By Lorna Tan

As a financial journalist, there is one occupational hazard I have to put up with. Often, I find myself being the centre of attention during social gatherings.

I would like to think it's to do with my personality and looks, but it isn't. It's because people want tips on how to get rich.

People everywhere want to know the fastest and easiest way to make money and they believe I have some inkling on how to do that by virtue of what I write. After all, I do rub shoulders with multi- millionaires and my personal finance columns cull advice from the experts on wealth management.

Given the financial climate, it was even harder to avoid the slew of questions thrown my way from relatives, friends and strangers during the recent festive holidays. Questions I was bombarded with included when the crisis will end and what they should be investing in.

Before we look ahead, let's look back at the horrendous year we left behind, what with storied institutions like Lehman Brothers going belly-up and others like American International Group asking for billion-dollar handouts.

And with markets that were doing well only a year ago falling like a stone and leaving investors bruised and confused, what have been some lessons I've learnt?

Cash is king

My biggest regret is not having enough cash to take advantage of the fire sale that is going on in the stock market.

In the last few months, the prices of shares, including blue chips, have fallen to record lows. Just to name a few, DBS Group Holdings' share price ended at $8.69 while Keppel Corp's closed at $4.51 last Friday. It's like a big Singapore sale but minus the crowd, since only a few brave ones are venturing in to nibble. We are currently seeing less than a billion shares a day traded on the stock market, a far cry from the peak when more than nine billion shares were traded daily.

At a time like this, it pays to have spare cash or an 'opportunity fund', to take advantage of undervalued stocks and slowly accumulate them over the coming months. This is particularly so if one is prepared to take a medium-term view of three years or more.

Sadly, I have a habit of maxing out my savings, putting them into different investments. It's my way of stretching every dollar I save, but now I realise that I should have more parked away as cash and in near-cash instruments, like money market funds.

Read the fine print

In April 2007, I bought a 1,370 sq ft condo in Ho Chih Minh City, Vietnam for about $250,000. With a projected rental yield of 9 to 14 per cent per annum, it was meant to provide a source of passive income upon its completion in the middle of last year.

Unfortunately, when the global crisis unfolded, the Vietnamese economy went into a tailspin. Due to structural problems, the project was delayed for months and it missed the completion deadline. I got cold feet and wanted out. It was only then that I realised that I didn't know what my exit options were.

Fortunately, the sales agreement has a provision that permits me to 'return' the property to the developer if the completion is delayed. But I wasn't prepared for the anguish I had to undergo just trying to get my refund.

It was only then that I realised that even the marketing consultant who brokered the deal had missed the fine print, resulting in a few months of correspondence during which we tried to determine the amount of refund that I should get. The refund included a penalty component which the developer had to pay me for not completing the project on time as promised in the sales agreement.

As the property was paid for in US dollars, I also had to contend with the potential loss in foreign exchange. After all, the currency was S$1.53 to US$1 at the time of purchase but it had slipped to S$1.35 by mid-last year.

Luckily for me, the Singapore dollar strengthened to $1.49 just when the refund came in November, so I ended up making a few thousand dollars over and above the progressive payments I had made on the property. Still, the experience was painful.

Trust no one

If there is one lesson that we can derive from the current crisis, it is that we can trust no one.

It is frightening to realise that the institutions we entrust our money to, the ones we thought were run by intelligent and trustworthy bankers, put together deals that led to a massive credit problem.

Closer to home, the debacle resulting from the failed structured products linked to Lehman is a clear example that every stakeholder in a sales transaction has his own agenda. The bank wants to make its profit, the relationship manager wants to meet his sales quota, and the customer wants to have steady returns on his investment.

The only way to protect your interest is to understand very well what you are investing in and to check around. Remember that there is no free lunch and anything that looks or sounds good is often too good to be true.

Looking ahead

Despite suffering heavy losses from soured investments and volatile markets last year, investors can expect this year to be worse as the damage extends throughout the economy via job losses, bad debts and bankruptcies.

On a positive note, nothing stays down forever and financial experts are hopeful that the markets will bottom out later this year or the next. In the meantime, don't blame yourself for your losses. As that popular Killers song goes, we are human, and we make mistakes.

And as we tighten our belts, we should also bear in mind that spending sometimes for a little pleasure is not being irresponsible. Don't forget the less privileged too. They shouldn't be punished for the financial mayhem. As my humble gesture of giving back to society, I wrote a $200 cheque to Boys' Town last week, a practice I started some years ago.

We all need money to survive, for that rainy day and to retire on. But we will lose the meaning of it all if we go to the extreme and allow money to dominate or overpower us.

This article was first published in The Straits Times on January 04, 2009.