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Guide to Essential Money Tools
Investing Tools
The case for equities
Rensburg Sheppards
Though they are a more volatile investment than bonds and cash, equities – or shares - have consistently delivered a higher return over the long run and provided protection against inflation.
However far back you go, even to the 1920s, it has been very rare for cash or bonds to outperform equities over a ten year period. Equities have also provided people with a real return on their investment over the longer term.
This is why many expatriates, having considered their attitude to risk, decide to invest a proportion of their hard earned savings into equities (or equity based investments such as offshore funds) to achieve a better return than holding money on deposit and to invest for the capital growth to overcome inflation. But it is not quite that simple. There must also be a sufficient timescale to consider equities in the first place.
Equity investment is for the longer term. If you are likely to need the money concerned within, say, two years, the money is probably better kept on deposit. You also need to consider the currency you will ultimately spend and structure a portfolio accordingly. There is no point in having a dollar denominated portfolio if you intend to return to the UK and spend sterling.
Finally, before considering an equity portfolio you must be prepared to accept the increased risk, which normally means that a diversified portfolio of equities, bonds and cash is more sensible.
With less than, say, £100,000 ($200,000) to invest it can be difficult to structure such a portfolio with an acceptable level of risk. This is why Rensburg Sheppards has designed a portfolio management service called the International Fund Service specifically for expatriate investors. With a minimum investment of £30,000 ($50,000), the International Fund Service makes use of collective investments only, rather than individual stocks and shares, and provides the investor with a spread of investment into equities, bonds and cash in order to provide diversity and to help overcome inflation.