Hello Everyone,
Change is the law of life. And those who look only to the past and present, are certain to miss the future. (John F. Kennedy)
Over the last twelve years whilst I have been looking after my own investments, this is the third major market collapse I have experienced. It is a frustrating time, and it is important to try and sit outside the cone of noise that is created. This is, as Warren Buffett stated “The time to be patient”. Fortunately, our Saltydog numbers have always indicated that a move into a substantial percentage of cash would be a good thing to do. In previous slumps cash was paying a measurable amount of interest, but this is not the case now, so I have been looking for an alternative more constructive route to protect this capital.
Paul Milne from JPM Asset Management has come up with this solution. If you are fortunate enough not to need an income then a PRP (Protected Retirement Plan) may be the answer. In its most basic, stand-alone form, the PRP is a fixed term annuity that provides an income for a set period, with a guaranteed future value (GFV) at the end of the term. In this form the income of the PRP is taxed as earned income. However, it is possible to hold the PRP as an investment within your SIPP where the income/growth can accrue without incurring any immediate tax charge. Over the years I have always held a large amount of cash as a “just in case, sleep at night, security”, which earned me virtually nothing. However, as a result of the conversation with Paul, I have taken up this option using Liverpool and Victoria, with my SIPP as the holding vehicle. Strangely enough, my first £3k mortgage fifty-seven years ago was with L.V. If these PRPs are of interest to any of you, I would suggest that you get full details from an acknowledged provider. That should shake the dust out of what I have written.
It is also worth considering Fixed Income Structured Products which offer a fixed income irrespective of the index performance in which the product is invested. Unlike the PRP plans these products do not offer the option to mature early, but give a higher interest rate. I hold two of these products.
Another investment fund that I have written about in the past is VinaCapital Vietnam Opportunities Investment Trust. I invested in this when it came to my attention after my much younger brother emigrated to Vietnam as a doctor. At that time, it was priced at around 200p. Vietnam has a young well-educated work force and as an alternative to China was ripe to receive off-shore work from the West. This proved to be the case, and hip hip hurray, the value rose to nearly 550p. Then mid this year the value went into reverse, falling below 400p. There was no obvious reason that I could see for this reversal, until my brother revealed that there had been major cases of corruption linked with the fund directors. The case is now over, and VinaCapital is back on the upward trend at a price of 450p. I could be tempted to acquire some more!
My wish list for the New Year would be….
The end to the conflict in Ukraine.
A normalisation of energy usage and supply, with continuing developments towards environmentally positive generation methods.
Inflation in America and Europe ceasing to be the stock markets nemesis.
An amenable resolution to the strikes and pay claims in the UK.
My wife and I are away for January and February in the Antipodes, finally ending up in Perth with our elder daughter. I am fortunate that my wife has total mastery of modern technology and communications, so Richard and the Saltydog numbers are only a click away.
I leave you with this thought. Stay away from negative people. They have a problem for every solution. (Einstein)
Have a Merry Christmas and Happy New Year.
Change is the law of life. And those who look only to the past and present, are certain to miss the future. (John F. Kennedy)
Over the last twelve years whilst I have been looking after my own investments, this is the third major market collapse I have experienced. It is a frustrating time, and it is important to try and sit outside the cone of noise that is created. This is, as Warren Buffett stated “The time to be patient”. Fortunately, our Saltydog numbers have always indicated that a move into a substantial percentage of cash would be a good thing to do. In previous slumps cash was paying a measurable amount of interest, but this is not the case now, so I have been looking for an alternative more constructive route to protect this capital.
Paul Milne from JPM Asset Management has come up with this solution. If you are fortunate enough not to need an income then a PRP (Protected Retirement Plan) may be the answer. In its most basic, stand-alone form, the PRP is a fixed term annuity that provides an income for a set period, with a guaranteed future value (GFV) at the end of the term. In this form the income of the PRP is taxed as earned income. However, it is possible to hold the PRP as an investment within your SIPP where the income/growth can accrue without incurring any immediate tax charge. Over the years I have always held a large amount of cash as a “just in case, sleep at night, security”, which earned me virtually nothing. However, as a result of the conversation with Paul, I have taken up this option using Liverpool and Victoria, with my SIPP as the holding vehicle. Strangely enough, my first £3k mortgage fifty-seven years ago was with L.V. If these PRPs are of interest to any of you, I would suggest that you get full details from an acknowledged provider. That should shake the dust out of what I have written.
It is also worth considering Fixed Income Structured Products which offer a fixed income irrespective of the index performance in which the product is invested. Unlike the PRP plans these products do not offer the option to mature early, but give a higher interest rate. I hold two of these products.
Another investment fund that I have written about in the past is VinaCapital Vietnam Opportunities Investment Trust. I invested in this when it came to my attention after my much younger brother emigrated to Vietnam as a doctor. At that time, it was priced at around 200p. Vietnam has a young well-educated work force and as an alternative to China was ripe to receive off-shore work from the West. This proved to be the case, and hip hip hurray, the value rose to nearly 550p. Then mid this year the value went into reverse, falling below 400p. There was no obvious reason that I could see for this reversal, until my brother revealed that there had been major cases of corruption linked with the fund directors. The case is now over, and VinaCapital is back on the upward trend at a price of 450p. I could be tempted to acquire some more!
My wish list for the New Year would be….
The end to the conflict in Ukraine.
A normalisation of energy usage and supply, with continuing developments towards environmentally positive generation methods.
Inflation in America and Europe ceasing to be the stock markets nemesis.
An amenable resolution to the strikes and pay claims in the UK.
My wife and I are away for January and February in the Antipodes, finally ending up in Perth with our elder daughter. I am fortunate that my wife has total mastery of modern technology and communications, so Richard and the Saltydog numbers are only a click away.
I leave you with this thought. Stay away from negative people. They have a problem for every solution. (Einstein)
Have a Merry Christmas and Happy New Year.
Best wishes and good luck with your investments.
Douglas
Founder & Chairman
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