic situation in the past couple of years called for us to play defence and midfield with our investment approach. However, the whistle for the second half was blown, and this year will be the year we begin to assume our striking positions. It will be a year that marks the beginning of exceptional new opportunities with a number of developing countries and other areas of wealth creation. We aim to accomplish a great deal of asset growth for our clients before the next bout of mass euphoria sets in and we revert to a more prudent defensive posture. Indeed, the next few years are going to be very exciting for JNP and our clients. The economic situation is going to be phenomenal. JNP is seizing the opportunity to delve into new areas of investment development and growth such as property research. So we will be very busy this year, making money for our clients.

Volume vs. Return on Investment (R.O.I)

JNP has always sought to distinguish ourselves from the rest of the wealth management industry. Sadly, we see the majority of our counterparts in other advisory firms falling prey to the vultures of low moral expectations and salesmanship. For the typical financial salesman, he or she understands the system is designed to reward the volume of assets under management, rather than wealth creation for his or her clients. Most of them would choose the line of least resistance and focus on sales rather than R.O.I. Simply because it takes more effort to research into a set of funds than to make a sale to a new client.

But, like I said earlier, JNP has never sought to set mediocre expectations for ourselves. Your trust in us demands that we make the effort to keep your portfolio on track. It is part and parcel of the substance of our relationship. As we increase our research efforts into new areas of opportunities this year, know that it is with you in our mind that we do so.

Conclusion

Curiously, many of the areas that JNP will be venturing into this year have not been requested by our clients. Aspects novel to our investment offerings are all part of our efforts to pre-empt the needs of our clients even before they know they require them.

This is reflective of JNP's philosophy of being an organisation that cares truly for our clients.

We are confident that this, and the years ahead, will be exceptional periods of growth not just of your portfolio, but also of our relationship with you. Again, thank you for your continued trust and confidence in us. We will do our utmost to serve you and your financial wellbeing.

We do not set mediocre expectations for ourselves as an organisation. Neither does us, for the profound relationship we have with you. Rest assured that 2010 will be a fantastic year in so many ways!

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Testimony from AGM 2010~Heartfelt Words from HuiJun

Our most recent AGM was an invigorating experience. It helped me reaffirm my identity as a professional financial adviser and gave me new insights into my role in my clients' lives.

The focus of the AGM was mainly on client- servicing. Boss talked about how we fared through the crisis of the past year or so. This helped me contextualise and appreciate so much more how critical my responsibility as a long-term adviser to my clients is.

For example, Boss shared that 2007 was a year of persecution for us. Everything was rising then. But we advised our clients not to invest in certain funds that were being raved about. Going against the euphoria, a number of our clients were understandably unhappy about a perceived missed opportunity to jump onto the bandwagon. But Boss knew what was going to come next and so we set aside an opportunity fund to prepare for the next wave.

2008 turned out to be a year of aerodynamics because we went heavily into China and we spearheaded the entire movement in China. Almost every other financial firm was anxious and uncertain about this move. But JNP saw only opportunities. We just kept going forward and insisting that our clients invest in China. That was the first major investment call that we made. Needless to say, it paid off.

What I've learnt from Boss is the spirit of authentic financial advisory. He doesn't follow the herd. When he makes a decision or a call, he is committed to it. He isn't swayed by the market's euphoria. In 2007, when the financial sector was excited about the market, they just got their clients to invest without thinking, when in fact; the results came from China only in 2009.

Through these examples Boss shared, I began to more deeply appreciate the heavy responsibility a financial adviser bears. These are responsibilities that can be lived out only through an authentic long-term relationship, which is what we have promised to our clients and intend to fulfil.

From our JNP Investment Committee perspective, 2010 will be a year of discipline and following through. It is our desire and duty to help our clients to become rich. I am confident in being able to do this because JNP has a good track record. And I look forward to this track record for the benefit of my clients who have placed their trust and confidence in me!

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Morality and Money: The fundamental virtues of a good financial adviser

By Patrick Tan

People often look for the wrong things in a financial advisor. An advisor who talks merely about the accumulation of money cannot be of much value to a client. Simply put, financial planning is not about chasing after money; it is about chasing after life’s purpose. And life’s greatest purpose, in my humble opinion, is about service to others -family, friends and society. In summary, life’s purpose is about the loving relationships we forge and nurture with the people around us.

