TRUE's Hero & “View” To a Kill

In this issue of Money Make Over, the author sat down with Thailand's favourite son and daughter, Khun Pichate and Khun Wallaya or Nong View as she is often known by her nickname. Nong View really needs no introduction because since her successful return from the Olympic games in Greece with a bronze medal, we have seen posters of her picture at every bus stop around Bangkok ; not to mention countless sponsorships and products endorsement deals. Khun Pichate, on the other hand, is lesser known but achieved just as much, if not more, success at the Para-Olympic Games by winning two gold and one bronze medals as well as setting a new world record for 4x400 metre and 4x100 metre relay events. As always, fame and fortune come with price and burden. And the biggest burden of all is probably how to cope with newfound wealth and being the centre of attention, which can often be a double-edged sword. Both of our national heroes have vastly different backgrounds and face different sets of challenges with their investment portfolios and here are their stories, which hopefully will be inspirational for future generations of sports men and women.

Khun Pichate's story is one of life harsh realities but what is encouraging is that he did not complain about God being unfair or give up on what life has to offer. In his own words, “Life is like a card game, one can not choose the hand one's been dealt.” It was not his fault that he was born into a poor farming family in Pichit nor was it fair that he's been inflicted with polio when he was 4 years old. Being poor AND handicapped is probably the worse thing that can happen to anyone but sometimes God works in a mysterious way. Life in Pichit was very hard for Khun Pichate. When he first succumbed to polio, his parents did not know any better and resorted witchcraft to drive away the evil spirits rather than seeking help from public hospitals and by the time he was five, it was already too late for any kind of medication. Going to school was such an ordeal. Being teased by other kids was bad enough but having to literally crawl to school everyday was hard work on the body and the soul. That was when the headmaster of the school decided that Khun Pichate needed special help that was not available in Pichit and managed to send him to a special home in Bangkok called Baan Nanthapoom, where he spent the early years of his life under the care of the foundation for handicapped children.

Baan Nanthapoom is home to more than 400 handicapped and quite often-orphaned children, many of whom were abandoned deliberately by their parents. In spite of the odds against him, Khun Pichate made the most of what Baan Nanthapoom had to offer: food, shelter and most important of all, education. Even with a Bachelor degree in Computer Science, it still took him a long time to get a job. In fact, finding a job was easy but the most difficult part was finding an employer who was prepared to hire disabled people. Khun Pichate was offered several jobs but was turned when he disclosed to the prospective employer that he was disabled. This is something corporate Thailand has not fully embraced and that is non-discriminatory employment practices against race, religion, gender and disability. In any case, Khun Pichate's luck turned for the better when one of the executives from Telecom Asia or TRUE as it is known today paid a visit to Baan Nanthapoom and decided to give Khun Pichate a job as a customer service staff in the internet service centre (ISC).

Khun Pichate is 29 years old, has been married for 3 years with one daughter. His wife, who is not disabled, used to work as a sale girl at Jusco department store but now stays home to look after the daughter, which means that Khun Pichate is the only bread earner in the family. Going to work was quite an ordeal for disabled people, as one would imagine. Getting on and off crowded buses etc. was particularly hard and the journey from Nonthaburi into TRUE's head office in Ratchadapisek often takes up to 2 hours. Therefore, the first thing Khun Pichate did was to take out a loan for a specially modified motorcycle for disabled people, which cut the journey time into work by half. Colleagues and superiors at work have also been very accommodating by treating him like normal people but help is always available if needed. In fact, TRUE's has been especially kind to Khun Pichate, the company even gave him 3 months leave with pay when he had to train for the Olympic games in Greece .

