Review - four months later

Regular readers of my articles will have followed my views over the last four months of the wonderful investment opportunities that have arisen from last years traumatic times. Many of you have already taken my advice and have enjoyed very healthy returns of both high income and capital appreciation since February. It was then that I suggested that it was the time to start using your capital again and not accepting the dismal rates of ‘interest’ offered by the banks.

What has been most pleasing over the last few months has not only been the strong returns made for our clients but also the comfort that the original capital invested has also been protected from any potential falls. This reassuring message has been echoed by all new investors that have used our services this year.

So is it too late to invest now after the strong run we have had recently ? After such a good run we are starting to lock in the profit we have made for our happy clients. We are now in a position of holding between 30 and 50 per cent in cash as a result of taking healthy profits. We fully expect to be back ‘in the market’ again after the summer as inevitably new opportunities will arise. Such opportunities to date have been in my recommended areas of commodities – energy, metals and agriculture. I expect these to offer strong returns again in the second half of the year but for now we are happy to sit with more in cash.

On the topic of energy, we recently recommended that our investors took profit on our first capital protected product of 2009 which was linked to the crude oil price. We striked the product when oil was at $39 and recently sold when oil hit the $70 mark – an increase of 79 per cent ! These returns exceeded even my expectations and especially as it were only over a six month period.

For the more cautious investors, our UK recycling fund has done very well also with a net return to investors of approx. 7 per cent this year to date. Bearing in mind that interest rates are in the region of 1 per cent in both sterling and euro, even our most cautious investors have received returns considerably higher than bank rates.

If you would like to find out more of the products and services that we offer then please do contact us by email or telephone. All meetings are held in confidence and without obligation.

Mark Hollingsworth, Director, Hollingsworth International Financial Services Ltd
Tel: +357 99066840 (Cyprus Mobile), +356 21316298 (Malta Office)
e-mail: info@hollingsworth-int.com
Website: http://www.hollingsworth.eu.com/
Authorised by the Malta Financial Services Authority to provide investment services, license IS/32457

Case Study - Selling a house

Property sale and the euro

Having decided to settle in Cyprus, it is quite common for retirees to sell their UK residence to allow either a purchase of a new home here in Cyprus or to release capital to in turn increase their income. The following was a typical scenario I came across recently that is worth sharing with other readers:

Joan and Andrew retired to Cyprus in 2007. They kept their UK home and rather than purchase in Cyprus, elected to rent their property here due to the uncertainty with the local property market and because they were not certain if they would settle in Paphos. After two happy years on the island, they decided to sell their UK home and to continue to rent here. As Andrew retired five years before State Pension Age, it was important to enhance their income for at least the next five years. As their savings were held on deposit, they have seen their income drop substantially and now need to use their property sale proceeds for income purposes. As most of their expenses are now in euro, they are also wary of the poor rate of exchange they will receive when bringing money across to Cyprus. They sought my advice last month on these issues.

Rate of exchange
We are all conscious of the decreasing value of the British Pound against the Euro, especially when remitting pension income on a monthly basis. Just over a year ago, we were receiving Euro1.30 to the Pound. This reduced to 1 for 1 in January this year. At time of writing, we have seen a reversal of this trend with the present rate now standing at Euro 1.18 to the Pound.

For Joan and Andrew, they do not need to bring the entire sale proceeds from their UK house to Cyprus as they have no capital expenditure. They do however need to manage their income needs carefully to take advantage of improvements in the rate of exchange. My advice was therefore to bring in their required monthly expenditure every 3-4 months, rather than exchanging a large lump sum for example once a year. This way, you are in control of when to exchange, i.e. you can follow the rates of exchange and decide when is a good time. For example, this year, I suggested individuals kept their funds in sterling until the rate improved to Euro1.15 and next when it reached Euro1.18. This has made a significant difference as you have received over 15 per cent more for your money than had you exchanged at the start of the year.

Saving for income
With bank rates at between 0.5 – 1.0 per cent, I advised Joan and Andrew to maintain £50,000 from the £250,000 proceeds on deposit to act as an emergency fund. The balance of £200,000 was invested into a spread of income producing investments that provided a combined yield of 6 per cent. This provided an annual income of £12,000. The investments were into capital protected high income notes, corporate bonds and guaranteed return bonds. The net effect is that they now have more than enough income to live off and have their original £250,000 still intact.

Mark Hollingsworth, Director, Hollingsworth International Financial Services Ltd
Tel: +357 99066840, +356 21316298
e-mail: info@hollingsworth-int.com
Website: www.hollingsworth.eu.com
Authorised by the Malta Financial Services Authority to provide investment services, license IS/32457