My previous track record with investments has been fairly poor. They typically consisted of buying individual shares as a “punt” normally ending in them either being delisting from the stock exchange or being sold off in what often is a rubbish deal for shareholders.
Since being an expat the rules for investing in the UK have changed for me, meaning my previous somewhat limited “investment strategy” is not workable.
What was this previous strategy? Well incredibly simple actually, pay off the mortgage on our London property and save money into my personal pension.
Whilst a very prudent financial plan it’s hardly a robust plan, nor one that would give a decent return. Nevertheless, this approach made sure I saved a good portion of my income and helped me and the family be in the position we are in today.
Having sold our UK property and closed my UK companies I need to invest the money for future growth and maybe to use as income.
My aim is to develop an investment strategy to follow as a set and forget approach, so that I don’t spend my time looking at share prices every minute of the day worrying if they are doing better or worse than the were doing 5 minutes ago.
The focus should be on developing a sustainable online business instead of looking at share prices.
I should point out, that I regularly commit the cardinal sin of investing in vehicles I don’t fully understand. This really is not recommended, and is a very fool hardy approach, as I have no idea of the associated risks, which nicely leads us to assessing risk!
Assessment of Risk
Discussing financial risk is an interesting one. What one person considers risky another person may find it acceptable. This is even when just discussing one particular asset class.
There are quantitative measures of risk assessments for how you see yourself, these are based on your aversion to risk and your age.
Remember there are risks associated with all investment strategies even if you use measures like the Sharpe Ratio (method for calculating risk-adjusted returns – check here for more information).
For example, I mentioned to a long-time friend of mine about my cryptocurrency holding and he thought I had gone mad. Not only did he question why I purchased so much but what my strategy was going forward (to be fair on this part he does have a point!).
I would say overall, I am more risk averse these days, mostly because I have a family now.
It’s more than that though, as having worked for myself for so many years I cannot imagine ever having to work for someone else. Deep down I always ensure I have a minimum of a few years savings to ensure that in a worst-case scenario, I am able to pivot and create my own revenue streams.
So, what do I currently invest in?
This year I have invested in a number of different assets from gold, Forex, Quantitative Fund and Cryptocurrency, to good old boring but safe cash, yes I have invested in cash…
I’ve outlined below, my current investments and assets and I’ve shown the strategy for each one. For me this has been a really good exercise as it’s made me think and justified why I invested in the a particular investment in the first place, as well as for how long I intend to keep it.
Cash is king as the old saying goes!
I have always been keen to keep a portion of my portfolio in cash, mostly from an inherent paranoia about having no money and needing to get a “proper job” and work for someone else.
This is good in the sense that that I can rest assured of having money to live on should the need arise. Although on reflection this does mean I have too much sat around and I’m losing value and it’s not growing with inflation.
In the last year I have been looking into index funds but have yet to invest, mostly from a fear that the market is going to crash – a fear that so far luckily has not arisen.
I did briefly consider investing in a couple of flats in the UK for rental income but want more of a passive investment, that doesn’t need a constant finger on the pulse. My brief experience with UK rental property showed me there is always something that needs doing and what with the very big question mark over house prices in the UK and Brexit I believe I will hold off and see what happens
To live in Malaysia I was required to place around $85k USD in a Fixed Deposit (FD) account in order to secure a long-term visa. The FD produces a yield of 3.7% per annum, which compared to the percentage you get in the UK is pretty good.
To ensure we (the family) have easily accessible money I decided to open a few more FD account to attract a similar yield and because the money is held in a bank risks considerably decreased.[table id=1 /]
Personal UK Pension
I started my personal stakeholder pension when I was 30, but it was only in the last 3-4 years before leaving the UK that I started to put more money into it.
My original plan was to continue to invest even after leaving the UK, however, the maximum amount I can now invest per year is only £3,600. I didn’t realise this until after leaving the UK, which meant my plans of growing my UK pension pot were dashed.
My pension has been growing at around 6% which isn’t bad considering the low levels of risk in them. If it keeps going at that rate it will be enough to pay some University fees for my kids in 20 years time.[table id=8 /]
SaxoSelect Discretionary Fund
When I was looking for a broker to buy index funds I came across SaxoBank whilst reading an expat investor book that heavily promotes Index funds. He recommended SaxoBank and Interactive Broker (IB) as good options for UK expats to be able to invest globally in different Exchanges.
After comparing SaxoSelect and IB I went with the former as I preferred the interface. Having signed up and completed their due diligence process and know your customer (KYC) jazz, I found their support to be really helpful and quick.
Originally, I was looking at a managed portfolio but had to invest a significant amount in order to open the account. So instead I looked at their SaxoSelect trading strategies and found one that looked interesting, “Discretionary Trading”.
This fund is not automated trading but a discretionary account that looks to “exploit short-term price movements across asset classes.” Instead of me buying and selling commodities or Forex, you have SaxoSelect investment managers doing it for you.
Of course, stellar performance comes at a cost in that it’s “high risk” and has a minimum opening balance of $20,000. The service fee is low at 0.5% per annum with a 20% performance fee subject to high water mark.
What I really like about this fund is how liquid it is. I can request to sell and cash out within a few days.
