How can I invest offshore and locally in a cost effective way?

Dear reader,

Thank you very much for your question.

The above information provides a significant amount of information about your existing investment portfolios, but contains very little information about your:

  • Personal / investment goals, risk tolerance and return expectation versus time horizon;
  • Career plans and retirement dates; and
  • Hopes for residence / successor (even if you are currently single, without dependents or debt).

However, financial advice should speak to clearly defined personal financial goals for the client. The investment and portfolio structure may change when the customer’s goals / circumstances change. As such, my answer will not go into the level of detail you want. However, I will offer you some observations you should keep in mind when it comes to portfolio construction in general and financial advice in particular.

One of the questions I faced while reading your original question was: “If the investment values ​​per your original question were tenfold, as it would one day be, your goal would still be cost-saving, or it would rather be risk management / peace of mind? ” I have therefore in my reply added a zero to all the amounts you have given for our wider audience to consider. The point I want to drive home with larger investment amounts is that individuals generally need the advice of a trusted specialist to enjoy peace of mind during retirement.

While one can find a lot of ‘free’ investment advice out there, it is offered (by virtue of its nature) only piecemeal. It provides a great way to educate yourself, but the danger is that responses that make a lot of sense individually still do not help the investor plan holistically. It takes an experienced financial advisor to put all these parts together for their clients … It can be compared to building a quality wall versus building a quality house.

By focusing solely on the cost component, you can thus do yourself a disservice in the long run.

Reputable institutions (including the Investment Funds Institute of Canada) and others such as Dalbar, Morgan Stanley, Vanguard and Coronation locally have concluded that disciplined “principlead” financial advice provides an excess return of 1.5-3% per annum (after fees) to their clients. In short, do not fall into the trap of believing that successful investing is only about saving costs. It is not.

However, I think your financial knowledge puts you in a good position to identify a counselor who can add value beyond their counseling fee. This will provide the necessary reassurance so that you can better focus on becoming an expert in your area of ​​expertise and focus on retirement goals during your retirement.

It is difficult to express a view of the existing portfolio, as no matching financial targets are mentioned, apart from costs and streamlining of liquidity.

Cash is, in my opinion, a method of payment and should only be kept for known obligations within 24 months. It is therefore not an investment.

What applies to me here is that “there is beauty in sophisticated simplicity”. Spreading your investment capital across more than one administrator does not necessarily improve diversification or reduce your risk. You should also consider the spread of underlying investment instruments and the different investment styles of managers. Despite using different managers, your underlying investments may behave more alike than you think!

Distribution of capital via more than one administrator can be:

  • An administrative, management and succession nightmare; and
  • Investment suboptimally from an administration fee perspective (economies of scale). Fees are taken not only at the advisory level, but also by the product administrator (and in the funds). Therefore, it is very important to see that your management / asset management fees (for example, performance fees on some of your funds) are reasonable.

Portfolio management takes place, in my opinion, optimally within a “fund of funds” investment portfolio structure, where financial instruments are constantly assessed (and traded, if necessary) by professional asset managers. The portfolio changes in these portfolios are made by impartial / insensitive investment specialists (financial analysts), who constantly assess risks versus rewards. Fund changes within a fund of funds structure have no tax consequences for the customer.

When it comes to financial planning, we all simply do not know what we do not know outside our areas of expertise. While we can see financial planning as an expense, research shows that it is an expense that reimburses its own fees. The trick, however, is to find a financial advisor who adds value with whom you can build a long-term relationship and who provides the necessary peace of mind – which today is invaluable.

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