A authentic financial advisor is one who understands this and approaches the financial planning process with the intent to help his client appreciate and realize the truth about life’s purpose as well.

The possible danger in accumulating money for its own sake may be inferred from a study done on the suicide rate among the graduates of all the universities in America. Remarkably, the suicide rate among Harvard graduates is the highest among all other colleges. Harvard, as you know is the most prestigious university in America, if not the world. My opinion on a possible reason why this is so, is because these graduates study for the wrong reason. When you accumulate knowledge for the wrong reasons, or with no specific life purpose, you go berserk. When a person accumulates knowledge without focusing on personal growth, they will suffer from emotional imbalance and subsequently they lose their moral character. The same goes for the accumulation of wealth.

Confucius talked about humanity and walking a righteous path in life. In other words, be true to yourself and your life’s purpose, and based on those principles, be authentic in dealing with the people in your life. Similarly, in a financial planning relationship, we invite our clients to get into an authentic relationship with us. Your advisor should exude a moral character based on have a purposeful life and demonstrate that he or she is walking just such a righteous path.

As the wealth of a person grows, it is very likely that his emotional health deteriorates more readily. We must have a desire to succeed and to make it big in life, but not for ourselves. And once we’ve made it big, we must then be ready to let go. Most people become addicted to their success. People who have no ambition don't set out to do big things. Intelligent people know what they are capable of and set out to achieve their goals for their own satisfaction. But at the pinnacle of wisdom, a rare few set out to do big things for mankind. That's the kind of life I'm chasing after and encourage my advisors and their clients to pursue as well. It is a life rich yet simple and simple yet rich! That's how I look at my life.

I hope you find a nugget of insight in this sharing and find it useful to the pursuit of your own purpose in life as well!

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Drink to your health! But in moderation...

In just a few more weeks, most of us will be making merry, celebrating either Christmas or New Year; many of us both. We will be surrounded by good cheer, good company, good food, and very likely, copious amounts of alcohol.

While alcohol is a staple at many joyous events, we know that too much of a good thing can turn out to be deleterious to our health. Studies over the years have shown that alcohol can be a double-edged sword. While it appears to guard against certain cardiovascular diseases, over-consumption may lead to other health complications.

The good news first. Just last month, a Spanish study found that long-term moderate drinking decreased the risk of heart disease by up to one-third in men. Even better news: the type of alcohol – wine, spirits or beer – made no difference to the results. It turns out that men have greater reason to rejoice than women, for whom the study found alcohol consumption having far less health benefits.

The study found that the ideal amount to drink for men is less than two glasses of wine or a couple of beers a night. Men who drank this amount saw their risk fall by more than 50 percent in the 10 year study on 15,500 men.

Other experts warn however, that the findings should be treated with a circumspect, as they do not take into account illnesses from a range of other diseases caused by excessive or binge drinking.

UK experts said the findings should be treated with caution because they do not take into account ill-health from a range of other diseases caused by excess drinking. Whilst moderate alcohol intake can lower the risk of having a heart attack, coronary heart disease is just one type of heart disease. Cardiomyopathy, a disease of the heart muscle, is associated with high alcohol intake and can lead to a poor quality of life and premature death as well, according to the British Heart Foundation. The heart is just one of many organs in the body. While alcohol could offer limited protection to one organ, abuse of it can damage the heart and other organs such as the liver, pancreas and brain.

Stroke experts meanwhile also caution that people who drank a large amount of alcohol regularly appear to be at a three-fold risk of having a stroke.

The Stroke Association noted that overall, evidence indicated that people who regularly consumed a large amount of alcohol had a three-fold increased risk of stroke.

Meanwhile, the British Liver Association advises: “There have been several studies suggesting that small amounts of alcohol can reduce the risk of coronary heart disease in men over the age of 40. But these are often misinterpreted by people looking for a health reason to consume alcohol. If you want to look after your health, stay within the limits of no more than 3-4 units a day for men or 2-3 for women and aim to give yourself at least two days off alcohol a week.”

