Yoga Sutra & A Lucky Winner

Many of you may have seen the movie “Kama Sutra”, an Indian erotic story about the art of love making, which I thought was quite well made and I even learned a few tricks or two about how to improve my love making skills. In this issue of Money Make Over, I could not find a sex expert to share with us his/her portfolio of love making tips but I managed to get in touch with a “Yoga Sutra” expert, Khun Suthee Phanthong, to talk to me about his life as a Yoga Master and how he manages his personal wealth. In addition, I also talked to a lucky winner of the Money Management Awards (MMA), Khun Thanakrit Saengsomsuan, who managed to beat 150 other contestants to win the first prize of Baht 1 million.

Let's first start with the Yoga teacher, Khun Suthee, who is in great demand these days since Yoga has taken off in a big way in Bangkok . At first, I was expecting to interview a woman since I don't know any men that have taken up Yoga seriously. Those that do, just use it as an excuse to be in the same room with many pretty women in tight T-shirts and short pants doing handstands and what have you. The second surprise was that Khun Suthee is 56 years old but he looks much younger, about 39. Then he flipped out a photo from his wallet to show me what he used to look like before he took up Yoga. At first I thought it was a joke because he looked like a different person. But he reassured me that it was really him, when he was an overweight, chain-smoker and a heavy drinker. Khun Suthee used to be in the jewelry business before he decided to throw in the towel and live a modest life, using Yoga as a form of exercise and meditation at the same time. Of course, he has given up all the vices, smoking, drinking, late-night partying etc. Seven years later, he is a changed man. Much fitter, much healthier and believe it or not much younger looking.

What started out as an escape to a better life turned out to be a blessing in disguise that propelled Khun Suthee into a new career as a Yoga Master. Essentially, Yoga is about three things: “Asanas”, that is building strength, flexibility and stamina through set exercise movements. Then, there is “Pranayama”, which is the co-ordination and synchronizing proper breathing movements. Lastly, “Samadhi”, is when one tries to achieve the attunement of oneself with higher levels of awareness. I was told that all of our perceived illnesses from muscle pains, insomnia, breathing difficulties, and even erectile dysfunctional are all due to the fact that the glans in our bodies that release hormones are not fully functional and Yoga is supposed to cure all that. There are 7 main “focal points” in our bodies that are most critical to our wellbeing: forehead, middle of the skull, throat, chest, stomach, and two in the sexual organs. Correct exercise movements together with synchronized breathing will make a new person in you, so I've been told. Not quite sure whether I follow the argument, but I will take up Yoga anyway, just find out for myself whether I can look 18 again!

Those of you who are early birds can find Khun Suthee each morning at Lumpinee Park from 6:40-8:00 and 8:30-9:30. It only costs Baht 50 to attend his class or you can choose to pay a monthly fee of Baht 600. In addition, Khun Suthee also teaches at Yoga Sutra on the 32 nd floor of Sathorn Thanee Building (for full details please call 0-2636-6758-9 or visit their web site at www.YogaSutraThai.com ) Tuition fees range between Baht 1,000 to 3,800/month depending on the time of class. Khun Suthee also offers private lessons at Baht 800/hour and his credentials include teaching Yoga to celebrities and businessmen such as Byrd Thongchai McIntyre, Ta Ta Young.

Khun Suthee lives modestly with his wife (49) and 3 children, two of whom are also Yoga instructors. He is debt free and does not own a car. He prefers to use BTS, MTR and “win motorcycles”, which I completely agree given Bangkok 's traffic and the current price of Baht 22 for a litre of petrol. By living modestly, I really do mean modestly, Khun Suthee eats 2 meals a day, has two sets of clothes, but he prefers to wear his gym clothes most days. Therefore, he has a positive monthly cash flow with 80% savings rate. He lives in his own home and all of the children have already completed their university education. Like a lot of Thai men, “the wife” takes care of family finance and he does not really know how the money is being invested or spent. As far as he knows 100% of the family money is in a bank deposit, although, he has been allocated IPO shares of Thai Oil and Mang Pong from his Yoga students who are stockbrokers but Khun Suthee does not even know where to begin, not even how to fill out the IPO forms.

Therefore, my advice to Khun Suthee is to talk to the wife and divide the portfolio into 3 main portions: 5% in cash; 45% in fixed income mutual funds and the remaining 50% should go into equity mutual funds. Although, Khun Suthee is super fit but at the age of 56, he is not a young lad anymore. Moreover, being self-employed, he has nothing in terms of retirement safety net and he has neither life nor health insurance coverage. Therefore, I strongly suggest Khun Suthee should put his money to work straight away by putting 15% of his gross income this year each into Retirement Mutual Fund (RMF) and Long-Term Equity Fund (LTF). Although, Khun Suthee is very risk averse and does not understand a great deal how the stock market works, which is not uncommon for many people, but my advice is to seek professional help via mutual funds. As far as retirement nest eggs are concerned, Khun Suthee is starting from zero at the age of 56, therefore, he has a lot of catching up to do. Another good starting point for beginners in the stock market are index funds. I would advice Khun Suthee to put about 30% into the SET or SET-50 Index Funds and 5% into an actively managed equity funds. As for international diversification, even a small investor like Khun Suthee can now invest off-shore via Foreign Investment Funds (FIF) and I would suggest that about 5% of the overall portfolio should be offshore.

