How much does global investing cost?
In the past, the complexity of costs associated with global investing have deterred investors from exploring their options, but these days, offshore assets are far more accessible. Here’s an idea of what kinds of costs to expect when investing globally.
Investing has historically been a complex and costly process – administrative obstacles such as paperwork have detracted from the ease of saving, while excessive fees have eroded returns.
Thankfully, the costs of investing globally have fallen significantly as technology has improved. In fact, the costs nowadays are relatively comparable to those of accessing local markets. Some of the most common fees associated with global investing include:
- Financial adviser fees: Due to the complexity often involved in investing globally and the many considerations from estate planning to taxes, it’s important to ensure you structure your investments correctly. Using a financial adviser is the easiest way to do this. If you are using the services of a financial adviser knowledgeable in global investing, they may charge for the initial advice to set up and structure your offshore portfolio. This upfront fee will depend on how much work is required to get the arrangement in place.
Financial advisers also generally charge annual advice fees to manage your investment from that point on. Part of their job here is to account for any changes in your personal circumstances. For example, if you experience a significant life event that affects your beneficiaries or finances, your financial adviser can help ensure your overarching estate plan remains intact. They can also help ensure you stay on track to achieve your investment goals. - Asset or investment management fees: These are the fees that an asset or portfolio manager will charge for managing the allocation of different assets on your investment. The figure includes variable and fixed costs such as the cost of trading securities as well as the salaries of those managing the investment solution.
- Administration and custodian fees: This is an overall asset-based fee for using the holding structure of your investment. It includes investment administration, tax administration, beneficiary administration, custody and general oversight, other regulatory requirements and safeguarding assets in an international jurisdiction. There could be additional fees for certain product features, combination structures or investment portfolios.
- Potential other fees: Depending on the structure and complexity of your global investments, other fees may apply. These fees are typically:
- Charges for the services of tax consultants.
- Costs relating to estate planning, including legal advisers, the costs of setting up an international trust structure, drafting international wills and the costs of getting offshore probates. These kinds of costs in particular can add up. For example, to invest in an international trust, the settlor has to pay upfront set-up fees as well as an annual trustee fee, which can add up to tens of thousands of US dollars.
- On the brighter side, there could also be structure-specific bonuses or enhancements for clients who stay invested over time.
So don’t be shy to ask your financial adviser questions. Remember, fees compound just like returns do, so it’s worth the effort to make sure you understand what you are paying for, how this will impact on your returns over time, and whether what you’re getting justifies the cost. Read our tips on how to ensure your global investment offers value.
This article is not financial advice. Please consult with a financial adviser for financial advice.
Invest below the prevailing exchange rate
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The Discovery Global Endowment allows you to start a global investment at below the prevailing exchange rate. It also offers you a convenient, competitive, tax-efficient investment structure with liquidity and flexibility. Ask your financial adviser about us today.
Navigate the world of global investing with ease – ask your financial adviser about us today.
Get the right help to ensure you reach your investment goals
Investment decisions are important and are best made with expert financial advice. The right financial adviser can help you make the most appropriate investment choices for your future. Don’t wait to start your wealth journey – find an accredited financial adviser who will guide you and start investing better today.
Discovery Life International, the Guernsey branch of Discovery Life Limited (South Africa), licensed by the Guernsey Financial Services Commission under the Insurance Business (Bailiwick of Guernsey) Law 2002, to carry on long-term insurance business. Discovery Life Limited is a registered long term insurer and authorised financial services provider. Registration number 1966/003901/06. Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, is an authorised financial services provider. The views and opinions expressed in this article are for information purposes only and should not be seen as advice as defined in the Financial Advisory and Intermediary Services Act. Discovery shall not be liable for any actions taken by any person based on the correctness of this information. For full details on the products, benefits and any conditions, please refer to the relevant fact file. For tailored financial advice, please contact your financial adviser.