However, it should be noted as well that these statistics were based on studies done on European subjects who generally have a larger body mass than Asians and may thus process alcohol differently than Asians.

So, with all the merrymaking that will be taking place in the coming weeks, it may be fine to protect your heart with a little alcohol, but be sure not to harm your other organs with too much of it either. And whatever alcohol’s benefits, remember that physical exercise is still the best way to stay healthy!

Have a Merry Christmas and a Happy New Year!

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Capital Guranteed Products And How They Fit Into Your Portfolio (Part 2)

In last week’s article, we examined the nature of capital guaranteed products and explained why they were so popular during economically-uncertain times. Despite the fact that banks and insurance agencies tend to over-zealously promote them during such times, they do serve a purpose and can be part of a sound financial portfolio.

Having said so, there are many types of capital guaranteed products and it does matter which ones you choose to park your money with. After all, marketing brochures never tell you the a complete story. These are some important things to watch out for before making your decision:

Does the issuer of the capital guarantee meet the ‘solvency adequacy’ requirements? In other words, does the issuer have the financial means to deliver the promises made to clients when the product matures?

Is the issuer protected by ‘PPF’ (Policy Owner Provision Fund)? Most life insurers in Singapore are governed by this fund which compensates policyholders in the unlikely event that a registered insurer fails. Under current provisions, the PPF will cover up to 90 per cent of an insurer's liability from any life policy. Do note that structured deposits issued by banks on the other hand, are not protected by the Singapore Deposit Insurance Act which insures the first $20,000 of aggregated deposits with the bank should the bank fails.

When does the issuer return the full invested capital sum to the investors? Most structured deposits require the investor to hold the capital guarantee to its full five year term before the capital can be retrieved, whereas capital guarantees offered by life insurer often returns the full amount by the end of third policy term. This gives a huge advantage to clients. In times of urgent need for cash, they can break the contract term without losing any cent invested.

Is the interest payout compounded or flat? Some issuers pay the interest out yearly in cheques leaving no option for the investor to compound it further. For investors who actually do not need such liquidity yearly, they forsake a potential higher return at the end of the term.

Many issuers of structured deposits like to flash on their advertisements a sexy guaranteed interest paid out in the first two years. The interest in the subsequent 3^rd, 4^th and 5^th year is then dependant on the performance of the underlying asset class. In many occasions, the actual interest in the remaining years is negligible. For example, the issuer may promise a 2% interest in the first two years. But, because the remaining 3 years pay nothing to the investor, the real return on investment annualized is really less than 1%. For such returns, the investor may have done better off with fixed deposits. The capital guarantees offered by life insurers are fortunately often without such complicated make-ups. They may make a much better capital preservation tool with such higher certainty of their interest paid-out.

Is there an additional life insurance coverage provided by the capital guarantee? Those issued by life insurers often give a insurance on death and total and permanent disability for the investors whereas structured deposits offered by banks do not have such a feature. In the struck of an unfortunate disability, the monies of the investor with the structured deposit is still locked in, but with the life insurer, he gets an amount that is usually 25% more than his capital invested.

To sum it up, do not make a hasty move and lock your money in without ensuring that move is appropriate in the context of you financial situation. Speak to your adviser, and let your capital preservation tool work for, and not against you!

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Capital Guranteed Products And How They Fit Into Your Portfolio

In economically-uncertain times, “equities” takes on a decidedly unappealing register to most people, especially those who have seen their stock portfolio take a tumble. It is little wonder then that financial products that offer “guarantees” to their capital become more attractive.



Just look through the newspapers or browse the Internet and you’ll probably find it isn’t too difficult to come across ads for structured deposits. These are usually touted by banks and life insurers as sound and safe products. But are capital guaranteed instruments (inclusive of structured deposits) that flood the market now really worth parking your money in? After all, most such instruments offered require a minimum number of years (usually five at least) for your capital to be locked in, before you do actually get back your capital, and whichever amount of interest promised by the issuer. Investing in such products without proper understanding of what you are getting into, can mean a hefty opportunity cost, especially in bearish times like this, where many other asset classes can offer a better value for you.


A structured deposit, as its name suggest, is a deposit structured to combine the characteristics of a fixed deposit and an investment product. The return on a structured deposit is usually dependent on the performance of an underlying financial instrument, which can be a basket of equities, REITS, bonds or even bundled credit swaps.


