[Mmzmptvk]

OK - so I had a meeting this week with AES international - a finance / investment company specialising in expat finance (I'm a Brit living in The Netherlands).

http://www.aesfinance.com/

We've gone through the risk profiling, now waiting for the results - then we will start to talk specifics of investments; both in terms of accepable risk as well as currency (inside / outside of the EURO).

So far I have to say I've been very impressed with both their sales-patter and their attention to detail / straight talking. I don't have anything at the moment that is making me doubtful about them.

Based on the last meeting, our expected risk profile is judged to be medium-risk, which in their experience apparently equates to investments giving an average return of 8-10%. The initially suggested investment profile is a 24 year plan with monthly investments, with a committment to 23 months at 1,125 euro per month. After the intial 23 months the monthly invested amount can be varied (or stopped) without issue.
The chosen investment portfolio can also be adjusted as frequently as necessary, with in principle four meetings per year with AES to review.
We've been advised that spreading investments in monthly amounts is preferrable to lump sum investing, as you spread both your risk and benefit from any intermediate rate changes. A monthly investment of 1125 euro ensures an automatic monthly return of 55 euro just from the scheme vehicle itself, before factoring in the return on the actual investments. So essentially at this level of investment the scheme pays for itself each month, and gives you a small return irrespective of investment performance. The investments themselves would be offshore, with no tax payable on the returns (a much better option than keeping the money in Dutch banks, where I pay income tax on the interest generated... all 2% of it )

If anyone is able to use their l33t interweb skillz (is that what the kids call it these days?) to find out more about this company I would be highly appreciative. Further more, if anyone has investments themselves and wants to offer up any pearls of wisdom, feel free.

I can offer a Steam Guest Pass: Red Orchestra 2: Heroes of Stalingrad to whomever I consider gives me the most useful information - on in the case of this place the least condescending and sarcastic information (don't judge, its the only giftable item I have!)

[amberamuletuk]

rule one, if the bank made the product, the bank always wins

[Peapeuddedbaw]

An investment vehicle that generates a return just by investing in it, probably provides 8-10% (I'm guessing pa rather than capital growth over 24 years) on medium risk and is offshored for about 15k pa? Sounds like a ponzi, you're right to investigate.

What downside risk did they discuss?

In terms of other thoughts, don't you have your own place? Do they do offset mortgages in the Netherlands?

[TodeImmabbedo]

Chris, let me be less controversial. It sounds to me like you'd be buying units in a fund (or fund of funds) of non-investment grade corporate bonds, but happy to hear the views of the guys who work specifically in banking or investment (I've been out for about 5 years). There is significant downside risk in a fund of this type and it'll be relatively illiquid and I wouldn't have thought a guy with a young family would want to take those kinds off risks or have lack of access to funds.

I'm not on the forum in the day time any more so see what other advice or comments you get but feel free to drop me a PM to chat about lower risk ways of holding liquid assets (hence my offset mortgage question). It won't be advice, just a few ideas about different ways of thinking. I'll just add that rule one for me is that you pay someone to be independent; if they're not charging you up front, they're not telling you what you need to hear, and that seems to be the case here.

EDIT: Have been reading this on my phone so missed a couple of details. A 5% nominal return just for investing? Either you've got mixed up over the details or you need to steer well clear. I thought it said 5 euros, not 55 euros!

[crazuMovies]

I went to school with one of their relationship managers and one one of their private client advisers. They are both based in Dubai now, but I can put you in touch with them directly if it would help out at all.

Both are decent blokes I'd say after knowing them for 20 years, but I know nothing about the company. I tend to think that decent people tend to be fairly ethical. Just my two cents though.

[foI3fKWv]

Chris, let me be less controversial. It sounds to me like you'd be buying units in a fund (or fund of funds) of non-investment grade corporate bonds, but happy to hear the views of the guys who work specifically in banking or investment (I've been out for about 5 years). There is significant downside risk in a fund of this type and it'll be relatively illiquid and I wouldn't have thought a guy with a young family would want to take those kinds off risks or have lack of access to funds.

EDIT: Have been reading this on my phone so missed a couple of details. A 5% nominal return just for investing? Either you've got mixed up over the details or you need to steer well clear. I thought it said 5 euros, not 55 euros!

I agree with the above.
I do not like this at all. Also the word "commitment" hurts my eyes.

I would never, I repeat NEVER buy into a scheme if I do not know exactly what is inside.
Especially if it promises 5% tax free + extra returns.

Based on your post above I will also say steer clear unless they can give you full transparency (and then I'd like to see it). There's no such thing as a free lunch.

PS: I'm a derivatives salestrader, for the records. I have a large aversion for funds and funds of funds (and black boxes for that matter).

[Adfcvkdg]

I too would urge caution. Extreme caution even. You should know exactly what's in the product you're buying and how much that product is costing you. Do you have any literature directly from the vendor that explains what this product is? It sounds suspect.

It's entirely possible that this is a completely legitimate product that, for example, owns stable dividend-paying utilities or something and uses written puts and/or calls (either a combination of naked puts, covered calls or short straddles) to generate ongoing income. Such a strategy could absolutely deliver 5-odd percent monthly returns in the right market and with ideal execution, but I would call it a very risky proposition.

