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Hi All,

I have been in the Financial Services industry now for over 30 years in one field or other. During the last 14 years I have been offshore. Most of that time was spent in China before moving to Cyprus in August this year. I still have clients in China and I visit them at least twice a year.

I work for a Portfolio Management company managing our client’s investments all over the world. We are fully licensed as investment managers in both Switzerland ( Protected content ) and Europe ( Protected content ).

In Protected content will be writing a series of articles addressing various investment topics of interest. One of the biggest issues that I have encountered during my contacts with expatriates has been concern over costs and commissions. They are often the “cancer” that eats up returns. We believe that investors have the right to be given full disclosure on what they are being charged. We shall be posting an article on this very subject next month.

I hope that you find this first article of interest and I will be happy to answer any questions that you may have.

Written by Nicos Cotsapas, Partner of Cyprus-based Elgin AMC and Swiss-based Elgin Group LLC.

Investing in today’s environment – a “reasonable” approach

It is a challenging world we live in: exchange controls, bank security fears, heavily promoted so-called ‘safe’ funds imploding, uncertainty about currencies, stock market jitters and general loss of trust in financial services (and most importantly, banks); all justifiable concerns that explain why the general public lives in fear of anything other than cash stashed under the mattress.
Throw in the effect of product fees and losses already incurred by many, and we find ourselves dealt a unique set of circumstances which, in many cases, leads to what some define as investor apathy - a situation whereby no matter the solutions available, investors are simply not interested in any of them and end up incurring even more losses and erosion of capital by burying their heads in the sand, ostrich style.

We believe that there are two ways to approach these challenges:

1. Do nothing and hope for the best.
2. Take action by seeking solid, well-founded, realistic advice and a common-sense approach.

Let us start with a few harsh realities:

• We live in a near-zero risk-free interest rate environment i.e. deposit interest rates are, for all intents and purposes, so low to render themselves meaningless.
• Inflation is higher than deposit rates, which means that cash is losing value.
• High commissions and fees destroy investment returns.

However, the news is not all bad:

• Real and liquid income-generating assets do exist if you know where to look.
• Low inflation means you do not need to shoot for the stars and take excessive risk.
• Low-cost, no-commission products and services are available.

Generally speaking, there are two types of investments – “Push” and “Pull”

Push
Financially-engineered investment products pushed upon the unsuspecting investor that promise the earth, often complete with glossy brochures, big promised returns and a sharp-tongued front man that may deliver misery.

Pull
These are investments that one seeks with their eyes wide open. That is to say transparent and liquid assets that fall and rise with the reality of the world in which we live.

The sad fact is that most retail investors are left with investment products being pushed on to them. The lure of unrealistically high returns becomes irresistible and common sense goes out the window.

A Realistic Approach to Investing
As an investor, you should seek a straightforward solution. One that simply makes available to you institutional-like, fee-based financial services by reducing all associated fees to realistic, affordable levels. At the same time, look for a solution that uses best-of-breed, transparent instruments in order to construct a portfolio that is appropriate for your circumstances. This portfolio should be robust, composed of the highest quality securities, and have longevity to withstand the ups and downs along the way.

In the next few weeks and months we shall be exploring a number of topics that are vital to your financial well-being, such as:

• What does Protected content for investors? We shall examine what the top investment banks are thinking.
• How fees and/or commissions erode returns. There is a reason why the financial regulator in the UK has banned commission for new advice and insists on disclosure of all fees in advance.
• What are the “best” funds and securities, and which ones should you avoid?
• Structured products and structured notes have made a post-crisis comeback and are heavily marketed to unsuspecting retail investors. Should you be worried?

Opinions expressed in this article are those of the author and do not constitute financial advice in any way. Please visit Protected content Protected content for more information.

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