Almost everyone that we talk to about investing money raises the issue of access. Being able to get our hands on money in the event of an emergency is always important, but why is it that many of us draw the conclusion that easy access, equals a good investment when all the evidence is to the contrary? Apart from the money in your pocket, the money on deposit in your bank is the most accessible, but it doesn’t work that hard for you, does it?
Let us respectfully suggest that other than the expenses for living day to day, and your “emergency money”, having money on deposit makes about as much sense as having an ashtray on a motorbike. The impact of inflation on your money is never really planned when one looks at one’s finances. There is not a deposit bank account on the planet that’s interest rate will beat that country’s inflation, so the more money you hold, the more real value you are going backwards.
When one also factors in the currency fluctuations between hard (USD, GBP, Euro) currencies and those that are classed as soft (emerging markets i.e., South African Rand = ZAR) the effects of holding cash can be massive. The biggest currency pair is against USD and to really put this caveat into context then around 10 years ago 1 million Rand was almost $75,000 USD.
Today the same in Rand is under $54,000 USD! Many of my clients just see the benefit of protecting their hard-earned savings in established hard currencies to hedge against the dropping of local currency.
How to limit your currency exposure.
It is therefore very important to think about what the impacts are of holding onto too much cash and what, where and how to invest to maximise the returns and secure the original capital.
My recommendation
We only recommend sourcing investments in secure and highly regulated international jurisdictions. This will allow you to benefit from saving in global, strong denominations.
As Austen Morris Associates specialises in helping individuals reach their personal financial wealth targets, there is no one investment that fits everyone, which is why we like to sit down and talk to our potential clients about their own personal situations and see if we can be of benefit.
If you would like an introduction to Austen Morris Associates and how we can help with education planning, then please do contact us, at https://austenmorris.com/contact-us/
From the desk of: Kirk Mcardle, Austen Morris Associates Associate Partner