I would suggest that actively-managed products and services tend to be very expensive as compared to something like index funds, and they overwhelmingly tend to underperform indices in the long term as well. The more exotic the product, the more costly it is and the worse it's apt to perform in my experience. Even if the short-term performance is good, in the long term you're often better off with simple, passive funds/products purchased in small amounts on a regular basis.

What you've been told about ongoing, regular contributions is spot on. This is called dollar cost averaging. In a choppy or declining market, it's likely to deliver the best average entry prices for assets.

What you've been told about the tax implications is suspect. You should consult with a tax expert or some legal representation. I know that in Canada, you are obligated to pay taxes for any offshore assets that generate income or returns for you. If you already pay foreign taxes on those, then by treaty those amounts will count towards your Canadian taxes and you will not be taxed twice. If you pay nothing to a foreign country, then you will pay Canadian taxes. You are also obligated to document in explicit detail what foreign assets you own if they cost in excess of a certain dollar amount. You can elect not to document any of these activities, but this does not make a tax-sheltered investment of them. It's simply breaking the law and exposure to legal ramifications.

[GustavM]

Thanks guys - really much appreciated

Like I say -I'm still at the risk-profiling / investigation stage currently. Not going to jump into anything without doing all necessary investigation & due diligence. I will get more detail from them in the next meeting also.

[Breevereurl]

What became of this Chris?

[WhonyGataxott]

I have thought about this a bit, and in my mind it means that you have a medium (50%?) chance of losing 27,000 Euros.

[Blellurgews]

Put the whole thing on indefinite hold for the time being as my work is mental at the moment, and might cause a shift in my circumstances depending on the outcome of tenders in progress.

Not sure exactly what I will do once my situation becomes clearer. I do want to make my savings work harder for me, but just not sure how.

[valensds]

Put the whole thing on indefinite hold for the time being as my work is mental at the moment, and might cause a shift in my circumstances depending on the outcome of tenders in progress.

Not sure exactly what I will do once my situation becomes clearer. I do want to make my savings work harder for me, but just not sure how.

Unless I'm being really dumb, a high interest savings account will return up to 10% with the figures you are quoting.

[autolubitelone]

In a low interest environment, the easiest, no thought required thing to do is get an offset mortgage (assuming rates are not higher than "normal" mortgages, you're due to remortgage and the fees aren't prohibitive). The effective rates gained on your savings are the mortgage rate x (1+ plus your marginal tax rate). You're holding cash so the risk is low too.

Then when you have time to think about it properly or assess your risk level, you take the cash and treat the mortgage like a normal one.

[Glamyclitlemi]

Unless I'm being really dumb, a high interest savings account will return up to 10% with the figures you are quoting.

4.5% is about the best I can find at the moment. These days banks don't want to give you any kind of interest at all.

My thinking at the moment is simply to use some of our savings to pay off a chunk of the mortgage, as bank account interest rates are barely higher than our blended mortgage rate (we have 50% of the mortgage on a fixed rate, and 50% on variable).

[sauppyshurb]

4.5% is about the best I can find at the moment. These days banks don't want to give you any kind of interest at all.

I have 20k in a 5 Year CD and I'm barely getting 2%.

[Metrujectiktus]

you should always state the currency as well when talking about interest rates

[abossakon]

In a low interest environment, the easiest, no thought required thing to do is get an offset mortgage (assuming rates are not higher than "normal" mortgages, you're due to remortgage and the fees aren't prohibitive). The effective rates gained on your savings are the mortgage rate x (1+ plus your marginal tax rate). You're holding cash so the risk is low too.

Then when you have time to think about it properly or assess your risk level, you take the cash and treat the mortgage like a normal one.

While you are correct in theory (a Firstdirect example showed you needed to have at least ~7% return to beat the benefits of ofsetting if you're a high tax-rate payer), don't forget that you probably have no protection on that cash you pay in to offset the debt. If the bank goes belly up, you most likely will have to pay back the mortgage while losing the cash you had put on the offset account... [nb: I have not double checked this but thought about it the other day - it's quite a scary scenario].

Other options that are quite interesting at the moment are high dividend yielding stocks. With cash and bond yield so low, investors are suddenly seeing high-yielding equities as an interesting vehicle at the moment.

[tsovimnpb]

Only the surplus over FSCS limits is used to reduce mortgage debt. I have a fully offset mortgage for exactly the limit to keep the readies available at low opportunity cost, so would essentially lose whatever is in my current accounts to the debt itself.

[JRixlcvF]

Only the surplus over FSCS limits is used to reduce mortgage debt. I have a fully offset mortgage for exactly the limit to keep the readies available at low opportunity cost, so would essentially lose whatever is in my current accounts to the debt itself.

Sorry... lost you there. You mean you are offsetting £85K (considering that's the compensation limit for deposits in the UK)?

[ancexttew]

Yes, but instead of offsetting your own money, you take out an £85k mortgage and leave the funds sat in an offsetting account (mortgage therefore attracts no payments as it is interest only). You invest your own £85k but have an £85k cash call at less than 3% pa.

If the bank goes caput, the £85k is protected and they use whatever other deposits (assuming less than £85k) you have to repay the £85k loan. You settle the difference and walk away with what's left, that being whatever was in your other deposits (ignoring any fees).

It essentially amounts to having an £85k low-interest, colateralized overdraft.