Did a Tuk Tuk Driver help you Invest?
In current market conditions it is really important for offshore investors to be in a position to act quickly- to have the ability to liquidate all held stocks into cash and when the time is right buy back in to the market without costing the earth.
For myriad reasons many investors hold their trinkets, cash, share certificates, stocks and securities in a safe deposit box and in a variety of other areas both on and offshore. This can lead to real problems for the wealthy investor
There are many reasons why people have safe deposit boxes but whatever they are they cannot compare with the advantages of holding all your assets in an offshore Executive Investment Bond. (EIB) sometimes called a Portfolio Bonds (PB)
An EIB is like a big warehouse which can hold all your investments, wherever you purchased them. It can hold or purchase on your behalf fixed interest securities, stocks and shares on a regulated stock exchange, bonds gilts and currency deposits, unit trusts, mutual funds and cash deposits.
Your name is not painted all over this warehouse. You see all of your assets are transferred and legally owned by the EIB Provider and held on their behalf by a custodian trustee. Many wealthy investors especially American expats use the EIB as a tax shelter.
But it has much more to offer than just that.
The ability to structure an investment portfolio requires careful planning, prudent stock selection and knowledge of the world's investment markets. Your EIB provider can appoint a professional fund advisor to do all this for you. Normal stock broker's fees for this service are 1.5% of your portfolio. The EIB can offer a discount of 1.2% so actual cost is 0.3%.. There are also stockbrokers based in the UK who will advise you for a flat annual fee. You can of course make your own investment decisions without cost.
Initial discounts from fund management groups are a big feature of an EIB. For example if you requested the warehouse manager to purchase say an offshore HSBC fund he would pay 0.25%. If you were to purchase it directly it would cost you 5%, a saving of 4.75%
Similarly he could purchase a Blackrock fund at 0.0% charge where you would pay 5%to 7%. This would gives you the flexibility to change your investment portfolio at any time: especially convenient if the market crashes, when you can liquidate without exorbitant cost
So how can your EIB provider offer these discounts?
The simple answer is bulk purchase. A company like Royal Skandia qualifies for these discounts as they are the largest single purchaser of many offshore investment funds. The entire discount is passed onto you, the bond holder. They make their money with an annual management fee.
There are many EIB providers like Zurich, Friends Provident, Royal Skandia (who invented the EIB) and, Generali, to name but a few. Once you own a bond you can then forget about distribution of dividends spending hours calculating your net worth and never being sure and wondering about currency calculations. Each quarter you will receive an in depth valuation statement. It will provide full information on asset movement, income accrual, cash withdrawal and charges. It will also state the total valuation in the currency of your choice.
For the mature investor who thinks about estate planning, there are major advantages. Normally with each investment you have, your beneficiaries, on your death, will need to get probate in each jurisdiction where the asset is held. This will involve getting lawyers in each jurisdiction, different administrative procedures, paperwork and time and money. Within the EIB all of this can be avoided by probate avoidance, free trust facility are features of this investment vehicle. It really helps to make estate planning easy.
So the EIB in summary offers administrative simplicity, worldwide dealing, no CGT or income tax, corporate discounts, bank account facility, bank loan/leverage and denomination in any major world currency and estate planning simplicity. All you need is Stg50,000 or currency equivalent to open the door to investment freedom.
Of the many EIB providers I prefer Royal Skandia. Here are a few reasons. They are not owned by a bank:
They were the pioneers in portfolio bonds 26 years ago:. They have more EIB's than any other provider and they have the largest offshore EIB dept with over 100 staff.
Just a cautionary note. - PB's cannot hold everything. Exclusions may include works of art, coins, precious metals, property and derivatives. So keep your Safety deposit box: you might need to deposit the precious jewelry that nice tuk tuk driver helped you purchase in Bangkok.
If you have any questions about this article, or investment related queries, please feel free to E-mail me: