April 1, 2007

Private banker invests long-term in property

He believes in diversifying assets and knowing the risks involved when deciding where to park his money

By LORNA TAN, FINANCE CORRESPONDENT


WHEN it comes to long-term investing, private banker Nik Rossinsky prefers to put his money in property, describing real estate as 'a cash machine if you don't leverage too much'.

He has investment properties - two in Miami and one in Munich - all generating rental yields of 7 per cent to 8 per cent annually.

'Returns are nice in terms of capital appreciation and it is a nice annuity from rental income,' said Mr Rossinsky, the 53-year-old managing director (South-east Asia) of France's SG Private Banking.

He and wife Linda, 48, are also considering buying property in Singapore, where they have been permanent residents for five years. Top on their list of choices is the house they have been renting for that period - a seven-bedroom 6,500 sq ft bungalow in Woodlands.

As with his property investments, Mr Rossinsky believes 'diversification is the name of the game'. Through his accounts with two private banks - one in New York and one here - he invests in foreign currencies and related products as well as structured products.

As a private banker to the well-heeled - some of whom are on the Forbes rich list - Mr Rossinsky constantly tells his clients to 'know your risk and how much you can stomach'.

Born in New York and brought up in Germany, he is no stranger to Asia having spent six years in Jakarta with another bank before SG headhunted him in 2002.

Q Are you risk-averse or an aggressive investor?

A I'm in the middle. My wife describes me, as 'never black or white, always grey'. If I see an opportunity, I can be more aggressive. With markets coming down from high levels, I'm on the cautious side now so it is good to have cash. The markets are consolidating now for a bit before we can expect more upside.

Q What financial investments do you have?

A More than 50 per cent of my cash flow goes to savings and investments. I have 40 per cent invested in real estate which I hold for the long term.

For short- and medium-term investing, 30 per cent is allocated to foreign exchange-related products and another 30 per cent to derivative-based structured products. I like to go into equities as a structured product because it can cap the downside. It can also be structured to partially protect the capital.

Q What is your investment philosophy?

A Have a good handle on risks involved. Be realistic on what you expect in terms of returns given a certain quantum of risks. If you want 20 per cent returns, make sure that the risk is something you can stomach, otherwise you may lose your shirt.

Q How much are you insured?

A Not enough for my wife to serve poison in my drink. For financial and estate planning, I plan to get into some trusts at some point as it is more appealing from the tax point of view.

Q What is your best investment?

A I bought a five-bedroom bungalow in South Miami for just under US$1 million (S$1.52 million) three years ago. It has doubled in value. Now that property prices have dipped in Miami, I may buy at least one more bungalow by June/July. There is good demand there as the market is more attractive to baby boomers who move to Florida after they retire.

Q What are your retirement goals?

A To get a degree of financial independence which allows me to sit in Key Largo sipping pina colada while looking at the sunset. Seriously, I don't think I will ever stop working. I'm likely to look at business opportunities in Indonesia later.

Q What do you splurge on?

A I take my wife and two boys, Alex, 15 and Maxi, 13, for holidays. We're flying soon to Tanzania for a 12-day safari trip that will set me back by over US$20,000 (S$30,400).

SG has set up a wine trust for our clients so I've also developed an interest in wines. I have about 200 bottles of French Bordeaux wine in my home.

When I was in Indonesia, I picked up some paintings in auctions. Linda bought a painting by a prominent Indonesian painter for US$2,000. It was recently valued at about US$30,000.

Q Which cars are you using?

A I have two cars, a Mercedes and a BMW, and I'm looking at buying a Porsche.

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How he puts his cash to work

More than 50 per cent of my cash flow goes to savings and investments. I have 40 per cent invested in real estate which I hold for the long term. For short- and medium-term investing, 30 per cent is allocated to foreign exchange-related products and another 30 per cent to derivative-based structured products.
MR ROSSINSKY, on his investments