|You thought a fund manager will be like this...nah, it's not fun but lots of hardwork|
Monday, December 23, 2013
La Papillion is now officially a fund manager.
I don't know whether this is a good development or not...I'd like to see it as a positive one. Before you start thinking I've joined some fancy company as a employee, nah, I'm not. I've simply the fund manager of my parent's retirement money. This follows my post a week earlier regarding an assignment that my mum tasked me to do. Following some readers comments that I should issue my own LP bond with a fixed rate and a term, I've decided to do it because I think I should confidently be able to beat the fixed deposit rates offered now (around 0.25% to 1.25% pa) and yet also be able to provide them security by guaranteeing that the capital that they had trusted with me will be returned as and when they require. Seems like I've built a certain trust level with my parents because ultimately, the security of the bond is as safe as the issuer - which is me.
The terms of the bond are as follows:
1. Fixed guaranteed yearly interest of 2.0% pa, paid out per year on 1st Jan.
2. No fixed duration, which means it's perpetual until redemption by parents, or liquidation of funds by issuer (i.e. me). Before either can happen, there will need to be at least a 6 months notification to the affected party.
3. Non-guaranteed bonus per year, ranging anything from 0.5% pa to 2.0% pa. This is in addition to the fixed guaranteed yearly interest of 2.0% pa.
4. Capital guaranteed by me after a minimum period of 5 years. If they take out the capital before 5 years, any losses will be born by them. If they take out the capital after 5 years, I'll take the losses if any.
I've 50k at hand here sitting around for a week already, with possibility of another 40k to 100k coming in next year. Wow...I didn't know that they will be sold so easily after presenting to them the different options. However, I didn't do anything for a week so that I can approach this issue with a calm mind. First of all, I didn't know they had squirred quite a sum of money for retirement. This is probably good news for me because it means that I've got 3 layers of defense for any emergency medical fees - insurance under H&S, their retirement money, me and my brother's money. This makes the whole financial burden a lot easier to shoulder. Secondly, I can only guaranteed 50k at this point in time. If they wish to put in a total of 150k, I don't think I can guarantee that kind of sum. Hence, I suggested to them that they evaluate my performance first. If it's satisfactory and most importantly, that I'm confident that I can guarantee both the returns and the safe return of their money, then I'll take it. This is better for them and for myself.
In the coming days, I'll be thinking hard on my portfolio allocation. How much of the money should be allocated to bonds, fixed deposit/cash equivalents, equities etc. If anything, this 50k is even more important than my own 50k because I can lose my own money but I can't lose theirs.
Now, if only bankers would think like that, we'll have a lot more trust in them.