Portfolio Diversification

Property Investment and Discretionary Managed Investment

Philip, a busy 40-year-old banker and Debbie, a 36-year-old recruitment consultant, are married with no children. Both earn good salaries and receive large bonuses each year when times are good. They previously invested in property in Hong Kong but recently sold out thinking the market was too ‘hot’ and are now in the enviable position of having US$ 2 million in cash.

After a thorough analysis of their current financial situation and anticipated financial objectives for the next ten years with a Consultant from Platinum Financial Services, they decided to seek maximum capital appreciation

Asset Diversification: Property Investment

Philip and Debbie intend to enter the UK property market, more specifically Central London, as they can see many upsides there in the next five years. They want to invest US$ 1 million in the property and seek a mortgage to pay the rest of its price. They intend to rent the property out while they remain in Hong Kong. By taking advantage of low-interest rates with their mortgage, they can purchase a property valued at US$ 2 million with a 50% loan to value mortgage. The mortgage costs are funded via rental income, which is also paying their loan down whilst they benefit from the capital appreciation on the full value of the property.  

Historically, properties tend to double in value every ten to fifteen years. So their Central London property could potentially be worth US$ 4 million, with debt paid down and all from an initial investment of US$ 1 million.

Asset Diversification: Managed Investment Accounts

They also want to commit US$ 1 million to the equity markets and leave it there for at least five years. Although they are both closely involved in the finance industry, neither has the time, knowledge, or inclination to make initial and ongoing investment decisions around their portfolio.

Following Platinum’s advice, they opened an offshore custodian account as it offers access to various assets. Their investment is established on a joint-life, second death basis for tax purposes and diversified across 20 individual holdings. The Portfolio Management Team closely monitors these holdings. They are appointed to act as discretionary managers according to Philip & Debbie’s objectives, reviewed every quarter with their Platinum consultant.

With both property and equity investments, Philip and Debbie are in a good position to take advantage of both asset classes while still maintaining liquidity, if needed.

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