Asking yourself what your global investment costs – and what your global investment is worth – are two very different but equally important questions. Here are some valuable pointers on how to make the most of your global investments.
Value is a powerful concept in the investing world. It speaks of worth, and this can mean different things to different investors – for some, it’s paying as little as possible for the highest returns they can get; for others, it’s the peace of mind knowing they have savings in hard currency, a ‘back-up plan’ because their investments are well diversified, or a legacy to pass down to their families.
Whatever your take and your personal investment strategy, there are general guidelines you can look out for to make sure you’re getting the most value from your global investments.
- Avoid investments with the potential for hidden surprises by way of additional costs. Excessive fees and taxes are compounding’s nemesis. By consistently eroding returns, the long-term impact on your wealth effectively compounds, negatively. Before signing up, you should understand what your commitment is, and the commitment of your investment provider in return. Learn more about typical fees to expect here.
- Ensure your investment is structured correctly. To get the most value out of investing offshore, your investment needs to be optimally structured. Remember, the more complex your investment product and investment needs (such as having to restructure existing offshore assets, cater for changing beneficiaries or cover country-specific legal costs), the more costly your investment is likely to be.
By structuring your investment optimally for tax and estate planning, you can save big in the long run. Often these two costs can significantly outweigh the costs on the investment in the long run, so it’s important to get this right. Consulting a financial adviser in this area can help.
- When assessing the value of your investment, seek transparency. The total figure you pay should be easy to understand. Your financial adviser should be able to translate percentages and rates into annual amounts, and explain what kinds of fees could potentially change, and why. Like with any service, you have the right to negotiate fees. And if you’re unsure about the costs of specific global investment options, ask your adviser to suggest alternative solutions for you.
- Don’t accept fees that are unnecessarily high, but don’t assume that lower fees are always better. Costs for the investment management, for example, can vary quite a bit because they depend on your specific investment choices – like whether you choose a single-asset or a multi-asset investment; whether you invest in direct securities or a unitised fund in an endowment; and whether your investment is actively managed or passively tracks an index.
Actively managed funds will always cost more than passive methods, as you are counting on the expertise and time of professionals to optimally allocate your investment between individual assets and asset classes. However, that higher cost doesn’t necessarily mean it will perform worse, an investment that is optimally allocated, particularly between asset classes, can result in better performance after fees.
- Check what other benefits and features can increase cost-effectiveness. For example, Discovery Invest’s currency enhancer on their Global Endowment offers an upfront entry-point currency discount with US dollars, British pounds and euros. This feature has been shown to exceed all the administration and custodian costs over a 10-year period.
Discovery Invest also offers a highly affordable international trust solution at a discount of over 90% to standard trust fees. In addition, they offer a 50% refund of these fees after five years.
No matter which mechanisms or assets you choose to invest in, the costs associated and services you’re getting for those costs will play a critical role in the performance of your overall portfolio. So do your research and consult the right investment professionals to ensure you get both peace of mind and bang for your buck!
This article is not financial advice. Please consult with a financial adviser for financial advice.
Invest below the prevailing exchange rate
Discovery Invest recently launched the country’s first international shared-value investment offering, designed to give your money access to the world’s best investment opportunities.
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.