Thursday, 29 January 2015

Cash is King?

I am often asked by clients: How much cash should I hold and what should I do with it? This is the first step in having a successful financial plan as cash is required for everyday use and emergencies; however, holding too much cash can have a negative impact on your wealth, especially in times of low interest rates as we have at the current time. Cash is also required at times when you are saving for something in particular such as a new car or a deposit for a house. It offers a safe option with good security for your money as long as you don’t hold more than the amount covered by the local protection scheme, for example; the Cyprus Deposit Protection Scheme (currently €100,000 per depositor per institution).

How much cash should I have? This varies due to personal circumstances but broad guidelines depend on your stage of life. If you are single with no dependents then three to six months of income is sufficient cash to hold. If you are married or have a family then you should aim to hold between six to twelve months of income as cash and if you are now retired a good guide is between one to two years of income as cash in the bank (or under the mattress as you prefer!). If you are saving for something specific you may need to hold more cash. If you look at your entire assets in total (property, cars, stocks, shares, bonds, artwork, etc.) then you should try to have less than 20% of your entire asset value in cash.

When you do invest in cash you give up other opportunities to invest and generate potentially higher returns. If we look at the returns here at the moment you are probably getting around 0.5-1% per annum credit interest (if you are lucky!). With long term average inflation rates of 2.4% in Cyprus (3.1% worldwide) any cash holdings are actually losing value and purchasing power year by year. By doing some research, taking good advice or being a little more adventurous you can quite easily find secure, liquid investments such as high quality government / corporate bonds yielding 3-5%+ per year. By investing excess cash into mutual funds / exchange traded funds you should see average returns over the longer term of 6-8% plus. As an example over the last 10 years a cash portfolio would have brought average annual returns of 2.9%, a balanced bond portfolio 6.9% and a balanced equity/share portfolio 8.1% per year.

What should I do with my cash? The first thing is to make sure you are not holding too much cash and then make sure you are not holding more than the amount covered by the deposit protection scheme. After that you should try to find the best possible interest rates available to you. You may find that by taking advantage of term deposits (where you agree not to withdraw the cash for 1 month to 5 years) you can get some much better rates on your cash. Shop around and look for the best deals. It’s also worth considering a mix of currencies for larger cash holdings. £’s and $’s can be useful to hold as protection against currency fluctuations especially where you may be spending money or have assets in other countries outside the EEA.

In summary, firstly make sure you have sufficient cash reserves for you situation, secondly for any excess cash that you have, look for better investment returns and finally try to get the best interest rates for the cash you do hold.

Have a great day! Andrew Lumley-Holmes

Monday, 19 January 2015

Expat Investments - Get a better deal!

Do yourself a favour today and get a better deal!

As a regulated independent company, working with clients all over the world, we can secure preferential terms for your investments.

I often speak to clients who are in the process of looking at offshore investment options for the first time or clients who have previously agreed to invest into an offshore investment structure only to find that the platform they are using is either expensive or not suitable for their needs. If you already have or are thinking of investing into an investment platforms/investment company then take 5 minutes to speak to us first. We are able to negotiate preferential rates for our clients with the following providers or may be able to recommend a more suitable investment for your situation and requirements - why pay huge commissions to advisers when you can have that money in your pocket instead?

  • Generali International & Generali Pan Europe & Generali Worldwide (inc. vision, personal portfolio bond (ppb) & choice)
  • RL360 (inc. personal investment management service (pims) & quantum)
  • Skandia International & Skandia Ireland (portfolio bond, capital investment bond & managed savings account)
  • Old Mutual International
  • Prudential
  • Hansard 
  • Friends Provident & Friends Provident International (inc. premier, reserve & advance)
  • Offshore Bank Accounts
  • Tax structures (personal and corporate)
  • & many others - if your proposed investment is not on the list we can still help!

Where the recommended investment is suitable for your needs we can almost always reduce the fee structure on the accounts, however, there are often better options available depending on your circumstances. Where you already have an investment with one of the companies above we can normally re-broke the investment to reduce the charges at no cost to you. Combine it with a portfolio review and get your savings and investments on the right track!

We have client’s worldwide, in-house tax barristers, chartered tax accountants and Finsbury Sport where we manage the wealth of some of the top sports professionals. We pride ourselves on the professional, discreet and precise nature of our advice for clients in all circumstances.

Contact me HERE

Have a great day! Andrew Lumley-Holmes.