You can also set an “investment shield” too that acts to protect your capital as trading stops if it reaches a level you set yourself. I have set mine to be 15% below the investment value and I’m going to adjust this upwards to match increased growth.
I have only been invested in the fund since the end of August 2018 (just over two months now) and already seeing a great absolute return of 22.9%.[table id=2 /]
Hedge Fund – TCM Liquid Alpha Program (TLAP)
I met and became friendly with Howard one of the guys who runs this hedge fund for some time before I knew what he really did, all I knew was he worked in “finance”; it was only after a mutual friend highly recommended speaking to him about investments did I find out.
The fund looks to take long and short positions in liquid global indices and currencies.
These positions are systematically rebalanced based on a probabilistic forecast of how those indices will move over the next 24-hours. The system trades index futures and currencies, as opposed to other instruments, to capitalize on the liquidity and lower transaction costs of futures.”states TCM website.
There are two funds, the Flagship Class a less risky fund with lower returns, and the Growth class being more volatile with greater returns.
I was interested in the Growth class as the target return is 30% per annum, with previous years achieving 25-30% so the strategy has been mostly on target.
As I expected, the Growth class fund has been fairly volatile since I have invested with drawdowns of 10% in some months with equal upswings. Currently I’m roughly even for the 4 months I have been currently invested.
I like that the fund is liquid and I can request part or all the fund to be liquidised within 14 days.
There is a caveat in with this fund in that the minimum investment in order to invest in this fund, is pretty high. It was only after some serious thinking that I took decision to invest. As with all my investment thinking I make sure I “didn’t put all my eggs in one basket” I ensured I didn’t put all my money into this in case it goes sour.[table id=3 /]
Like many people I fell to the “fear of missing out” on “easy money” and during the middle of 2017 I invested in Cryptocurrency, which given a conversation in 2015 with a friend of mine on investing in BitCoin then I was very late to this market.
Investment timing is key and even more so with Cryptocurrencies. I first got into Bitcoin at around $4k per coin (yeah it wasn’t that much in 2015!) but made purchases at $6k, $10k and madly at $18k (ouch!).
Buying Bitcoin at the peak isn’t as bad as it seems though as this was purchased from selling Litecoin at a nice 10x profit.
One of my best friends (and a few others) have suggested on a few occasions that I should sell my crypto holdings and lock in a healthy profit. Of course, I didn’t as I believed and still do to a degree, that they will; might eventually return to what they were also.
In the back of my mind I was thinking that the money would just be sat in a bank account anyway, so may as well keep the “investment” there.
The same friend did highlight that if I had day traded Ripple I would have done very well. The currency has bounced around hugely with large swings, but, I am not a good trader as previous experience has shown me.
Due to the spread of my purchases, even with the cryptocurrencies currently being low, I am about even on my investment to date.
I have decided to keep holding (HODL!) them for the foreseeable future. However, a friend of mine that made a significant amount of money from Bitcoin in the early days is bearish about cryptos going forward, regularly suggests I sell or at least have a plan for WHEN I will sell.
He does have a very good point, the last one, When will I actually sell? will the “fear of missing out” (FOMO) stop me from selling?[table id=4 /]
Forex Fund – ArtofFX
This is the second time I have invested in Forex with another company, with the first time not working out too great and I lost 30% of my investment within 3-4 months.
So, I was hesitant to invest again in this high-risk vehicle, many forex traders lose money as its incredibly tough industry that uses leverage that can easily wipe you out!
I first became aware of these guys from a podcast I regularly listen to and mentioned in my top 10 blogs to read – Invest Like a Boss.
I met one of the owners Teng Su in Bangkok a few months back to get to know them a little more. It was a great meeting and Teng is a charismatic chap that does inspire confidence.
The downside of the fund is the liquidity.
You have to lock up your money for a minimum of 3 years. Locking up a chunk of cash is a not great to be honest, and is the main reason I have decided not to invest further.[table id=5 /]
Over the years I have often read that having bullion is a great hedge against a volatile or bear market, so I have invested in physical gold.
Bullion Star vault storage
I opened an account with BullionStar and hold physical gold coins in their vault.
They have a physical store and you can visit your gold (should you so wish) you can also buy and sell bullion from their website.
The service has been great and it’s easy to transfer money to them to purchase directly – they even except Cryptocurrencies![table id=6 /]
Safety Deposit box storage
Keeping with don’t have all my eggs in one basket, I am also holding physical gold coins in a bank safe deposit box in Malaysia.[table id=7 /]
Future Investment Plans
Indeed, what are my investment plans going forward?
I want to keep a decent cash position to balance out the higher risk components of my portfolio (e.g. Cryptocurrency and trading accounts), and additionally to have enough funds to invest in a start-up business in the next few months.
The SaxoSelect and TCM Hedge Funds I would like to hold for 5-10 years, but this will need constant evaluation of their performance on a month to month basis – and I’m thinking about including this information in my monthly updates.
Investing is certainly more involved than my previous buy a house and invest in my pension approach.
The finance industry really is tough and, in my experience, there is no easy money, certainly without a good amount of risk attached.
We do not in any way claim that you can earn any money from investing, speculating or trading in any of the investments outlined above. All the information on this site is for educational purposes only. Trading & investing in some of the investments above carries a high level of risk and may not be suitable for all investors. We would recommend always speaking to a professional for guidance if in doubt.