36 minutes | Oct 4th 2020

Greg Au-Yeung – Debt Management Tip: Only Invest What You Can Afford to Lose

Greg Au-Yeung has held senior executive positions at various global banks in China, including Saxo, UBS, ANZ, Morgan Stanley, and State Street Bank. He has a solid track record pioneering, building, and managing technology centers in China that deliver innovative solutions and support digital transformation programs for incumbent banks and FinTech.

Greg is currently Senior Advisor for Shanghai Fudan University, specializing in FinTech, and the Co-founder of the Financial Technology Talent Standardization Committee. He was also the China columnist for Shanghai Daily, ComputerWorld, and various newspapers and magazines in Hong Kong and China.

He graduated with a degree in Computer Science from the University of Westminster (UK), completed the Executive MBA program at the Chinese University of Hong Kong, and certified from MIT (Artificial Intelligence), Harvard University (FinTech), and Copenhagen Business School (Digital Transformation-Financial Services). He is also a Chartered Information Technology Professional, a Fellow of the Hong Kong Computer Society, a member of the British Computer Society, the Hong Kong Chamber of Commerce (Shanghai), and the American Chamber of Commerce (Shanghai).

 

“I do speculate sometimes, but only when I can afford it.”

Greg Au-Yeung

 

Worst investment ever

Around 1995, Greg’s parents decided to invest in additional property when prices were on a record high. Because they could not raise funding, they had to remortgage their current properties and borrow money from the bank. Due to the high property prices, the interest on the bank loan was high too.

Here comes the Asian financial crisis

For one year, everything was good, and the investments were making good returns. Then boom! The bubble burst and the property market crashed. In just two years, property prices went down by 50% and continued to go down for almost eight years.

The banks still wanted their money

Greg’s parents still owed money to the bank. The bank came knocking on their door, wanting to get paid. So they had to start selling the properties at much lower prices than before, including some of the properties they held before just to pay off the debt. They experienced a substantial loss in the family’s assets.

Lessons learned Always know what you can afford

Make sure that you always understand what you can and cannot afford. Before you leverage or borrow money, know that you have to pay it back and with interest.

You cannot live on credit

Don’t hide under the comfort of a paycheck and think that you can live on credit; you can’t. The world is not the same anymore. That comfort can be taken away from you anytime.

Make debt management a priority

To make debt management possible, always live within your means because you don’t know what will happen next year. Your job could be lost tomorrow. The economy could go down the drain tomorrow; just see what COVID-19 has done.

Andrew’s takeaways Expect economic crashes

Crashes in the economy happen. They can be massive and can take years for them to recover.

Almost every economic crisis is a property market crisis

An economic crisis starts with the property. Part of the reason is that property is the ultimate collateral that backs the loans.

Debt is the number one risk in business and life

Debt can take you down just when you don’t expect it. There are other risks, such as foreign exchange, but ultimately, the number one risk is debt. To manage your debt, do not get overextended. If you’re going to borrow money for yourself or business, borrow a small amount. You may have slower growth, but you will protect your wealth over the long term.

The free market should set interest rates

The free market should set interest rates because interest is the price of risk. And when you distort the price of risk, you cause tremendous distortions in your country’s economy and the global economy.

Actionable advice

Afford what you can invest; it is as simple as that. Do your calculations and know what risk appetite you have, and what you can afford to lose.

No. 1 goal for the next 12 months

Greg will be doing something different soon and so his number one goal for the next 12 months is to get ready and prepared for his next adventure.

Parting words

 

“People deserve to understand what the real world is like, what’s better than to share a real story of a bad investment so you can help people to make the right choice going forward. I’m super glad to be here.”

Greg Au-Yeung

 

[spp-transcript]

 

Connect with Greg Au-Yeung Andrew’s books Andrew’s online programs Connect with Andrew Stotz: