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| Frequently
Asked Questions |
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- Why invest through a
discount broker?
- Why invest offshore?
- Why invest through a life
policy?
- Why should a UK resident
or returning UK expatriate invest through a life assurance bond
rather than directly into offshore funds?
- Why invest into mutual
funds?
- What are Fund of Funds
and are there any major benefits?
- What are hedge funds?
- Why do you primarily
recommend hedge funds?
- I am looking for a no
risk investment with high guaranteed returns & have seen some
unfamiliar banks and funds offering just that. Why do you not
exhibit these here?
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| 1.
Why invest through a discount broker?
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| Commission Rebate - Investment companies pay
commission to approved brokers in return for new business. This saves
the investment company from opening, staffing and managing worldwide
offices plus allows their product to be represented independently, as
opposed to the bias of a tied agent.
If an investor directly approaches the investment
company, they will either be offered the standard charges (no
discount) since the company has to protect its broker network or will
simply refuse an individual application.
We rebate a substantial part of our
commission either by cashback paid into your nominated bank account,
increased allocation or reduced bid/offer thus reducing charges and boosting
your investment from day 1. Our
large commission discounts are always extra to any increased allocation
or special offer from the investment provider.
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| 2.
Why invest
Offshore? |
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| Gross Roll-Up - Offshore investment funds are not liable to tax at source*, therefore
the money that would normally be removed by the taxman remains in the
investment and continues to enjoy the accumulative growth, year on year.
To give you an example, lets look at the long term effects on a UK
onshore investment versus the same fund offshore in the graph below:
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Click graph to enlarge |
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The graph shows investing
offshore contributes to increased returns by demonstrating that if you
invested £1000 in an offshore fixed interest life fund (accumulating
virtually free of tax), twenty years later it would be worth
approximately £11,549 in comparison to the same investment being
worth approximately £3,939 in an onshore fixed interest life fund
(with tax deducted at source).
Of course, whilst we use Sterling as an
example, we could have chosen any currency and compared any onshore and
offshore funds with the same assets. The net affect would be the same,
although the onshore fund may be taxed differently from country to
country and thus cause a larger or smaller difference.
*(with the exception of some countries
where withholding tax on dividends is payable on underlying
investments). |
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3. Why invest through
a life policy?
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| Favourable Tax Treatment
- In the UK and most of the developed world, governments encourage
individuals to take out life assurance as a way of reducing the burden
on the state.
Consequently, the proceeds of a life assurance
bond are
treated more favorably than directly held investment assets.
Any life assurance bonds you see here
have nominal life cover, normally around 101% of fund value, and is merely
included at minimal cost simply to
provide the tax benefits.
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4. Why should a UK
resident or returning UK expatriate invest through a life assurance bond
rather than directly into offshore funds?
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| 5% Cumulative
allowance - Following
on from number 3 the best answer to this is to read the guide prepared
by Royal & Sun Alliance International:
UK Tax
Advantages of Investing into offshore funds through an Offshore Bond
and then see Offshore Bond.
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5. Why invest into
mutual funds?
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| To lower risk and maximise
gain - In mutual funds your money
is pooled with others and invested by fund managers into one or
more class of assets such as stocks, bonds, futures & options, etc
depending upon the type of fund.
The fund manager or fund management team
control the funds' capital and ensure it remains invested at all times
in the assets that offer the best opportunity for investment gain or
income generation whilst balancing the fund's exposure to any risk that
could cause the fund to loose value.
A fund with a narrow or specific scope
may just limit it's exposure to one country or market sector, such as
India or UK blue chip stocks, whereas a more broad ranging fund may look
for potential growth opportunities across differing sectors without
geographic boundaries.
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6. What are Fund of
Funds and are there any major benefits?
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| Funds that
invest in other mutual funds - Fund
of Funds are mutual funds that pool your capital with others and rather
than investing directly into stocks, bonds, etc, actually invest into
other mutual funds.
When managed correctly, Fund of Funds offer
increased investment potential with lower risk by selecting the
best fund managers and the best funds without restriction to country or
sector boundaries.
Fund of hedge funds in particular offer a
lower risk choice for private investors who do not wish to run the risk
of single manager hedge funds.
Fund of funds also offer investors the
opportunity to access some underlying funds that would normally incur
high minimum investments. (i.e. Since the fund is the investor it can
easily meet a 1 million USD minimum holding by pooling investors capital
and thus opens up certain institutional or private funds).
