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Youthful Mistake Provides Biggest Lesson Of Investing Life

2017-01-11 04:19:18

How true is the saying "no pain, no gain"? Very true indeed, if you're Prapas Tonpibulsak.

The chief investment officer of Ayudhya Fund Management says he learned his fair share at the schools he attended, but none offered him the sorts of lessons _ not all of them pleasant _ that the Stock Exchange of Thailand has given him.

As a teenager in Chumphon, the Southern Province in Thailand, he was like many of his peers, with limited awareness of events happening around him. Even when he first arrived in Bangkok to study finance and banking at the University of the Thai Chamber of Commerce, he found life fairly convenient; his goals were indeterminate.

That soon changed. As a senior student, he started to become curious about what he'd been reading about the stock market. He started to get ideas. Just two weeks before the 1987 Black Monday, he borrowed his parents' money and put it all in the stock market. The outcome: he kissed all the money goodbye.

"Well, if you ask how much money I lost back then, I would say the value equal to four Mercedes-Benzes, " he says with a grin.

Though the experience was unbearably painful for a 20-year-old, in retrospect he says it was a priceless lesson.

"I suddenly realised how volatile and unstable the stock market was. And how much and how deeply one needs to study it to eliminate _ or at least manage the risks. That's the hardest thing one has to do," says Mr Prapas, now 40.

The personal crisis strengthened his resolve to recover his losses. This later led him to the new, and real, world of investment. He started to read everything in the field, and he found a hero in author Benjamin Graham.

After completing a bachelor's degree, he pursued an MBA in finance from Wagner College in New York, where he spent most of his days in classes, his nights watching financial and investment news on television, and his weekends at Barnes & Noble bookstores looking for securities analysis books. Before long, he had a clear goal in mind.

"I'd like to be financially independent at the age of 60 with 200 million Baht, approximately 5 millions US Dollar, in savings," he says hesitantly, and then he smiles.

Returning to Thailand, he started as a stock analyst at Securities One for two years and another two years at One Asset Management as a fund manager.

Following the 1997 crisis, he headed home to help solve problems facing his family's business. A few years later, he was back in Bangkok as a financial consultant specialising in debt restructuring at several key companies before stepping into Ayudhya Fund Management.

Asked about a view on personal finance, he says, "It's something that's related to commitment and responsibilities in life, which change through an individual's life cycle. It's a matter of setting goals and setting an action plan to get there. It's the same thing as doing business."

Hence, his goals have changed in relation to the changes in his life. Today, his ambition to be financially independent must also include the needs of his wife and three children.

For those setting a goal for savings after a retirement, he advises working back from the future to today, by taking monthly or yearly expenses, inflation and interest rates, into account.

"They need to do the mathematics to find out how much they need to save each month or invest in order to get the amount or returns they wish to have when they retire."

Currently, 10% of his investment portfolio is in equity and fixed-income funds including long-term equity and retirement mutual funds, while the majority of 80% to 90% is in real estate.

To accomplish his goal, his portfolio needs to generate a return of at least 12% a year.

"The key, and the most important thing, is that investors need to be able to know what the risks are and manage them well," he concludes.

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