By Albert Lim
Investment Director,
IPP Financial Advisers

THE beginning of the year always brings hope and an opportunity to start anew. It is also the time when banks, broking houses, asset management firms and major financial institutions put forth their outlook for the new year. Looking back, 2009 has been an eventful year where vast fortunes were lost and made. We also saw the year of the Great Recession turn into the Great Recovery in the stock market.

For a change, I want to start my first column for the year by discussing the financial outlook and sharing my thoughts on the value of wealth and money.

What does 2010 hold for investment? In my view, this is a year where economic fundamentals will be put to the test. Judgment will be out by the second half of the year on whether all those billions of dollars in government stimulus packages get filtered down into the real economy.

Jobless recovery

Thus far, it is still a jobless recovery in the west and consumer spending is still weak. Hopefully, by the third quarter, we will see a clearer picture. As for now, we don't foresee a major correction because of the ample liquidity waiting on the sidelines to take on higher risk for higher returns. In terms of regions, we still like Asia and the emerging markets. Their economic growth forecasts beat the developed economies and there is potential for their domestic consumption to grow. Corporate credits will likely do better than government bonds as credit conditions continue to improve and earnings rebound. Government bonds are likely to come under pressure at some point in time when policy tightening begins.

I spent my year-end holiday going through all kinds of reports from different financial institutions and I came to the conclusion that an opinion is just an opinion. Market gurus who have contrary views from the norms can be well supported by facts and figures too. We get excited about what financial gurus and institutions have to say about the new year and we strategise on how to capitalise on the information and opinions. However, whether a piece of information is financial treasure or junk is relative to a person's situation.

To most of us, money is the means that enables us to purchase material items to lead a comfortable life. Money satisfies our needs and wants. It may be the desire to buy a five-carat diamond ring, a sports car or a prestigious property in a nice location. In most cases, it is not a question of addressing our needs because we have more than enough for that. On the other hand, there exists a group of people who struggle daily to fulfil their basic needs. The harsh reality faced by this needy group is beyond what you or I can imagine.

Let us consider some statistics related to global hunger*.

• 1.02 billion people do not have enough to eat - this is more than the population of the USA, Canada and the European Union.
  
  
• The number of undernourished people in the world increased by 75 million in 2007 and 40 million in 2008, largely due to higher food prices.
  
  
• 65 per cent of the world's hungry live in only seven countries: India, China, the Democratic Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia.
  
  
• More than 60 per cent of chronically hungry people are women.

The list goes on and on.

The best investment I made last year did not give me any monetary returns. For years I have been privileged to be involved in an organisation that helps provide surgery to the handicapped especially children with cleft lips and palates. In many parts of Asia, children born with this problem have no future or hope. They are destined to a life of begging or being an outcast in society. Their family is ostracised because people around them believe in karma. They believe that they had done something bad in their previous life and therefore, their child is born with deformity as punishment.

The truth is these children are mostly intelligent and normal, save for the mild deformity. Protein or calorie malnutrition during pregnancy is one of the causes of cleft lip/palate deformity. A simple surgery costing a mere S$250 can restore them to normality, give them a future and help the family get accepted by their neighbours again. That, to me, is the real value for money.

An act of generosity, love and kindness goes a long way. In our condominium, there is an elderly Chinese lady who does a wonderful job cleaning the grounds. One day, my wife gave her an ang pow and a hug to let her know that she is appreciated. The true reward is in seeing the expression on her face. Her eyes were teary from a sense of being noticed and appreciated. We can use money to make someone really happy. Remember, money is neutral, it is neither good or evil. It just takes on the character of the owner.

Making a difference

There will always be the poor and needy and we cannot help them all. However, we can make a difference to those we can help and their lives will feel the impact of that gesture in a very practical way. As the new year begins, I am more determined than ever to be the master over money and not the other way around. I aim to invest wisely, make as much as I can so that I can use the money to make a difference in the lives of those in real need. Hence, it is important to keep abreast of the market outlook and make adjustments in our investments along the way.

* Source for the statistics: Food and Agriculture Organisation of the United Nations (FAO).

The author is the Investment Director at IPP Financial Advisers, the leading licensed financial advisory company in Singapore. He can be contacted at albert@ippfa.com.

This article was first published in The Business Times.