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7. What are hedge
funds?
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| Potential
gains in rising, falling or level markets - Hedge funds do not buy
the underlying stock, commodity or bond, but more normally take a
position on the asset or basket of assets using contracts that commit
them to buy or sell the asset at a fixed price in the future.
Using various different contracts, hedge
funds leverage the buying power of a clients' investment and allow them
to capitalise on small movements in the price of an asset without ever
owning the asset or committing the same level of capital.
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8. Why do you
primarily recommend hedge funds?
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| A
valuable risk management tool or a growth generator all of its' own -
Hedge funds have been a valuable ingredient to the balanced portfolios
of high net worth investors and institutions for a number of
years.
Many have easily preserved their wealth
due to the protection or hedging effect of hedge funds whilst others
suffer the equity market losses. More and more people now recognise that
with a greater hedge bias in a portfolio that these are not just a risk
balancing tool but a strong growth option uncorrelated to other
investments.
Astute investors now seek absolute
returns on a year on year basis in preference to the boom and bust of
equities.
Some single manager hedge funds can be
very high risk and so this is where the Fund of Hedge Fund (see Fund of
Funds) really come into their own, by lowering risk to any single
manager failure and by providing access to high minimum investment
funds.
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9. I am looking for a
no risk investment with high guaranteed returns & have seen some
unfamiliar banks and funds offering just that. Why do you not exhibit
these here?
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| Investors perceive
as no risk when reality is quite different - The
lower the credit rating of a financial institution such as a bank, then
the higher the interest rate/return the bank needs to offer investors in
order to bring in new money.
Remember all investments are simply a
balance of risk versus return and just because it is called a bank does
not mean your money is necessarily safe.
Some Caribbean banks can be started with
minimum due diligence on the directors and as little as 90,000 STG in
paid-up capital. Investors will only place money with these banks/funds
if there is a gain to be made over a high street bank, so they are
forced to offer higher returns.
In reality, due to little or no investor
protection, you are effectively loaning your money to the 'bank' who
then must work your capital sufficiently hard to cover both your higher
interest rate and their profit. Hence they take your money and either
place in the market (equities/futures/bonds, etc) or loan to
business/private entities again at a higher rate. As these will most
likely be high risk loans due to the higher rate they would need to
charge then there is a strong chance of default.
The net effect is that they place your
money at risk and if it goes wrong then you loose your capital. Of
course all banks work in a similar way, however the more exotic
banks/funds have little or no experience, few regulations to protect
investors or control client funds and very little to lose if it all goes
wrong.
If you are aware of these risks, then
there are investment potentials with some Eastern block banks looking
for hard currency, however we would tend to steer clear of some of the
newer higher 'guaranteed' funds as they are mostly destined for failure..
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Do you need expert advice on offshore investments? Click Here |
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Fund of Funds |
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Castlestone's Aliquot Agricultural Commodities
Fund |
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+25.82% pa
return & no management fees. Invest now as we believe increasing
demand and low supply will drive Agricultural commodities
higher. |
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FMG
Rising 3 Fund |
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Successfully
invests into 6 hedge and 6 equity managers covering India, China
and Russia achieving compound annual returns of +19.85% |
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High Regular Income
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Keydata Defined Income
Plan 2 |
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Receive high monthly income
equivalent to 8.25% per annum paid gross to non-UK investors.
Unique asset class independent of equities & bonds. |
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High Growth Equity |
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HSBC GIF Chinese Fund |
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Invest in the growing economy
of China. +352.0% growth in 5 yrs to 31/03/08 |
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Templeton Latin American Fund |
| Growth
economy that has missed much of the effect of the credit crunch.
+634.59% return in 5 years to 31/03/08 |
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Portfolio
Management |
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Offshore Life Assurance
Bond |
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UK investors benefit from
roll-up of gains without deduction of tax on either offshore
funds or offshore bank accounts held within this type of bond.
You can also take 5% income pa with no immediate tax liability.
Ideal if you need an income in the UK or need growth & will live
abroad in the future. |
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EU Savings
Directive |
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Essential
reading for EU residents who have offshore investments or
offshore bank accounts. >> |
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Terms
& Conditions
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This website states
our expert opinion on offshore
investments. It is not personal advice as we are not aware of
your individual requirements. This website is not directed at
UK, US or Hong Kong residents. It is for UK expatriates & other
international investors who may legally invest offshore
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