The dilemma of the high net worth individual

Blog, Money, People

As people say, ‘the new normal now is the abnormal’

Indeed it is.

In investments, since the 1930’s up to perhaps the 9/11 event, one could more or less project investment returns.

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For instance, from 1982-2000 US stocks averaged 15% per annum.

In fact, mutual funds and life insurance companies backed up by actuaries confidently predicted and projected returns of 10-12% in their long term investment proposals

Sadly after the year 2008 their ‘deliverables’ were not delivered as ‘promised’ to their clients. No life insurer was ever spared worldwide. Even pension funds were affected.

What is worse is that the big drop landed on the laps of retiring individuals.

Actuaries who were supposedly ‘accurate’ were not God after all.

The shock waves came after year 2008 and then the abnormal scenarios started lurking every now and then. Tomorrow is now forever a question mark.

In the world of politics, the same new found principle has applied. The new normal has been the abnormal.

What to do?

This brings us to the dilemma of the high net worth individual.

To the landed, if he sells, where does he place his money?

For the liquid, where does he invest in this zero sum environment? If he invests in real estate, his family may get into an inheritance tax trap depending of course on which jurisdiction.

If he parks his money in a private bank, he may get a measly 6% return on a risky and volatile environment or at almost zero in a conservative portfolio.

This is the time when one can truly say the higher the return, the bigger and frightening the risk.

And his banker insists that his money has be invested somehow lest it gets eaten up by inflation.

Gone are the days of old when parking your money in blue chips will give you handsome dividends plus capital appreciation.

Well for some who are very liquid and have no where to go,

they have diversified their portfolio into investing into offshore life insurance.

Not only are they attracted to its generous tax benefits but also have effectively increased their total estate value at a very low cost.

Much more benefits can be discussed with your insurance consultant whether domestic or offshore. It’s worth it, believe me.

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