Investment Strategy Design for Mr. Z: A High-Net-Worth Individual

This report presents an investment strategy designed for Mr. Z, a high-net-worth individual with 5 million SGD to invest. The report begins with a discussion of key considerations before investing, emphasizing the importance of recurring income, beating inflation, and the impracticality of tangible real estate investment given Mr. Z's non-resident status. The core recommendation is to allocate investments between property stocks and REITs to diversify the portfolio and reduce risk. The report justifies this choice by highlighting the consistency and lower volatility of property stocks, and the suitability of REITs for non-residents. Specific recommendations include Able Ltd. for property stocks and D-REITs. The suggested investment proportion is 70% in property stocks and 30% in REITs, based on their respective risk-return profiles. The report concludes by emphasizing the potential for good returns from these investment options, given the constraints and analysis undertaken. The report is a valuable resource for students seeking to understand investment strategies and financial planning, and is available on Desklib.

Running head: Investment decisions for Mr. Z 1
Investment Strategy Design for Mr. Z a HNW Individual
Student’s Name
Student’s School

Investment decisions for Mr. Z 2
Contents
Introduction....................................................................................................................................3
Things to be considered before investing.....................................................................................3
Why Property Stocks and REITs are better options then Real Property Investments..........4
Proportion of Investments between Property Stocks and REITs.............................................5
References.......................................................................................................................................6

Investment decisions for Mr. Z 3
Introduction:
Investment is the most appropriate way of increasing ones assets. The money which one
has grows only when it is converted into some good and growing asset and as the value of the
asset increases, so does the value of the money. Real estate is one sector which is regarded as one
of the safe mode of investments and it is considered to give a healthy returns. The reason why
many people cannot invest in real estate is that it need some good amount of investments in the
beginning itself. Investing such huge amount may not be feasible for masses and hence High
Income Group people treats it as a safe and ever increasing harbor (Tomchom, 2014). In an
economy like Singapore where land is not available in abundance, if one can invest in some
healthy real estate there, then the returns are destined to be healthy and promising. With this
pretext, the following report is for the client Mr. Z, who is to invest 5 Million SGD.
Things to be considered before investing:
The basic pretext of investment states that the “Risk – beta” must be low and the returns
are assured to be keeping very less deviations. The following are the major points considered for
Mr. Z (Bardy, 2016):
- Should consider this investment as a thorough source of income. That income must be
recurring and should be able to produce some good for the client.
- It should beat inflation. Statistically, the property prices rises at the same rate as that of
inflation, so investment must be in some thorough asset that is able to beat the inflation.
In this case the inflation is 3%, hence increase of almost 4 to 5% is something expected.

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- If the property is not a local one and one cannot take care of it personally, then it should
be avoided as an investment option. Since Mr. Z is not a resident of Singapore, hence
tangible real estate investment is not something that should be recommended.
- The net yield is the critical insight that must be forecasted properly for the real estate
asset. This is an important mode of analysis, as it is the most specific mode of calculating
the returns that the real estate can yield.
Based on these analysis it is proposed that Mr. Z should not invest in the tangible real estate and
should think of some peripheral options. There need to be some option that is able to meet the
above demands and also able to produce the best yield for the client. It should also be noted here
is that all the figures related to real estate is based on anticipation and forecasts and hence the
analysis has to be pretty through and intruding. The figures given in the case are good indicator
of making a choice for the best investment option.
Why Property Stocks and REITs are better options then Real Property Investments:
Considering the above analysis, the best option for investment for Mr. Z is that he should
invest some amount in Property Stock and some in REITs. The main reason for giving two
options is to increase the portfolio and diversification and hence the “Risk – beta” is reduced
(Hayes, 2014). This ensures that from one part the returns will keep on flowing in. Looking at
the 52 week bracket of price fluctuations it is seen that consistency is seen with the Property
stocks and also the minimum and maximum value of the stocks has been keeping a very less
deviation level. This deviation is nothing but the sigma - value and hence the deviation and
further the risk. The choice is to be made between the REITs and actual property, for which the
REIT is a better option, since Mr. Z is not a resident of Singapore and hence he will not be here
to take care of the property by himself, which goes on to clarify that REIT is the better option

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among the two options that are available. Able Ltd. is the option to be considered for Property
stocks as their transaction price has been pretty higher than any other. Also, the option for REITs
should be D – REITs, as the 6 month’s average traded volume is substantially high for this
option and hence overall it is concluded that these are the best options available for the
investment. Since the constraint is restricted to these options only and hence the overall
assessment claims for these options and confidence is such that the returns must be good from
them.
Proportion of Investments between Property Stocks and REITs:
The investment must be 70:30, there is no hard mathematics in this, it is just that property
stocks tend to give better returns and are less risky than the other options. Hence this division is
what is recommended.

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References:
1. Bardy, J. (2016). Strategy Primer: investing in real estate. London: OakTree.
2. Hayes, M. (2014). Real Estate Investing 101. New York: Straight Talk Publications.
3. Tomchom, S. (2014). How To Correctly Value And Analyze Investment Property.
Changi: Financial Samurai.