The political and economic situation is getting more and more confusing (and dangerous) by the day. Europe is gripped by increasing populism and economic weakness, the USA seems on a path of increasing protectionism, while geopolitical tensions are simmering in the Pacific and in the Middle East. Meanwhile, Britain is hanging in the balance, trying to negotiate its exit from the EU in a way that will not damage the economy – although the signs of a worsening are already showing up.
This changing face of economic policy and government will have a giant impact on the wealth of Hight Net Worth Individuals (HNWIs) for many years to come. And, if you are a HNWI, you should be asking yourself right now:
Is my wealth in danger from government taxation, confiscation or capital controls?
How can I keep my savings safe in such an environment?
What is the best investment I can make to keep and increase my wealth?
The economic situation in Europe and its politics are rapidly deteriorating. Italy, France and Spain are juggling enormous unemployment rates together with economies at a standstill. Extremist parties are increasingly taking advantage of strong anti-euro and anti-EU sentiment. Meanwhile, the Brexit vote unleashed not only a 20% fall in the Pound versus all major currencies, but it has also damaged the UK’s economic performance. Growth in the UK’s service sector dropped to a five-month low in February 2017 while house building reached a six-month low. The uncertainty of the Brexit process is likely to persist for months, if not years, blocking investments and damaging business confidence in both the UK and EU.
In addition, booming levels of government indebtedness practically guarantee a future of increasing government regulation and stagnating economies. The UK is not immune, with a debt to GDP ratio of 90% in 2016, up from only 42% in 2007. Faced with increasing debts, weaker growth and an increasingly unhappy population, governments will respond with a predictable measure – taxes.
Taxation will likely rise on your stock investments, on your properties and on your income. In brief, on any asset or form of wealth you own, the government will be there to take its share to pay off its debts, satisfy electoral promises and find a convenient scapegoat. And it will target HNWI for the simple reason that they hold the vast majority of the country’s wealth (the top 10% of the UK’s population has more than £5 trillion in assets). If you are an HNWI, you and your wealth will be a primary target.
CAPTION: The EU’s economic problems WILL impact your portfolio – are you ready?
Another trend that is increasingly apparent is that of governments cracking down on all financial
privacy. Countries are sharing financial information on their citizens to an extent never seen before. Officially this is to counter terrorist activity and tax evasion, but in reality it is a search to find more assets to tax. One of the instruments of this policy is the Common Reporting Standard (CRS), which was developed by the OECD in July 2014. It calls on jurisdictions to obtain information from their financial institutions and exchange it with other jurisdictions every year. The CRS guidelines set out the financial account information to be exchanged, the financial institutions required to report and the different types of accounts and taxpayers covered.
No matter where you bank or where you hold your assets, you will not be able to hide from your government’s eyes any longer. The government will know how much money you have, where you keep it, when and where you spend it, how you made it and how you invest it. If this is the scenario we are faced with, do the most popular investments represent the best option to keep your wealth safe? The answer to this question may surprise you.
Investing in stocks, for example, may seem like a good idea to preserve your wealth and grow it in the long-run. Stocks tend to rise over decades in line with the underlying economy. However, this path is far from smooth. The financial crisis of 2008-9 exposed the danger of stocks, with most major developed markets falling by up to 50% from peak to bottom and some by more than 75%. This kind of loss of wealth, in the space of a literally a few months, can be emotionally in addition to financially devastating. And even more if you are retired, or are trying to build up your retirement savings, the volatility of stocks can be too much to take.
Another option is that of real estate, because of its income-generating and price appreciation potential. Nevertheless, it’s becoming an increasingly dangerous asset due to excessively high valuations and a deteriorating economic outlook. Real estate in the UK, and in particular London, is among the world’s most expensive. With Brexit, a weakening economy and fewer international buyers, appetite for UK properties has taken a hit. London’s borough of Chelsea has seen a 13.3% YOY price fall in January 2017, with asking prices for some >£10 MLN properties slashed by up to 30%. UK house prices as a whole fell for the second month in a row in April 2017. Buying at still very high prices, and with deteriorating fundamentals, is unlikely protect, much less increase, your capital.
CAPTION: More and more investments are become too risky – what’s the alternative?
Cash and bonds are also a problem. With cash you earn zero interest, which means that even in with low inflation you are losing money year after year. If inflation picks up to above the 10% level as in the 1970s in most of Europe, you are giving away a tenth or more of your wealth – every year. Furthermore, by leaving it in the bank the government can tax it into oblivion, impose withdrawal limits or make it impossible for you to access it.
In the worst case scenario, you risk losing it all in a banking crisis. Remember, the government only guarantees deposits up until £85,000 through the Financial Services Compensation Scheme. So, for example, if you have a £500,000 account that means that 80% of all your wealth would be wiped out – literally from one day to the next.
All these scenarios are both dangerous and possible. So how can you protect and increase your wealth? How can you make sure you will be able to provide for yourself and your family?
CAPTION: Fancy Coloured Diamond – A safe asset to protect and increase your wealth
Fancy coloured diamonds can be the answer to your needs.
Unlike bank deposits and financial assets, fancy coloured diamonds make your wealth something you can actually touch. Their size makes them easily transported and stored. You can keep them in your house, with a certified dealer, or wherever you feel comfortable and can access them with ease. Furthermore, their value has been going only one way – up.
From the start of 2009 to Q3 2016 the price of fancy pink diamonds has increased nearly 180% and is now at record highs. Fancy blue and yellow diamonds are also up by around 70% to 90%. What’s more, fancy light pink diamonds have returned 20% every year from 2002 to 2012 with low volatility. They emerged from the 2008 financial crisis intact, during a period where stock and real estate prices completely collapsed.
The world is getting more dangerous. The government is after your money and your livelihood – and it’s only getting started. If you don’t take this threat seriously you risk losing your savings, your retirement and your entire life’s hard work. But if you do, you can stop this from happening.
Fancy coloured diamonds are a safe, profitable and effective way to protect your wealth and grow it year after year. So don’t wait any longer – take action now.
Find out today how Argyle Assets can help you protect and increase your wealth by investing in Fancy Coloured Diamonds. Call us now at 0207 8560 315 or e-mail us at email@example.com for a FREE consultation and let us help you find the best solution to your investment needs