Thursday, 13 October 2016

Is now the time to switch to GBP?

Anyone following the currency markets – or even just the news – will be aware of the recent fall in value of British Pounds Sterling (GBP) against the US Dollar, which at the time of writing is a total fall of 18% since the UK voted in a referendum to leave the European Union.

The main question I’m getting from British expatriates and other international investors, is “should I worry?”

Well, that depends on the individual situation. Some of these situations could be:

a) People planning to retire in the very near future, and have saved up a retirement fund in GBP but plan to spend it in another currency. This would give you more to worry about than if retirement was still ten years away.

b) People who hold mainly USD (or other currency) investments, but plan to retire in the UK. They are probably in a much stronger position now as the gains from the exchange rate movements alone are worth a lot.

c) People who are very GBP focussed, who are not specifically worried by the exchange rate, but note that the UK stock market is moving inversely to the currency rate – when one goes down, the other goes up. For those who have made paper gains as the markets have risen, will this mean that the markets are likely fall if/when the currency rebounds?

To get some perspective of the present predicament, let’s look at a few of the past falls in the value of GBP.

In 2008, a 31% fall in the exchange rate (vs USD) recovered 20% of that back after six months.

In 2010, a 13% fall took five months to recover 12%.

In 2011, a 7.5% fall took three months to recoup 5.2%.

In 2013, an 8% fall took fifteen months to post a gain of 14.7%.

Now in 2016, we’re 18% down since the “Brexit” vote in June – and nobody knows when, or indeed if, a recovery will occur, how long it will take, and what level it will recover to. Could now be the time to switch to GBP?

Fundamentally, what is different about the fall in GBP this time? The obvious answer is that this time the UK is leaving the EU, whereas before it was very much in the EU and a powerful member. So will GBP recover again as it has in the past, or will the current trading range of $1.20 - $1.25 (or potentially less) be the new benchmark?

A win for investors with USD & EUR investments

The fact of the matter is that regardless of whether GBP recovers or not, those who want to use, or spend, in GBP in future can now sell their USD and EUR investments and lock in the 18% gain – a clear win, because:

a) If GBP recovers to previous levels, those who converted to GBP now would make money twice – first on the fall, then on the gain.

b) If GBP stays where it is, those who switch now still get the 18% gain locked in, rather than having to worry about if it goes up again.

c) If GBP falls further, those who convert still make a healthy profit from an unexpected event. Not as much as if they could have if they hung on a little longer if this happens, but still a great return – is it worth risking?

The correlation to the UK stock market

Is it just coincidence that the FTSE 100 reaches an all-time high at the same time as GBP hits a 31-year low?

No. Most of these companies are multinationals, who make money all over the world – but report their earnings in GBP. Therefore, when the value of GBP falls, the amount of GBP they earn from revenues abroad increases. Note that their share prices are quoted in GBP – so anyone who invested USD into large UK companies four months ago would not be facing a substantial gain – or loss – as a result of one going up, and the other down.

What does this mean? Well, it’s likely to mean that if GBP does recover, the share prices will likely fall – because despite all the drama and sensationalised news reports, there hasn’t actually been a substantial change in circumstance for the majority of these multinational companies. So for GBP investors in UK stocks, now could be a good time to decrease exposure to the big UK multinationals.

Those who are worried about the UK economy generally shouldn’t be too worried either – the current situation will result in a rebalancing, but not devastation. Remember when one British Pound was worth two US Dollars? That resulted in high levels of ‘retail tourism’ from the UK to the USA, as it was exceptionally good value to purchase goods from the USA if you were holding GBP.

How about now? According to research by the Wall Street Journal, a “Speedy 30” handbag from Louis Vuitton cost £645 in London last week – that’s $802. In Paris, it was €760 ($850), and in New York it cost $970. In China it was $1,115. Expect plenty of ‘retail tourism’ to the UK if the exchange rate doesn’t rebound quickly!

Although the above example relates to luxury goods, the same principle applies to savings and investments – you often have the chance to buy the same thing from a variety of places, at a variety of prices. Could you be getting a better deal?

Tuesday, 1 March 2016

King pushes for New World Order

There’s a new book out this week – I haven’t been able to get a copy yet, but it is being serialised in the Telegraph (UK), and it looks like it’s going to be a good book.

