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What the very rich are doing with their wealth?

Saturday, September 24, 2011

I read an article provided by Bloomberg News that Singapore will become the world's top wealth management centre by 2013, surpassing Switzerland and London.

It looks like our tiny island nation is attracting a lot of wealth from around the world and we are not just talking about HNW individuals. We are talking about super HNW individuals and families!

These families are setting up family offices to manage their millions instead of entrusting their wealth to private bankers. They view private bankers as salesmen instead of custodians of their wealth.

Clinton Ang, 38, prefers to manage his family's wealth of about $100 million himself.  About 90% of his family's investable assets are in cash after he sold from October to March its investments in stocks, bonds and most property assets.

Some family offices cater to more than one family to gain economies of scale. It is said that it costs at least $1.5m a year to run a family office that includes an investment team. So, a family will need a minimum of $100 million to justify the expenses.

Personally, I know some very rich people but they never talk about their wealth. So, it is not easy to get a peek into the way they manage their money. Usually, those boasting about their wealth are the newly rich and who might have just attained their HNW status.

There is wealth and there is WEALTH.


financialray said...

Totally agree.
Some people make their first million only and start telling people how to make money, after you sign up for a course costing a few k , of course.
The really wealthy though, are those who give and donate.
One of those says more meaningful to donate when we have not made it yet. For now that he has attained that level, donating does not come mean much to him since he has so much.

AK71 said...

Hi financialray,

I agree that we should look out for the less fortunate in society and for many years now, I have a list of charities which I make donations to yearly.

I have been fortunate to have received a good education and have a good family.

Life is never fair and people who are more fortunate can help to smooth out the wrinkles in life for the less fortunate. :)

Temperament said...

Hi AK71,
i always will remember the Chinese saying something like this, "Bamboo doors face bamboo doors, wooden doors face wooden doors."
If and when bamboo doors mix with wooden doors, guess which doors are not happy?
How about another, something like this:"if you are never satisfied with your life, you think a snake can swallow an elephant".
Well, am i satisfied?
i really don't know.
i have to think of my son, wife and our old age. Not forgetting our very old parents.
i wish i don't have to.
Ha! Ha!

INVS 2.0 said...

Hi AK71,

I can't even utter the word "wealth" when my personal asset size is not in the 6-figure range (let alone of 7-figure which is millionaire-level). Too young to compete with the oldies with more than $1m in their pockets. Grr. :/

INVS 2.0 said...


Strange, isn't it. Considering Singapore is going to be the world's top wealth hub and yet people around me are still struggling with their expenses and so on. Talk about huge income gap that exists here.

AK71 said...

Hi Temperament,

I had the impression that you are close to retirement, if not retired. Are you still responsible for your son's finances?

As for being aware of one's station in life, despite efforts at meritocracy, in a capitalist society, there is no true equality. Equality remains an ideal.

So, what are the less privileged folks like us to do? We have to mold our own financial security. For the more ambitious, they could try to enter the ranks of the multi-millionaires or even billionaires.

Of course, we could also buy ten Big Sweep tickets every month and try our luck. This is what I have been doing for years now. ;p

AK71 said...

Hi INVS 2.0,

To capitalise on the influx of wealth into Singapore, the best occupation to consider now could be private banking. I know private bankers who make $XXX,XXX a year. Huat ah!

Anyway, I don't know if the widening income gap applies here as many of these super rich people and family don't even work or work here. They just park their money here. ;)

Temperament said...

Hi AK71,
At the age of 40(me),
we have our only child after 20 years of marriage at the moment when we are about to give up trying. But my wife had low placenta pregnancy. She had to be CRIB in hospital for about > 7 months under her doctor care. Why? It means the chance of the baby aborting was very high due to any movement from my wife. The hospital was my 2nd home or rather my first home then. All her medisave and mine was wiped out. Plus i think about about 20K+ in cash.
Nevertheless, we consider it is a blessing from "HIS GRACE". That's why i name him "Samuel". It's a miracle for me and my family and kins.

We were prepared to donate our estates to orphanage/s if we had any when we passed from this world without a child. Hence, i still feel more for orphanage/s than any other charity.
Now my son is only 22+. he is still a student after his poly.
Hope you enjoy my sharing.

Musicwhiz said...

The Income Gap is indeed wide. I do know of friends who are very waelthy and I also know of a friend who is struggling to find a job and has to support his cancer-stricken mum. It's quite sad to see the world this way but that's just how it is. I try to help out whenever I can even though I am of modest means, because if I were in that kind of position I would appreciate assistance too.

There is often another category - those who are not wealthy but are embroiled in all the trappings of wealth; so that they give the impression of wealth but are actually very poor and living paycheck to paycheck. It's up to the astute person to differentiate the wheat from the chaff. I guess the same also goes for investing in companies! Haha!

financialray said...

People tend to compare with each other, that is not to be faulted, for then there may come motivation. But beware of ill thoughts like envy, jealousy and resentment and of course, the income gap.

