Banker with an interest in real estate

		Mon, Dec 14, 2009 The Straits Times
By Lorna Tan, Senior Correspondent Property makes up a substantial portion of Mr Sumit Aggarwal's investments. His confidence in it was bolstered by a series of good experiences from his real estate investments in India, London and Singapore. The 40-year-old is head of transaction banking at Standard Chartered Bank Singapore. He grew up in India and received his commerce degree from Dronacharya Government College, Gurgaon, in 1988 and an MBA from the Institute of Management Technology, Ghaziabad, in 1990. He does not speculate in properties but picks them up using a methodical approach. 'I believe in investing only in asset classes I understand. I go into properties with a medium-term view based on location, saleability, rental appeal and the ability to service mortgage up to six months vacancy,' he said. 'I tend to research the property properly and it takes me about three months to decide before I am ready to buy.' Other than a stint at ABN Amro, Mr Aggarwal has worked in Stanchart all his life, starting as an intern in India in 1988. The bank posted him to Britain in 1998 where he lived till 2005. In 2003, he joined ABN Amro in Britain as its corporate director, trade and supply chain. He arrived in Singapore from London in December 2005 when he was posted here by ABN Amro. He re-joined Stanchart here in 2007. He is married to gynaecologist Ieera, 37, and they have two sons, Souveer, 13 and Rahul, six. Both Britons, the couple became Singapore permanent residents in 2007. Q Are you a spender or saver? I am essentially an investor. I maintain enough to cover about five months' expenses in saving and short-term deposits, while making the bulk of savings work for me to create more assets. I save about 35 per cent of my pay a month and it goes into funding properties, investment in stock markets (via mutual funds) and insurance premiums. I also put away 10 per cent a month for charity. Q How much do you charge to your credit cards every month? Most of the monthly expenses are on credit cards. Again, I believe in using financial products to plan and monitor and maximise on cashflows. I use the Standard Chartered Xtrasaver card because it caters to my needs by providing good cashback and rebates. I have three other cards. I pay my credit card bills in full. On average, my card spend is $5,000 to $6,000 a month. I go to the ATM three times a month, withdrawing about $3,000 in a month. Q What financial planning have you done for yourself? My investment portfolio is property-led. I believe in the long-term value of these assets and intend to hold a couple of properties for my retirement. I have benefited from investing in stock markets via mutual funds on a monthly basis. My unit trust portfolio was set up in 2006 and it went up 25 per cent to 30 per cent in the first 18 months. It is now down 10 per cent. I'm confident in Asia's growth so my portfolio is concentrated in China, India, Asian properties and metals. I invest fairly large sums in this portfolio every month. I'll be happy with an annualised 25 per cent return over the next five to seven years. I also hold Stanchart stocks. Insurance is important for protection. So we have term policies for us and property insurance also. My monthly premiums are more than $2,000. Q Moneywise, what were your growing-up years like? My father was a government college English teacher. My mother gave up work as a teacher to bring up my younger sister and me. We lived in a rented two-bedroom single-storey house in north India. While we had a decent living, I saw my father work extremely hard. My parents gave us a great education. My sister is a doctor. My parents taught me the value of money, having earned it the hard way. My uncles were in business (one was a grocer and the other a cloth trader) and when I was in my teens, I spent long summer vacations visiting them. I learnt about taking calculated risks to leverage and grow profits by watching my uncles do business. Q How did you get interested in investing? I was always fascinated by the idea of asset creation. Analysing the balance sheet of a corporate, as a student, I decided to create my own. The outcome wasn't very impressive, as I had nothing really, but it inspired me to become an investor. I regularly prepare my own balance sheet even today. My first investment was 18 years back, when I was eligible for a housing loan in my firm in India. I bought a piece of land. It cost me $30,000 for the land and to construct a 3,000 sq ft, 21/2-storey house in Gurgaon, near my home town in New Delhi. Today, it has grown over 20 times in value to $600,000 while providing a home for my parents in India. Q What properties do you own? I own two properties in Singapore and two in India. In early 2007, I bought a 1,334 sq ft three-bedroom apartment in River Valley Road for $1.5 million. Its current value is about $1.9 million. My rental yield is nearly 4 per cent. In October last year, I bought a 2,700 sq ft, two-storey semi-detached house in Bukit Timah. It has a land size of 3,500 sq ft. I paid more than $3 million for it and spent another $500,000 renovating it as it was a 40-year-old property. In India, in addition to the house in Gurgaon, I own a 1,900 sq ft condo unit which sits on the perimeter of a golf course. It is at Greater Noida, near New Delhi. Bought in 2007 for $300,000, it is a vacation home when I want a golfing holiday. I've not valued its current worth. Q What's the most extravagant thing you have bought? When I began my career, I was keen on cars. In 1996, I bought a luxury saloon car for the equivalent of $20,000. It was a 2.5-litre Daewoo, popular among the elite in India then. But it became impossible to sell while depreciating rapidly. I sold it for $7,000. It took me two years of saving to recoup the loss. That's when I realised that cars are not assets. Q What's your retirement plan? I love working with people, I will do a lot of social work in my retirement. I dream of setting up an institution (perhaps a bank) which will provide opportunities to the young and teach them the art of managing money. In my retirement, my wife and I can get by with $10,000 to $12,000 a month. Q Home is now.... The semi-detached house in Bukit Timah. Q I drive.... A black Volvo XC90. Q My worst investment to date... In the mid-1990s, I invested $15,000 in some Indian stocks that I did not understand. I lost almost the entire sum as I did not understand the underlying asset, the timing of entry and exit. I did not have a target return and a stop loss. I later realised that I entered at the wrong end of the cycle as the market went bearish in eight to 10 months after I bought the stocks. That was when I exited the market. Q My best investment to date... I once bought an apartment in London which gave me over 60 per cent in returns in 1½ years. This was in 1998 and the 600 sq ft apartment cost £135,000. I sold it for £220,000 after 1½ years. I lived in the apartment during the time I owned it, so an expense was turned into savings. If I had to live in a rented home, my monthly rent would have been £750. This article was first published in The Straits Times.