Recent Letter to My Clients

I recently wrote a letter to my clients and I just thought I will share it here. I hope it encourages anyone who may chance upon it. 


Dear family of clients, 


This morning, I woke up with thanksgiving to God for all the grace and mercy that He has showed me as well as to Providend. At the same time, as I observed what has been happening around the world, and in particular Singapore, I just feel moved to write to all of you. Just 18 months ago, we witnessed one of the worst financial crises in the past 100 years. Banks around the world collapsed. Big institutions went bankrupt, many jobs were lost. Many frauds were uncovered. Investors who invested in structured deposits who in turn invested in toxic assets lost all or most of their hard earned monies. Retirees had to work again. Some who cannot accept this reality committed suicide. This crisis has taken away parents, husbands, wives, children, colleagues and friends. In Singapore, we were also not spared. As an export economy, we were in a very bad shape just 18 months ago. Many corporations, especially financial institutions, retrenched their staff. Investors lost their monies to the financial markets, to products such as Mini Bonds, High Notes, Pinnacle. Till today, some of the structured products out there are still at the risk of default. Our government warned us of worst days to come. As a result, many austerity measures were put in place and help was given to organizations so that they can survive through this perfect storm. We didn't have it easy too at Providend. Being a financial institution, we were hard hit when the market took us by surprise and our assets under our care came down from SGD250 million to SGD160 million by December of 2008. Many of our clients were scared, some angry. The morale of the Providend family were low, some bailed out but most stayed on, knowing that we have a responsibility to our family of clients.


Honestly, we were scared too. I was scared too and in fact the whole of Singapore and the world was scared. No one knew when the carnage will end. No one knew when the dark clouds will pass. Many have told me that "this time is different", the world is collapsing, the end was near and almost everyone I spoke to was gloomy and there was hoarding of money as everyone became very thrifty. 


How things have changed in just 18 months! Today, property prices have sky rocketed to a ridiculous level. HDB flats sold at SGD900,000, 99-Year leased hold properties in suburban areas sold at more than $1000 p.s.f. COEs have gone up as supply of COEs dropped but demand for cars remained. Cars are at a level more than 10 years ago! Structured products are on sale again and banks are recruiting Relationship Managers en masse once again to cope with the demand. People once again are chasing returns and afraid of being left behind. Property buyers are snapping up properties for fear of not being able to afford one or missing the property boat. When warned of a property bubble, many that I talked to tell me that "this time is different'. Prices will continue to go up. 


Dear valued clients, this is not an investment letter. I don't profess to know where the financial markets are heading. I do not know where the property market is heading. All I know is that nothing is different. I really want to heed the words of the bible through the wisest man on earth, King Solomon. He says in the book of Ecclesiastes: 


"Vanity of vanities! All is vanity." What advantage does man have in all his work which he does under the sun? A generation goes and a generation comes, But the earth remains forever. Also, the sun rises and the sun sets; And hastening to its place it rises there again. Blowing towards the south then turning toward the north, The wind continues swirling along; and on its circular courses the wind returns All the rivers flow into the sea, yet the sea is not full. To the place the rivers flow, there they flow again. All things are wearisome; Man is not able to tell it. The eye is not satisfied with seeing, nor the ear filled with hearing. That which has been is that which should be, And that which has been done is that which will be done. So there is nothing new under the sun. Is there anything of which one might say, "See this, it is new?" Already it has existed for ages which were before us. 


Even if you are not a Christian, the book of Ecclesiastes has much earthly wisdom to teach us. I encourage you to read this book in the bible. As CEO of Providend, I felt moved this morning because I worry for ourselves, our family of clients. I want to encourage each one of us to remember what has happened over the last 18 months. I hope we can all remember the precious lessons on greed and fear that 2008/09 have taught us. Let us not follow the rest of the world, chasing after things that may cause us to lose everything. Like I said, I do not know if the property market will still go up or for that matter, whether any markets will continue to go up. I am at peace with myself because in my investment, I do not have to know. All I need to do is to keep investing and stay invested in a properly diversified portfolio through good and bad times. But I know for sure that once I start to take too much loans, load up my expenses, I am putting myself and my family into danger zone. Let us please remember basic financial planning 101: 
1. Have at least 6 months of your monthly expenses in cash for emergency. 
2. Save at least 10-20% of your income. 
3. Do not chalk up a total monthly loan repayment amount of more than 35% of your gross income. 
4. If you do not have a mortgage, do not chalk up a total monthly loan amount of more than 15% of your gross income. 


Besides investing our money, let us invest time into building our families, our friends and building the lives of others. Only this will last for eternity. Above all, let us embrace the whole idea of contentment. Because it is only in contentment that we find true happiness. Which is easier? To do the right thing during difficult times or prosperous times? I am not sure, you decide. I pray for every one of us to have the wisdom and the strength to stay prudent during this prosperous yet difficult time. Please do take care, of yourselves and your families. See you all at the next client event. 


Yours sincerely, 
Chris