‘Capital guarantee’ is a much more generic term, encompassing structured deposits, but also includes products that simply guarantees a certain interest and capital, without further promising a higher bonus which most structured deposit accounts do.


Sounds appealing. But beware. Even the juiciest-looking apple might be poisoned. If you have been sharp enough to observe the marketing trends of financial institutions, capital guarantees often flood the market in bearish times like now. The reason is simple. They are designed to appeal to investors who are more psychologically averse towards losses. These fears increase as their perceived prospects of potential losses grow greater. These people become easy pickings for the banks and insurers during bearish times.


We all know that “there is no such thing as a free lunch”. So how can such a sweet deal be possible? The answer lies within. Financial companies are intelligent enough to know, when the stock market comes tumbling down, it is a market discount. They can’t wait to sweep all the good stocks at costs of peanuts and make a huge windfall with the monies they receive from the capital guarantees sold to investors. And when such institutions earn a handsome profit, they return a meager interest back to the investors from whom the money came from. What a move! No wonder Warren Buffett remarked that “Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway.”


Does this mean that capital guarantees are simply nonsensical? Not at all. In the context of portfolio construction for investment risk management, they do have a part to play. Akin to most sports, there ought to be a presence of both defenders and strikers in order to win the game. Capital guarantees are the defenders when it comes to asset allocation. In JNP, capital guarantees are used regardless of the market state. Bullish and bearish times alike, they will always find a place in one’s portfolio. But they will be recommended not with the intention to make a quick profit from investors’ fears, but for sound asset allocation.


Look out for next month’s edition where we explain which capital guaranteed product suits you best, depending on your financial situation.

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Character Building Is Key To Organisation Building!

According to several international surveys, Singapore is one of the easiest places in the world to start a business. Little bureaucratic red tape, solid infrastructure and relatively low taxation encourage the ambitious to venture forth and set their mark on the corporate landscape.

For these brave souls, they soon discover that setting up a company is easy indeed; too easy almost. Building and maintaining their new organization is where the trouble begins. Many fall short because they do not truly understand the fundamentals to sound organization building.

It is true that the most important tasks in ensuring that an organization has a sound internal coherence rest with its leaders. However, a common misconception is that the leaders’ main role is to set an example for their subordinates. While that may sound like it makes sense, a focus on mere example-setting actually detracts from the more critical point.

Examples are easy to put on. Any one can pretend to possess the proper values in front of others. It is almost like an actor performing for an audience. But when the cameras are off and no one is looking, the makeup comes off and all the wrinkles, blemishes and warts are exposed for the world to see. Moral character and integrity, on the other hand, are intrinsic; you can’t fake them. And that is what leaders must begin working on. This is the principle held by the exceptional CEOs of many successful MNCs such as Bill Gates and Warren Buffet.

This is authentic leadership. From there, the leader can begin building the individual characters of the company’s members, who are the true building blocks of the organization.

But it is easy to understand why character-building is often overlooked or ignored altogether. It is either because the leaders themselves lack strong character, or that they find the process of building others’ characters too time- and resource-consuming. Instead, they substitute character for what’s known as coping skills.

And that, too often, is what capitalists desire. Coping skills are easy to teach. More often than not, they are primarily intellectual tools that negate the heart and spirit of a person. But they are efficient to impart and suitable for the modern mentality that companies and businesses – like instant noodles – can be built and programmed to prosper straight out of the packaging. While a company’s turnover is monitored quarterly, character-building takes years.

Coping or competency skills themselves are not a bad thing. But they are only one of two legs that an organization stands on. The other being moral character, of course. Without that, the company limps and hobbles about, without sure footing. Competency skills enable people to confidently react or perform in a specific situation. Character enables people to confidently perform in life. And where their workplaces become an extension of their life, as it rightly should, then that is where they will shine as well, provided they have character.

That is why JNP takes a hard line in building our internal culture. Even top-producing advisers have to be dismissed if they step out of line and find that the organization’s values no longer resonate with them. Otherwise, the environment becomes contaminated and everyone else suffers. We are not simply in the business of growing wealth; primarily, JNP is an organization about growing character!

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