Well the financial world hasn't changed much over the new year period. Europe still
haven't resolved their solvency issues and continue to drag the world down.
Whither for investors in property, business and investment?
Take Care
From my simple view point I can only see caution for investors. As the last 10 years has
repeatedly shown, banks and countries can go bust as well as developers, companies and investment funds.
The answer is not to bury your head in the sand, but to invest wisely. What is behind the investment? Who are making the guarantees? is it good value? If you don't know, you take a chance and could be caught out.
If you take a calculated risk, you get your return.
BONDS
Government Bonds were a safe haven for investors but with UK and US bonds being issued at around 2% interest the returns are poor, and these countries still have a lot of debt!, It is no great investment. Less stable countries give you more interest, but they can go bankrupt just like anyone else. This is the problem in Greece . If their bankers around the world continue to fund their debt they are ok, if they pull the plug bond holders lose. Ask the Cypriot banks who have lost half their investment - €9m euros - to Greek banks. Ditto any other south Europe countries.
Deposits
Bank deposits, please how many times. The bank is as strong as its balance sheet. If the bank has over valued property assets against loans that developers or individuals can't pay, then they are living in the same world as Greece - relying on continued good will and confidence from their bankers, government and customers. There was a major run on Swedish banks in Latvia on a
December Weekend, how fragile is the world of banking at the moment, how fragile the confidence?
Guarantees
Trust in bank guarantees if you wish but they are as strong as the government behind them..... Can Germany afford to bail every one out in Euro land? Would they? They stand as the only triple AAA rated country in Europe now.
Choose your bank well, choose ones that are profitable and secure. Remember the new economies have the cash and wealth right now , don't pooh pooh Russian, Middle East , Indian or Chinese banks. Remember the world’s biggest bank, although essentially a British Bank, HSBC is the Hong Kong and Shanghai Bank.
Shares
Shares are regularly dismissed as investment options by individuals. They give up returns of 5-10% long term in exchange for funds and banks where they get 2-4%, the difference is the charges made by the bankers.
The economies , balance sheets and assets of large multinationals can be larger and stronger than many countries and most banks. Invest in Shell or your local bank? Which is more secure?
Apple reported a $79million cash holding in its balance sheet in the summer of 2011, at the time more cash than held by the American government.
Think Differently
Think differently people to get a better result.
Large , successful, profitable multinationals paying dividend income of 4-5% is logically a better return for cash investors in today's world. Think Glaxo, Shell, BP, AMP, Apple, De La Rue, energy utilities.
This article is not investment advice. It is a guide to thinking differently . You don't have to accept your investment or tax lot, there is always another way, a different way to look at your money, your business, your taxes. A way that will lead to lower taxes, better returns and financial freedom from the normal constraints of the old world.
The world is changing through evolution and revolution driven by IT and information technology. It's done good for Facebook, Apple and Amazon who have created new industries and an abundance of wealth, and lead to the demise of old world thinking business and countries. Join the revolution in 2012 to a better and more prosperous future for everyone.
Contact ProACT
ProACT Partnership Expatriate Advice for professionals business & retired living and working abroad. Expatriate tax living abroad, overseas property & investment relocation consultants for UK citizens living abroad and Cyprus business network when relocating abroad, based Paphos Cyprus.
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Sam Orgill
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