Why? Well it’s written by Mervyn King, now Lord King (how awesome is that for a name), the former Governor of the Bank of England. Not excited yet? That’s understandable. But this book, or what I’ve read of it so far, seems to be full of all the things which he couldn’t (read: wouldn’t) say whilst he was in charge of one of the world’s most influential central banks.

Now you may argue, and rightly so, that it’s in the interest of any non-fiction author to get a little bit dramatic with things like this. Similarly, it’s in the interest of any senior central banker, politician, world leader etc to “under-dramatise” (read: “misspeak”, or the noun of your choice to describe saying things which may possibly turn out to be less than 100% true) in the name of stability, or national security, or whatever other excuses can be drawn on.

So, whilst not necessarily suggesting that everything he’s written is 100% true, I do think it’s worth reading, and my personal bias leads me to consider things he’s said after retiring to carry a little more weight than things he said whilst in office. It’s also worth pointing out that a lot of what he’s said is not new, and is not unique to him – many “insiders” reportedly hold the same beliefs (privately), they just feel that they can’t say them officially.

I won’t cover everything here (I’ll put links at the bottom for those who want to read more), but I’ll highlight some choice quotes, and do my best to translate them from banker-politician-speak to common English. Quotes from Lord King in italics:

“For centuries, alchemy has been the basis of our system of money and banking. Governments pretended that paper money could be turned into gold, even when there was more of the former than the latter” – You have been lied to, for a very long time.

“The crisis was a failure of a system, and the ideas that underpinned it, not of individual policymakers or bankers” – The world’s system of government and finance is f****d, but it’s not my fault.

“The world recovery since the crisis has been neither strong, nor sustainable, nor balanced” – The world’s system of government and finance is still f****d.

“Much of the Euro area has either created or gone along with the illusion that creditor countries will always be repaid” – The Euro area is f****d.

“If the members of the Euro decide to hang together, the burden of servicing external debts may become too great to remain consistent with political stability” – If nothing changes, the situation in Europe will become even more f****d, and may lead to war.

“Put bluntly, monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy on the other” – Put even more bluntly, the proletariat (workers) are getting shafted by the elite.

“Central banks are trapped into a policy of low interest rates because of the continuing belief that the solution to weak demand is further monetary stimulus” – Central banks are keeping the system f****d because they listen to the elites who benefit from keeping things the way they are.

“As time goes by, parallels between the inter-war period [1919 – 1939] and the present become disturbingly more apparent” – The world is f****d and heading towards World War 3.

“Whether the next crisis will be another collapse of our economic and financial system, or whether it will take the form of political or even military conflict, it is impossible to say… But only a New World Order could prevent such an outcome” – The world is definitely f****d and there will definitely be another crisis… But the Illuminati could save us. Or possibly Marxism. Or the return of Christ. Either way, BIG changes are needed.

Of course, I am quoting selectively here, and there’s a little more meat on these particular bones – read the full transcripts here:

And for those of you worried by the comments above, or perhaps amazed by them, it is worth pointing out that before the end of this year we could potentially have the triad of Vladimir Putin, Boris Johnson and Donald Trump making deals on our behalf – so stop worrying! Maybe everything will turn out just fine. Have a great week!

Wednesday, 6 January 2016

New Year Ideas!

So it's new year resolution time again - are you making some? Get back in the gym maybe? Get to the beach more? They seem to be the two which appear on my list every year...

It's also a good time to get a financial one in there - so here's a few suggestions!

1) Save More

Sounds basic, right? It is! You'll have an endless list of things you'll need to pay for - holidays, cars, houses, weddings, kids education - and as time goes on they will only get more expensive. Save more!

Top Tips: 1) Try to have at least 2 different accounts you save and invest into - one accessible for short term expenses, and another for the bigger long term things; and 2) Regularly check your investment returns - it's great motivation to save more!

2) Plan for retirement

Think that this is the same as number 1? It's not. All the things included in number 1 are optional - but this one will be forced upon you at some point in time, even if you haven't planned for it. Planning is better!

Top Tips: 1) Have a dedicated retirement/pension fund separate from your other savings; and 2) Regularly review what income it is expected to give you at retirement age - and increase the amount you pay in if needed!