Khun Pichate currently lives in a subsidized housing estate next door to Baan Nanthapoom with his family but he would like to have a place of his own one day. The success from the Olympic games last year was a major turning point for him. Although, there were no product endorsement deals nor corporate sponsorships but the prize money from the Sports Ministry and some of the major companies including Honda, Toyota, Boonrawd Brewery and Singer came to a reasonable sum to start a new life. In addition, sweeteners from his own employer also came in handy such as lifetime subscription of UBC and Orange mobile phones. Currently, Khun Pichate's monthly cash flow is positive with a saving rate of about 40-50% of basic salary. He has a company sponsored provident fund whose contribution is 5% and group health and life insurance cover. All of his savings are in bank deposit.

Recommended Portfolio : It is not uncommon for people with Khun Pichate's background to have 100% of their wealth in a bank deposit because they don't know any better but we are going to change all that and what M&W has to offer will be more valuable to Khun Pichate than all of his prize money combined and that is the knowledge on how to create wealth . Being relatively young (29) with a steady job and now debt free (he has now paid off his motorcycle debt), Khun Pichate is in a position to grow his wealth via equity investment. It is my recommendation that Khun Pichate should put about 70% of his portfolio in stocks, 25% in fixed income and 5% in cash.

Equity portfolio: should comprise of 40% SET Index fund (to gain broad based diversification) 10% in actively managed funds and 10% should be diversified offshore via foreign investment funds (FIF). Although, Khun Pichate is still in the low income tax bracket but he should still take full advantage of the tax deduction being offered under the RMF and LTF schemes, whereby about 10% of the portfolio can be dedicated to such purposes.

Fixed income portfolio: in a rising interest rate environment, it is recommended that 15% of the portfolio should go into short-term fixed income funds and 10% into long-term funds. Since, Khun Pichate has a monthly saving rate of nearly 50%, he does not need to keep so much cash, about 5% should be adequate.

Home equity: it is quite normal for everyone to want to have a place of their own but given that a big ticket item such as a new home does not come cheap, I would advice him to take out a mortgage loan instead of using all of the prize money to buy a new home. Since interest rates are still relatively cheap and being an Olympic medalist, I am sure the Government Housing Bank (GHB) will be more than happy to give him a special rate.

Retirement planning and life insurance : Khun Pichate's retirement should be quite adequate given that he has a company's provident fund with additional savings in RMF and LTF. However, he is the only bread earner in the family, therefore it would be wise for Khun Pichate to take out additional personal accident and health insurance cover on top of what has already been provided by the employer.

Charity: Khun Pichate is one of those rare souls that do not forget the hand that feeds him. In spite of his handicap, he still feels that he is one of the lucky ones that managed to graduate from Baan Nanthapoom and live a normal life. However, there are still several hundred children that are not so lucky to make it into the real world, therefore, Khun Pichate and 20 other friends who were also at Baan Nanthapoom got together and chip in Baht 100 each every month into a fund that would provide gifts to needy children. This is something we all should learn from. In life some time giving is more important and quite often more gratifying than making money alone. As for readers of M&W, donation to Baan Nanthapoom is also welcome and more details are available from Tel. 02-….

Nong View, on the other hand, leads a more normal life than Khun Pichate. At the tender age of 19, success came quite early for her. When asked why she took up taekwando , which is not exactly a sport of choice for many Thai girls, she didn't really have an answer except the fact that it is something that she enjoys doing. Here again, success did not come easy, it really took sweat and tears to earn that Bronze medal. Nong View still puts in 5 hours training per day: 2 hours from 6-8 in the morning and another 3 hours in the evening from 5-8. The next big event in April 2005 is the Taekwando World Championship in Spain . Being part of the Thai national team can be quite taxing on Nong View's study schedule. In fact, she had a transfer from Thamasart University , where she was a 3 rd year student, to ABAC instead because it is closer to the Sportsman village, where she now stays and does all her training.

