As we have discussed in previous articles the importance of having a
financial plan lets look at some reasons the wealthy are very interested
in protecting and growing their wealth. Richard Cayne at Meyer
International Ltd in Bangkok Thailand says many assume that the very
wealthy don’t need to or have to think about their money or wealth but
that is not true. In fact most high net worth individuals defined as
having investable assets over US$1million think about their portfolio
more than those who don’t have any money saved up because they know that
through inflation can erode their hard earned savings if they aren’t
careful. They very much want to grow their assets and keep a watchful
eye on preserving them as well. Those who are slightly higher up the
food chain in the ultra high net worth class defined as having over
US$50million are even more concerned about inflation and want very much
to preserve the store of value and are less concerned about really
growing it and more focused with just keeping up with inflation.
Richard Cayne having worked in Tokyo Japan Meyer Asset Management for
over 15 years and servicing many high net worth individuals and even
ultra high net worth individuals can certainly say that everyone
regardless of the size of their portfolio should be concerned about
inflation and keeping pace with it at the very least. Inflation is
certainly a form of wealth destruction and should be one of the most
important considerations to any investor.
If it wasn’t for inflation then the need to grow your savings would not
be as pronounced as it currently is. Imagine for example if prices
would never change and the cost of higher education currently around
US$80,000 for four years ( see fastfacts ) would still be the same in 15
years. That is a nice thought but is not the world we live in. In our
world we would need to target a sum closer to US$150,000 to get the
same value in 15 years as now. That is assuming of course inflation
does not escalate further.
Loosing Your Store Of Value By Doing Nothing Or Achieving No Growth
Richard Cayne Meyer International Bangkok Thailand says that his
wealthier clients actually look at it as if they are loosing money every
year they don’t achieve growth same or greater than inflation. If for
example their net worth is US$20,000,000 and they achieve only 2% growth
on their portfolio they see their purchasing parity next year of only
US$19,600,000 that they are down US$400,000 assuming a 4% inflation
rate. This is a very unsettling feeling for them and as such the main
objective is to not loose their store of wealth and keep up with
inflation. Anything beyond the inflation rate is seen to be their real
return.
Real Estate is another area which despite some downturns even though
significant in size is still on the rise over time and needs to be
considered, particularly in Asia, where property prices have risen at
an extremely fast pace. Certainly property if bought at the right time
can play a meaningful part in someone’s portfolio right along with
equities, bonds and commodities says Cayne.
Choosing to invest in assets that will grow in value outpacing that of
inflation is key. Particularly in the US these days it is getting more
and more obvious that the government is doing what it can to stimulate
the economy and inflate asset prices of both equity markets and property
markets. This means keeping your cash in near zero interest bearing
accounts will be the worst thing you can do for your financial plan.
It’s a guaranteed looser over time.
So whether you are just starting on your road to financial freedom or
already there consider your options carefully as inflation is a force
that affects us all. Everyone needs to plan carefully and consulting
with a firm that can help you define and stay on track of your financial
plan would be a recommended and valuable decision to make.
Richard Cayne has been involved with offshore funds and structures in
Asia for over 17 years. He is currently Managing Director of the Meyer
Group consisting of Meyer International Ltd and Meyer Asset Management
Ltd. The Meyer Group is wholly owned by Asia Wealth Group Holdings a
London, UK listed company with ties to over 200 global financial
institutions.
Article Source: http://richardcaynes.wordpress.com/2012/08/28/richard-cayne-meyer-international-ltd-protect-grow-your-wealth/
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