3) Invest for income
If you wanted to sum up Warren Buffet's investment approach in three words, it would be this. It's an approach that has served him well, and it will serve you well also - you will always have money coming to you!

Top Tips: 1) If you're trying to accumulate wealth, reinvest the income instead of spending it; and 2) If you can afford to lock money away for a while, why not purchase a fixed income annuity from a leading global insurance company?

4) Get Organised

This doesn't just make things easier, it will also make you richer. Different financial products are designed for different purposes - and what may be the best for one purpose may be not so good for another situation!

Top Tips: 1) If you are saving regularly, pick a product which gives you bonuses and incentives to continue saving regularly; and 2) Move money accumulated in regular savings plans into something designed for accumulated savings when you can!

5) Leave a legacy

Want to guarantee that your family will always have enough money? We all do! 'Universal Life' insurance policies do this - just one payment to buy it, and the insurance cover lives for as long as you do!

Top Tips: 1) Take out multiple insurance policies as and when you can afford them - or use bank financing if you want to defer payment; and 2) If you want to have some input or control over how the money is spent in future, why not set up a family trust?

So there you go - that's my top 5. If you would like any help with financial planning this year, please just get in touch - either myself or one of my colleagues (your choice) will be happy to walk you through a Financial HealthCheck to give you some helpful suggestions.

And finally - best of luck with the new years resolutions, whatever they are! Have a very happy 2016 :-)

Wednesday, 16 December 2015

Another year flown by...

Wow, 2015 is almost done. That went fast. Thanks to all the people who made it a very enjoyable year for me!

I’ve been really poor at getting blog posts up – sorry! Will try harder through 2016. Fortunately the reason is general “busy-ness” – and 2016 looks set to continue that trend.

If you know anyone looking for a career in Wealth Management, we’re recruiting – so please let them know and ask them to have a look at this link.

We’ve just about finished interviewing for our January 2016 intake, but we’ll be recruiting more in the new year for a February start date.

The economy in Indonesia is delicate at best – and the rest of the world isn’t looking particularly rosy either. Pretty much all markets are down this year – many only slightly, but down nonetheless – and many predict 2016 to be similar.

Some see a strong performance next year but I think that’s more wishful thinking than realistic thinking, and whilst there’s always potential for a crash, those with money in the major currencies (USD, GBP, EUR, JPY) shouldn’t be overly worried.

Emerging Markets might take a bit of a hit, but as ever in these economies there’s good value to be had if you get it right – and disasters waiting to happen if you get it wrong.

We’ve spent the last few months significantly beefing-up our structured note capability – structured notes are contracts between investors and investment banks, very common in Private Banking but less well-known by those outside of this sector – so we can now offer a very well diversified portfolio of fixed income and conditional income investments from leading investment banks which generate solid returns of around 10-12% even in flat or falling markets. Get in touch if you’d like to know more.

Finally, may I wish you a very merry Christmas and a happy new year! Thanks for reading :-)

Wednesday, 29 April 2015

Greece Lightning!

It doesn't seem to be making the headlines as much anymore – but the crisis in Greece is surely about to explode.

Talks between the Greek government and the European Union (and ECB, and IMF) are getting nowhere, deadlines keep being extended with no result, and there isn't actually any money.

To be clear, the “bailout” of Greece wasn't actually a bailout of Greece at all – it was a bailout of those who had lent money to Greece – mainly large financial institutions. The money lent to Greece in the “bailout” was used to pay back loans to the (often privately owned) financial institutions, it didn't go to the Greek government for spending on the Greek people.

The larger European nations are insisting that Greece breaks its previous promises to its own people, by reducing their pensions (among other things), so that it can keep its previous promises to larger and wealthier foreign nations and financial institutions.

Of course many western politicians would argue that they have to protect these financial institutions because they hold the pensions and savings of so many “ordinary citizens”, but take a look at the miserly annuity rates available from developed economies these days and compare them to the financial reports of the institutions providing them – it’s not hard to argue that they might be looking after themselves a little better than they’re looking after “ordinary citizens”.

