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David:
Sho, It’s been one of those days hey, one of those days indeed.
But welcome to it, it is what’s involved and tonight I’m very proud to introduce you to our segment sponsor for this evening, Global & Local Investment Advisors.
You’ve heard the guys advertising with us and they’ve decided they want to give back a little more and by giving back a little more they’re going to be coming onto this show twice a month if I’m not mistaken for round about half an hour each time and we going to be chatting about what they do, how they do, why they do and how you and I can benefit.
So, without further ado, for the first time tonight we are joined by 2 of the directors from Global & Local Investment Advisors, we’ve got Michael Haldane who is the Managing Director & Mauro Forlin. Welcome guys. Michael, good to have you with us, Mauro, good to have you with us. As I said every 2 weeks, we going to be having a chat to you.
Tell us a little about what you are guys are going to be doing? Mauro?
Mauro:
Hi David, thanks for having us, we are so excited to be here.
So Global & Local is an Investment Advisory Firm, we were formed sort of 21 odd years ago, Michael formed the company, after a career in corporate.
Michael:
Which I hated.
Mauro:
And we’re not your average Investment Advisory company, we look to use our internal analytical team that makes us completely different, they will analyse your Investment Portfolio, make sure that it’s appropriate for you and your circumstances and your family, we will recommend something to you and then we will follow up and review it all the time. Now, internal analytical teams with advisory firms such as ours is quite rare and not everyone has them. We also get involved a little bit in transactional forex, not investment forex, we don’t invest in forex, but we transact in forex, so if you need to exchange Dollars for Rands or Rands for Dollars we can help you with that.
Michael, do you want to talk a little about how much we’ve got under management.
Michael:
Quite a lot. We have around 3500 clients, we have assets under management of about R5 billion.
Our clients have basically trusted us with their lives and that for us is what it’s all about, trust.
David:
You see, and the thing for me that I’m so excited about, is I’m hoping that by having you guys here and talking about investment because you know for a lot we all here this “save, save, save”, “invest, invest, invest” but it seems to a lot of people like it’s a totally foreign concept and we don’t know how to do it, we don’t know where to start, we don’t know where the best place to look is and that’s why when the opportunity came up to have you guys on the show and to chat to you about it, I thought, brilliant, let’s do that because apparently as South Africans we quite bad at investing.
Michael:
We’re terrible, the official figures say that of South Africans, roughly 20% invest anything. I believe that figure is a lot less. South Africans like new shoes, new cars, holiday house, a mistress on the side and they all cost fortunes and at the end of the month they go “I’m going to buy an extra pack of coke / Marlboros” whatever it is and there isn’t anything left. Once they hit age 55/65, they go “I’m not going to live on a government pension of R1900 per month and it’s all about companies like ours and the other 28 000 advisors in the country to hit everybody over the head and say save money now before it’s too late otherwise you will end up in your son’s outside room forever.
David:
It sounds like you are painting a bleak picture and it’s really not, I’m right there and life has happen to me and divorce has happened and all sorts of things like that. I’m sitting in a position now where I’m going “whoops” I’m 52 now and as things stand right now it looks like I’m going to be working until I fall over because that is the thing. But we often think that maybe this investing thing is expensive, we need lots of money to do it. Is that true? Mauro, do I need a lot of money?
Mauro:
No, so the important thing is to start, and you can start with pretty much anything from R500 upwards per month. You can start at reasonably low levels. Media, movies always show these big moguls investing huge amounts of money. But investing is putting away money for tomorrow.
David:
And hoping that guys like you will spot the right places for us to invest, that’s where your expertise comes in, doesn’t it?
Michael:
It’s all about maximum return, minimum risk with access on your funds.
David:
Fantastic stuff. Well, we are chatting to the guys and they are from Global & Local Investment Advisors. We’ve got 2 of the Directors in here, Michael & Mauro. Michael is the Managing Director, founder as well hey?
Michael:
I was the founder, a very very very long time ago and now I have helpers.
David:
Good. One of the nice things I noticed about you guys is that you are big fans of Mix FM and supporters of Mix FM so that’s a big plus. We will be chatting to the guys every second Monday of each month for the next couple of months and if you want to know anything about investing, we going to be touching on some Offshore investing later on. But if you’d like to know anything please make use of the SMS line 41348, SMSs charged at R1.50, alternatively you can WhatsApp us on 084 822 0938. It is Watts Involved proudly brought to you tonight by Global & Local Investment Advisors.
My special guests in studio with me tonight from Global & Local Investment Advisors, 2 of the Directors, Michael & Mauro are here. I said we going to chat a little about Offshore investing cause that is always both fascinated and terrified me and I have absolutely no idea what any of that is about so Michael can you talk to me about this? In your radio adv you speak about Offshore Investing and I always go” Sho, that sounds very fancy”.
Michael:
Well, let me put it in simple terms.
South Africa of world wealth represents 0.21%, