Where am I now Invested?
Most of my investments are in equity. I own my home, its paid. I have shares, unit trusts and index funds. And about 40% of my equities are in invested internationally.
The wild fluctuations, volatility in markets and the self-destruction of my currency has been terrifying. I am 52 and have only 8 years to retirement. The value of my portfolio is down 32%. Share prices of household companies have plunged. My financial planning goals have been derailed!
These are the sentiments being expressed by investors says Costas Souris of Quality Group SA a member of the SMARTeam group.
My Pandemic-Recession Resistant Financial Planning Goals?
I am revisiting my financial plan as I want it to be resistant to market fluctuations, volatility, and the issues of an emerging countries. (Political feebleness, corruption, unemployment, evaporating infrastructure, education, and healthcare standards.)
I want to feel safe. Not only personal security but also that my financial freedom that I aspire too does not get derailed again. I want my personal & family security, as well as my financial planning to be as robust as possible.
Financial freedom to me means:
To work or not work as I desire.
Passive income to me means:
I will achieve financial freedom and independence when my hard currency passive income exceeds my daily living expenses and there is sufficient for my hobbies and special interests. I love travelling and exploring different cultures and customs.
I must invest in hard currency passive/annuity income to protect my purchasing power as soft currencies are destroying my standard of living and wealth.
My FUTURE-proofing tomorrow strategy to me means:
I will be FUTURE ready as I move closer to my goals by reducing disruption & uncertainty through my financial freedom strategy
-by protecting my standard of living
-by protecting my retirement goals
-by protecting my purchasing power
-by investing in hard currency assets
-by investing in hard currency passive/annuity income
-by maximising returns after costs
-by maximising passive income via a low tax jurisdiction
My Investment Strategy for Pandemic-Recession Resistant Results
Passive income by property has the following characteristics
-is the asset class that generates income most consistently
-is the oldest asset class after gold that has experienced the least disruption
-shelter may change shape and colour, but after food we all need shelter to survive
-property has proven to be least affected by political, economic “pandemic” shocks
-hard currency economies & property is subject to less fluctuations.
-₤-$-€ passive income protects purchasing power as the local currency self-destructs
-certain sectors of property are more resistant to disruption
Property sectors resistant to disruption
If one is ill or sick medical attention is required. It is not a choice but a matter of survival and the providers of health care services in “good times and bad times” are earning and can pay rent to the landlord, me!
I have control and influence as I own the property & passive income stream. If I wish to sell, it is on the willing buyer and willing seller principle.
Commercial property is often unattainable for smaller investors like me. The traditional solution is to invest via an equity property fund. (Often referred to as REITs) Even though the assets of the fund are in property, the fund still suffers from market sentiment and volatility.
Dividends from funds dry up in difficult times and the investor has no control or influence on the outcome. REITS (Real Estate Investment Trusts) invest in property but the property management decisions are made by the fund manager and if the fund loses investor confidence, in challenging times, and there is panic selling causing a run on the fund, it can collapse and would be liquidated.
My property investment strategy directs me to invest directly in property giving me direct ownership. I choose to invest in the USA, the largest economy in the world with a highly developed and specialised medical sector.
The USA private healthcare industry is robust and driven by:
-an aging USA population | Everyday 10 000 people turn 65
-the aging population can live longer | Thru “medical tech” advances
Locations targeted to invest in:
-the demographic spread is middle to upper income groups
-there is a wide spread of ages with focus on the middle aged
-location accessibility is good, little traffic congestion, with parking
-patients can afford to pay for medical services
-building leases must be long term | 10 years plus
Investments in commercial buildings in the medical sector offer ±USD 6 – 8% net dividend returns before tax: Payable quarterly in arrears. On resale the capital growth pushes up the return to $ US 11-17% pa. (The IRR)
It is the desire of parents to give their children the best start in life. Some dish out money, the wiser educate their children first. The principle being “teach one’s child to fish, and they can fish for the rest of their lives, as opposed to giving them the fish!”.
My strategy directs that I invest in TIER 1 educational institutions in
First world Western world economies with stable democratic government.
British University Student Accommodation in Cyprus
Around the world, in all countries; on-campus student accommodation is in short supply and is usually awarded to first year and top academic students. On-campus student accommodation is 100% occupied. The formula for student on-campus accommodation is to provide for residences for only 20-25% of the total student population. Thus, the administrators of the educational institution will always have demand exceeding supply.
Investors in student accommodation receive the title deed and can resell at any point. The rental return is net before taxes. All letting, management and maintenance is undertaken by the Institution. There is no personal use.
These type of investments enjoy rental guarantees of ±€uro 6% net for 3-5 years thereafter participating in pooled income. On resale the capital growth pushes up the return to ±€uro 8-10% pa (The IRR)
Diversification & Tax
I will diversify into US dollars and €uro passive income and invest through a low tax jurisdiction; tax can range from Zero to 12,5% on bigger structured portfolios.
A Final Word on the exchange rate
Returns are in US dollars and €uro backed by the largest and third largest economic groupings in the world. If returns are measured in my soft currency which is depreciating against all hard currencies, then I can add 5-7% pa pushing total return to 15-20% pa!