In contrast, the left-wing Greek government would argue that there’s actually little or no benefit to the overwhelming majority of Greek citizens (who are already relatively poor) for them to have to reduce their own pensions, just to prop up a few huge (and rich) financial institutions from wealthy countries who made some terrible lending decisions.

So the current impasse isn't likely to change – there is no political or economic benefit for the Greek government to agree to the “reforms” demanded by the larger European countries, and no political benefit and only a small short-term economic benefit for the larger European governments to change its demands.

It’s common for supporters of left-wing governments to say they stand up for the poor, and for opponents of left-wing governments to say they ruin the economy. In Greece right now, it looks like both sides are going to be proved right.

So who is right? That depends on your perspective. Should debt agreements be honoured? Most people would say yes. Should “the will of the people” prevail in a democracy? Most people would say yes. (The current Greece government was recently voted into power on the back of a promise to not implement the “reforms” demanded by the larger European countries). The problem is, they can’t do both.

Personally, I think Greece should stick to its position, not meet the demands of the other nations, look after its own people, deal with the short-term economic problems as best it can, put its remaining resources into ensuring that everyone has the basics – food, shelter, clothing etc – and begin the rebuilding as soon as possible. Literally nothing of any substance is being achieved by the ongoing talks, decision postponements, and half-measures.

Will it happen? I’m pretty sure it will.

When will it happen? Relatively soon I think, although the larger European governments will be keen to try to push the problem a little further into the future (where it will be an even bigger problem, because it’s getting worse every day), so there might be some sort of “fudge” for the near future.

But as every politician and economist secretly knows, Greece cannot afford to pay its debts, and never will – regardless of whether they agree to the demands or not.

What will this mean? Certainly a Greece default. They might not call it a default – other phrases commonly used are “haircut”, “creditor agreement”, “restructuring” etc – but they all mean one thing – creditors aren’t going to get some, or all, of their money back (which is the definition of a default).

This may then lead to Greece leaving the Euro (definitely the best thing for Greece in the medium-long term), as officially, no country is allowed to default and remain in the Euro – although also officially, no country is allowed to leave the Euro at all, which leaves a bizarre conundrum.

It’s amazing that in a world with so much history to learn from, and so many intelligent people to think things through, that political leaders still think that if you write something on a piece of paper and have a big signing ceremony, everything will turn out as written. That’s a massively stupid assumption to make, to put it mildly… but it keeps happening…

So if Greece leaves the Euro, it will be massive news, but ultimately they’ll just introduce a new currency (probably called the Drachma again), which will have an artificial conversion rate to the Euro, and which will promptly crash as soon as it’s open for trading.

The stock market in Greece will also be re-denominated, crash, then everything will carry on as normal for the vast amount of Greek people (no more foreign holidays or luxury imports, but anything produced in Greece will still be there, just paid for with a different piece of paper with a different number on it).

Then, as Greece becomes exceptionally cheap for foreign tourists, and its good become exceptionally cheap for foreign companies, profits (denominated in Drachmas) will soar, the stock market will rise massively, the currency exchange rate will stabilise, and foreign financial institutions will start lending to Greece again. Back to normal.

So keep an eye out – you’ll never get a better buying opportunity than immediately after a massive crisis, particularly after a currency re-denomination crisis, in a relatively developed nation. And it looks like it’s coming soon…

Monday, 16 March 2015

A lot cheaper than you thought it would be?

It’s a largely mundane part of your financial planning, that takes up a gradually increasing amount of your money as you get older, but it can save you millions of dollars – or keep you alive, if you’re short on cash – there’s no doubt that medical insurance is a necessity for the whole family.

And in a world where people change their husband/wife/lover more often than they change their insurance provider, you don’t have to be a genius to work out that there might be a much better (and much cheaper) option, if you stop to think about it for a while.

This could be that moment – why not think about it for a couple of minutes? It might save you a few thousand dollars.

The prices below are for medical insurance from AXA Hong Kong, with the following features:

Worldwide cover, including emergency evacuation

All inpatient and emergency treatment covered

Direct billing (AXA pays the hospital bills directly

* High maximum annual claims limit of $1,500,000

* Guaranteed acceptance, regardless of medical history – no medical exam required


Can you afford not to have this?

These prices are based on someone living in any ASEAN country except Singapore (which would be approximately 5% higher), and covers medical treatment in any country – not just the one you live in.