Out of the Olympic medalists that came home from Greece, Nong View is probably the most successful in terms of attracting corporate sponsorship and products endorsement deals, even though, she only managed to win a bronze medal. May be her wholesome image and good looks were a big plus. Nong View did not disclose the exact amount of her prize money but my guess is that it is well into 7-digits and more deals are probably in the pipeline. Although, she did mention that several of the prizes came in the form of gifts rather than cash and there were also a couple of opportunists that jumped on the band wagon by declaring to the world that an “undisclosed” sum was given to Nong View, but that sum turned out to be quite small! The most prominent endorsement deals of all must be the Labour Ministry (energy saving messages & use of public transports) and a green tea manufacturer. The Government Housing Bank gave her a house and ABAC granted free scholarship up to Phd programme. The total sum involved may not be in the same league as David Beckham but at least it is moving in the right direction in steering Thai youths from drugs and violence to become professional sportsmen and women.

Given that Nong View is still very young and still has many years ahead of her, she has the luxury of time on her side. Right now everything is in bank deposit, just like Khun Pichate and my advice to her is to make the most of the situation by being heavily invested in the stock market. Nong View, admitted to me that she is not too keen on equity because it “seems” too risky and she does want to “gamble” away her hard earned money. This is exactly what is wrong with the Stock Exchange of Thailand (SET) today. In the eyes of ordinary citizens like Nong View and Khun Pichate, investing in the stock market is inaccessible and only the “rich” and the “well informed” can play the game. This is, of course, true to a certain extent but the SET is determined to change that image and M&W shall be one of the tools to make the stock market accessible to everyone and a level one at that too.

Nong View's top priority right now is to finish her Bachelor degree then she will decide whether to continue higher education or not. This is a smart choice, since she will have more options with a degree under her belt in addition to her black belt in Taekwando ! Being an Olympic medalist, I don't think she will pursue a 9-5 job behind a desk, something along the line of opening a fitness centre or a gym or even a spa/yoga school should do quite well given her celebrity status and the fitness craze sweeping through Bangkok 's Yuppies set. No doubt, all these ventures will be risky and capital intensive, therefore, my recommendation is for Nong View to embrace the stock market in a big way since she is still very young with at least 40 years investment horizon ahead of her. In order understand the basics of investment, I strongly recommend that Nong View should take some time off her busy schedule to attend investment classes being organized by the SET. They are free of charge and will give her the basic knowledge that will overcome her “fear” about the stock market. In addition, the newly renovated library at the SET is now opened until 22:00 in the evening and there are plenty of good books and useful information on investment matters.

Recommended Portfolio : I would like to start her off with a 80:20 (Equity:Fixed Income) asset allocation because of the luxury of a fairly long investment horizon and a debt-free status. As a beginner to the SET, there is no better way to start the learning process by investing in SET Index funds. They are fully diversified, cheap, easy to understand and most important of all, have the lowest risk among equity funds. About 50% of the portfolio should be index-linked; 10% can go into actively managed equity funds in order to spice up relative return and 20% should be diversified offshore via Foreign Investment Funds FIF. Since Nong View will be competing overseas quite often with the Thai Taekwando national team, she should not find it too difficult to understand the benefits of international diversification. Not only will this make her portfolio less risky and more diversified but keeping everything in Thai Baht is no longer such a good idea, especially after the 1997 crisis. As for LTF and RMF, Nong View may not need to get into these funds just yet, since she still a student and has no regular income but some sort of tax planning is required since she will have other sources of income from sponsorships and endorsement deals. I have mentioned before that sportsmen and women are not tax exempted but the Revenue Department may not be so stringent about Nong View's tax filing documents. In any case, it is still worthwhile to plan her tax liabilities carefully.

Fixed Income : Being a student without any regular income, Nong View can either rely on her parents or she can rely on her prize money for her daily needs. In a low interest rate environment, she can use short-term fixed income funds as substitute for cash. About 15% should do fine and 5% can be kept in bank deposit.

Retirement Planning & Life Insurance : Although, it may be too early to retire but not too early to plan for it. Once Nong View starts working and earns regular income, she should take full advantage of RMF and LTF. In addition, she should take out personal accident coverage together with a health insurance, since she travels a lot more than most of us and competing at the Olympic level in a “contact” sport like Taekwando , she will definitely be subject to higher risk from injuries and accidents.