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How to invest sensibly and securely in Spain By Sam Kelly, Managing Partner, Chorus Financial
I made my first investment when I was 17. I was convinced this ‘internet’ malarkey that we had started using in the last few years was guaranteed to take off, and so with several years of savings from part time jobs, I invested in a small internet supplier called Telewest. Despite my instincts being right, by putting all my eggs into one basket, rather than investing in the industry as a whole, I ended up losing nearly all of my money.
This did not put me off, and by the time I was 25 I had invested in pretty much everything you can imagine from Eastern European property to Penny Stocks, small businesses and more. I made more losses than gains, but those mistakes I made in my early years as a professional investor have been the most valuable of my life.
I learned the essential lessons that I still use today in my career advising expats on their financial planning and investment matters. The most important lessons being ‘due diligence’ and ‘diversification’.
Since moving to Spain I have witnessed more and more investment ‘opportunities’ including some that can only be described as ‘ponzi schemes’. These included sports betting, too good to be true investments, ‘low risk’ funds returning 20%+ a year, property investments offering unrealistic ‘guaranteed’ yields. These schemes can struggle to survive and will more than likely collapse, leaving their investors high and dry.
Naturally, as a financial planner, I understand why people want to invest. I have been investing my whole life and despite my early mistakes, success over the last 15 years has dramatically improved my lifestyle, making my money work for me. That is not taking into consideration the eroding effects of inflation - £100,000 left in the bank for 10 years will lose around £25,000 of its spending power as a direct result of inflation – that’s equivalent to nearly £7 a day, which would go a long way in Spain. So, on the whole, people understand that in an inflationary world, investment is essential. What is not essential, though, is taking unnecessary risks for unrealistic returns.
Let us look at that £100,000 in another way. If you invested £100,000 and achieved a moderate return of 5% per year over the last 10 years, that £100,000 would now be worth £162,000. A strong growth of 7% per year the figure would be £197,000.
A figure like this is an example to show you what can be achieved. This level of return cannot be guaranteed; your personal appetite for risk and the length of time you invest for will affect your potential returns or losses; it is important to remember that the value of your investments can go down as well as up.
So the big question is where should expats turn to for advice they can trust? This takes me back to my original hard learned lessons – ‘diversification’ and ‘due diligence’.
As an independent financial planner we have access to the whole of the market, so we can carefully select the most suitable product for you. Two providers who have proved incredibly popular with our clients here in Spain are The Prudential (remember The Man From The Pru?) and Old Mutual. These insurance and investment giants, both listed on the FTSE 100, have a combined 40 million clients between them worldwide and have set up international solutions specifically for expats here in Spain. That, along with their reputations and experience is part of the ‘due diligence’ requirement I mentioned.
We featured Insurance Altea last month and would like to point out
elaine@insurancealtea.es. We’re sorry for any confusion.
Their Spanish compliant bonds offer a whole host of advantages which can include tax efficiency, inheritance tax mitigation, ease of accounting and no requirement to report on the Modelo 720 as an overseas asset.
the correct email is
One offering from The Pru is their Spanish Bond, which is managed by the Prudential Portfolio Management Group, a collection of 80 of the World’s leading financial experts with £173 billion of assets under management.
Learn from my mistakes, not your own.
Female Focus
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