To keep the cost down, these prices include an annual deductible of $1,500 – meaning that you would have to pay the first $1,500 per year, if you make a claim, with AXA paying everything above this amount. That gets you a 40% discount, so if you’d prefer to have AXA paying everything (direct to the hospital, no need to pay for it first, fill out a load of forms, and claim it back later – it’s all taken care of whilst you’re receiving treatment), just do the maths to work out the price for Nil excess.

If you’d like cover for outpatient treatment, or need to cover pre-existing conditions – such as cancer, heart problems etc – that’s available too, at a higher cost, with their “comprehensive” option.

For the sake of clarity: You can be insured, with high levels of cover, at a very reasonable cost, even if you've had medical problems in the past, in case the same thing happens again.

This is by far the best medical insurance we’ve been able to find from around the world – both in terms of cover, and in terms of cost – and it’s fully regulated in Hong Kong, and underwritten by one of the world’s largest insurance companies.

We’ve already helped hundreds of families get better cover, at a lower cost, by them buying this insurance through us – but we’d like to make it thousands of families. Perhaps it’s your turn next?

For a personalised quotation, we just need your name, age, sex (male/female), and country of residence – if you send those details to (or to me personally if you prefer, I’m more than happy to help), we’ll send you a quotation and talk you through your different options.

And for more information, there’s plenty here:

I hope we save you a lot of money!

Thanks for reading – looking forward to hearing from you J

Wednesday, 14 January 2015

New Year, new ideas, and great offers

Happy New Year! I hope you had a great Christmas festive season and are enjoying 2015 so far.

We’re kicking off 2015 with some really good special offers, which admittedly are mainly an excuse to tell you all about the awesome financial products we have – but are still really good offers in their own right, and are available until 28th February 2015.

To start, there’s a free $5,000 on offer if you start saving $1,000 per month. Yes there are strings attached (obviously), but for most people they’re strings which a) benefit them, and b) fit perfectly with what they want to do anyway. So have a look – click here.

For those who want to save a bit more, we’ve got free luxury travel packages to a wide range of top quality destinations – with some “money can’t buy” experiences thrown in. Everything is 5-star – and I’m referring to the financial product as well as the holidays. Click here for more info on that.

We’ve completely removed our UK pension transfer fees – so if you’ve still got a pension in the UK, let us help you get at it. It is almost certainly better for you to transfer it out, and I’m only saying “almost” for the sake of legal prudence. I’ve never come across a situation where it was more beneficial to leave it where it is, and I’ve done a lot of them. You’ll make more money, save a fortune in tax, and be able to pass on the full benefits to your dependents when you die. If you leave it where it is, you won’t. Click here for more.

If you like to manage your own investments, now’s the time to open an Imperium Capital Investment Platform account. We’re offering 90% off the set-up deposit fee, and free trial accounts. It gives you immediate online access to over 7,500 investment funds from pretty much every investment manager globally, and it’s got loads of really cool features. The top performing fund in 2014 was the First State Indian Subcontinent fund (+70.51%). Other honourable mentions go to the HSBC Turkey Equity fund (+51.56%), the Fidelity Global Property fund (+41.95%) and the JP Morgan Global Healthcare fund (+29.18%). Click here for more.

If you like straightforward low risk investments, how about bank deposits paying up to 8.8% interest (click here for more info on that), or 1-2 year bonds paying a fixed 10%? The bonds are currently in the final stages of legal approval and should be launched during the week commencing 19th January 2015 – click here for more info.

The villa prices for the Lima Lombok Luxury Resort are being held steady until 28th February, so if you want to snap up a great investment property at a great price with a fantastic financing package, click here for more info.

We can also get you up to $550,000 life and critical illness cover, without requiring a medical, at a great price, from one of the world’s largest insurers (AXA), based in one of the most highly regulated jurisdictions (Hong Kong) – click here if you’re interested.

Finally, if you’d like an international offshore bank account, we’ve slashed 60% off the fees – now just $100 (down from $250). Click here to find out more.

So there you have it – some great ideas to give your finances a boost in 2015. As always, if you’d like to discuss any of them with me personally, just let me know – happy to help. Email me by clicking here.

Have a great 2015!