In a way, investing is like Yoga, one has to be cool, calm and collected. In Yoga classes, there is always a sense of calm and peacefulness. No loud music, no vigorous exercise movements and most important of all no panic. Every exercise movement is predetermined, which is a good training for the mind when investing in the stock market. You invest for a reason and once you have decided on the most suitable asset allocation for yourself, then you can relax and let the investment prospers for the long run. There is no need to watch the market every day and loose sleep over trivial news that affect the stock price. In fact Yoga is 50% exercise and 50% meditation and it is the latter that should help investors why they want to invest in the first place.

Khun Thanakrit Saengsomsuan , on the other hand, has just hit a Baht 1 million jackpot. But this was no ordinary jackpot, because he had to work for it and he managed beat the other 150 contestants to win the first prize from the Money Management Awards (MMA). In a way, Khun Thanakrit does not really need a financial planner since he is quite proficient in money matters and he is already an active investor in the stock market, but upon closer analysis of his portfolio, I would like to make a few adjustments in order to make his portfolio more diversified and tax efficient.

Khun Thanakrit is 40 years old and married with 3 teenage children, 2 boys and a girl, 15, 13 and 11 years old respectively. He is debt free and is self-employed in a garment and stitching business. The company went through a major debt restructuring during the 1997 economic crisis, coupled with fierce price competition from China and India , the business had to be scaled back substantially in order to survive. Now, Khun Thanakrit acts as a middleman, concentrating on the stitching women petit-coats for garment and clothing manufacturers. Since the crisis, business has not been easy for Khun Thanakrit and being self-employed, his monthly income varies in accordance with the business that walks through the door and he has about 10% saving rate from his monthly income. Khun Thanakrit's current portfolio comprises of just two main portions: 25% cash in a bank deposit and 75% in equity, made up of 4-5 stocks. He has not really set aside anything substantial for his retirement savings, although, he has a life insurance policy with a sum insured of about Baht 500,000. His children are still relative young and will be a major financial burden when they go to university. Therefore, Khun Thanakrit is quite right to have about 75% of his portfolio in equity but with only 4-5 stocks in the portfolio, it is not sufficiently diversified and with another Baht 1 million prize money coming in, I would suggest the following adjustments to his asset allocation strategy:- cash holding should be reduced from 25% to about 5% or six months worth of living expenses and the remaining 20% should go into fixed income mutual funds on a 5% and 15% split between short-term and long-term basis. As for the 4-5 stocks in the current portfolio, I've been told that they are blue chip big cap stocks but I would still stick to my recommendation that Khun Thanakrit will get a much better diversification via index funds. Therefore, he should put 35% of the portfolio into the SET or the SET-50 Index Funds, in order to achieve optimum diversification and put about 10% into an actively managed equity funds. Khun Thanakrit, does not have to sell all of the individual stocks in his portfolio but he should reduce their weighting from 75% to about 10%.

Since Khun Thanakrit still has not set aside anything for his retirement nest eggs, I would recommend that he start this year by putting 15% of his gross income into an equity RMF and the same portion into LTF. Not only will these two investment vehicles save Khun Thanakrit 30% in tax deduction this year but they will also act as his retirement savings as well. As for international diversification, I can't reiterate enough that, there is a much bigger world out there beyond the Stock Exchange of Thailand (SET), and by investing offshore through FIFs, not only will the portfolio overall risk be lower but you will most likely increase your long term investment return as well. Therefore, I would suggest that 10% of the asset should go into FIF. As far as life insurance is concerned, Khun Thanakrit should look into Personal Accident coverage as a supplement to his current policy. Since his children are still young, it would be prudent to ensure sufficient coverage. Although, the insurance premium for personal accident policies are not tax deductible at the present time but the premiums are much lower and may offer a greater deal to people with limited budget. In addition, Khun Thanakrit should also look into health insurance coverage as well. Like most self-employed people, the only health care safety net right now is the government's “Baht 30 Cures All” scheme but it would not be a bad idea to look into schemes being offered by BUPA/Blue Cross as an additional health care for the whole family. The author, shall be happy to help readers of M&W with their financial planning and wealth management. He can be contacted at teera@finansa.com