See things in a different perspective. One may donate when one is wealthy or when one is blessed with good family, good career...and success in life. But when one donate even when one is in hardship, that is bringing charity to another level.

There is charity and there is CHARITY.

If u get it, u will be enlightened and know what i mean.

THen, you realise happiness from CHARITY is much more than happiness from WEALTH.
I believe the 2 richest men in the world already understand.

AK71 said...

Hi Temperament,

Thank you very much for sharing. I appreciate it. :)

So, you became a father at 40 years old. I can imagine the joy after so many years of trying. Yes, the Lord works in mysterious ways. ;)

Money is only money and can be made back. Family, however, is irreplaceable. :)

I guess your son is continuing his education in a university after graduating from a polytechnic. I wish him the very best and to you too. :)

AK71 said...

Hi MW,

Indeed, such is the nature of capitalism, unfortunately for most.

I am glad to hear that you are helping out the friend who seems to be struggling financially. I hope your friends who are very wealthy could do the same.

Living from pay check to pay check and given to conspicuous consumption? Haha.. These are the wage slaves I have no sympathy for.

I wrote a piece on this recently:
Wage slaves should be fearful.

AK71 said...

Hi financialray,

I believe in being charitable. However, I am also a pragmatist and I believe that the clay Buddha crossing the river should try to take care of just himself. ;p

Francis S said...

What the very rich doing ?
Well .. invest 11 billion to become 2.5 billions in 4 yrs

AK71 said...

Hi Francis,

I guess sometimes we make bad investments. I know I did and still do. :(

ahsun said...

i dont really like private bankers, or anything to do with banks, there is a conflict of interests and one can rarely gain a genuine relationship. it is rather a very monetary relationship.

needs vs wants. do you want it for your ego to be happy or do you need it for yourself? man can live very simply. not everyone is blessed with good fortune and remember that situation/fact is neutral, it is how we perceive it that influence our thoughts and actions =D of course, mr market is too emotional to see things neutrally

Temperament said...

Hi AK71,
"At the age of 40(me),
we have our only child after 20 years of marriage at the moment when we are about to give up trying."

We have our our child after 12 years of marriage, not 20. My apology. You see after 22 years(my son's age) when i share this episode of my life i think i am still emotional "sub-conciously".
Sorry for the mistake.

AK71 said...

Hi ahsun,

I agree. Bankers need to make a living too and often people are just too trusting. I fell into that trap once too often. Not anymore, I hope.

As for what's out there, yes, facts are facts but perception is reality for most. It is this disconnect that could provide opportunities for the savvy investor. ;)

AK71 said...

Hi Temperament,

I am crunching the numbers you gave. So, you got married at age 28 and not age 20. Everything else remains the same. Thanks for the correction. :)

Keeping up with the Tans said...

People may appear wealthy.

One way to gauge is:

If they go on long holidays
( long means more tha 14 days )
If they own a car AND have domestic maids.

If they own a car ( any will do)
If they have a domestic maid
If they have 2 kids ( below 21 )
If they are supporting 1 elderly
If they live in 5 room sized property
If they can afford annual vacations of more than 14 days for 4 people beyond 8 hr flight time.
If they work 5 day weeks

You could replace kids and elderly with dogs, cats, fish, golf, boats.

Anyone who falls into this criteria, in my opinion is wealthy.

Single people are not fair comparisons.. especially if they have no parents to support and are living with them... for free.

AK71 said...

Hi Keeping up with the Tans,

Interesting nickname. Inspired by Presidential Elections 2011? ;)

Wow, thanks for sharing with us your criteria for being considered wealthy in Singapore. You must have spent a lot of time thinking about what qualifies a person as wealthy. ;)

I must admit I have never given it much thought beyond how much a person has in investable assets.

keeping up with the Tans said...

Ha! ha!.. yeah, Tan is pretty common isn't it??

Well, lets take a hard look at wealth. Should it be just investable assets?
Being wealthy should also include the luxury of having time to spend it and and live it... all paid for, not via debt!

If you look around, you might notice that families with maids may not own a car and vice versa.
Why is that so?
The next level is: if they have both, how far do they travel for vacations? BKK/HKG/PER/TPE and especially KUL do not count!

True, they may be able to afford flying to Paris, but they choose not to. But do they have the time or do they need to look after a business that they cannot take their eyes off?

To me, that means they have yet to be wealthy. There is no point in hoarding all that cash, assets and not being able to live! ( yeah, fat, triglycerides, gout and all )

Well, to each his own anyway.
Thanks for the sharing too.. I am but an occasional visitor to your blog.. one that has a different perspective.

AK71 said...

Hi Keeping up with the Tans,

Wow! You do spend a lot of time thinking about what it means to be wealthy.

I am sure there are many shades of grey and that there are numerous opinions on what to be wealthy means.

To me, it is just a feeling. If we feel wealthy, we are. The same goes for feeling otherwise. Simple. Of course, whether others think so or not is something else. And does it matter what others think? Only if it matters to us what
others think. ;)

Thanks for sharing your thoughts here. :)

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