March 29, 2009
me & my money
He sticks to dollar-cost averaging
Financial service group founder's disciplined savings strategy gives him peace of mind
By Lorna Tan
Australian Robert Bennetts, 56, the founder and group chief executive of Professional Investment Services (PIS), does not like to lose sleep over his investments.
That is why he follows a disciplined savings strategy by putting a regular sum into his investment portfolio rather than a lump sum. As a result, the price paid for the shares or unit trusts is averaged out. This means more shares are bought when prices are low and fewer when prices are high.
Together with four financial advisers and seven accountants, Mr Bennetts set up PIS in Australia in August 1996 with an initial total investment of A$193,000.
The founding members still work for PIS, now one of Australia's largest financial advisory groups.
For each of these founding shareholders, A$5,000 invested on day one was valued at A$3.1 million in December 2005, when British insurer Aviva bought 20 per cent of the group.
The PIS group now advises clients with combined funds of over A$21 billion (S$22.1 billion). With 1,000 branches Australia-wide and more than 1,542 representatives, it has one of the largest networks of accountants, financial advisers, and mortgage and insurance brokers there. Its overseas businesses have more than 1,000 advisers in all. Its Singapore operations, Professional Investment Advisory Services, started in 2001 and has 360 representatives.
Mr Bennetts, who was in town recently, is married to Sheree, a housewife, and they have two daughters aged 19 and 17. They live in the Gold Coast.
Mr Bennetts graduated in 1995 with a Bachelor of Science degree, majoring in business administration, from Pacific Western University in the United States. He is also a certified financial planner.
Q: How is your credit card usage?
Credit cards are a necessary evil in my belief. Necessary because they are the currency of the day, convenient and reasonably secure. Evil because of the ease of access to credit and the possible abuse of this if not managed correctly. I ensure that all debts on my cards are cleared within the interest-free period.
Q: What financial planning have you done for yourself?
Because I don't have the time to buy and sell individual stocks, I invest my funds through managed investments. My long-term goal is to average 2 percentage points above the Australian share market average, which is traditionally 12 per cent.
Q: What about insurance planning?
Personal and business protection is extremely important to an overall financial planning strategy.
As I have accumulated sufficient wealth, I find it unnecessary to insure myself. However, when my children were younger and I had a mortgage, I considered it essential to be protected appropriately to pay up any debts and provide my family with an income to maintain their existing lifestyle if I was unable to provide for them.
Q: What are your property investments?
I have a three-bedroom house at Bundall beach in the Gold Coast overlooking the sea. I also have a four-bedroom home in Sorrento and a three-bedroom home in Ashmore, as well as a small farm in Killarney with approximately 20 cattle. All are in Australia.
The current downturn and limited access to banking credit have influenced a retraction in housing prices, so there are good opportunities across most Australian cities. There is only a limited coastline for housing development and properties with absolute beachfront are highly sought after.
Q: Moneywise, what were your growing-up years like?
I come from a family of five. My father started his career in the meat industry, supplying meat to retail outlets like butcher shops, and later became a real estate agent. My mother raised the family. I grew up in a four-bedroom house with a swimming pool in the Gold Coast.
My parents came from an era where they grew up believing they should save their money in a bank; they both stuck to this belief. But this strategy did not allow them to retire as wealthy people. They relied on their government old-age pension. So I did not come from a wealthy family. But I worked hard and was able to buy in 1969, at age 16, my first two blocks of land, in Burleigh Heads in the Gold Coast. Each cost A$300. I spent A$400 improving them and, six months later, I sold them for A$3,000 each.
Q: What's the most extravagant thing you have bought?
It was an earlier 'investment' in a horse which had more shoes than (former Philippine First Lady) Imelda Marcos, more blankets and injections than you would see at a hospital, and in the end my golden retriever could run faster than it.
Q: What's your retirement plan?
I believe I achieved financial independence in 1995 through astute investment decisions. I have no plans to retire yet but will keep working for as long as I am capable and enjoying it. Having said that, I am working on my wealth accumulation so that when I do retire, I can do so comfortably with my family.
Q: And your home now is...
I live in a four-bedroom house facing a canal in the Gold Coast. The property is also five minutes from the beach. It was purchased for A$310,000 in 1993 and is currently worth A$1.5 million.
Q: And your car is...
A black E-Class Mercedes-Benz.
BEST AND WORST BETS
Q: What has been a bad investment?
In 1997, I bought a property 1,000km from where I live in the Gold Coast.
Being so far away, it was difficult dealing with tenants and with damage to the property. It was bought for A$110,000 and I spent A$30,000 on enhancements.
After seven years, it was sold for about A$87,000, or a loss of about A$50,000.
Q: Your best investment to date?
My overall strategy of keeping investments balanced and my development of the financial service group Professional Investment Services.
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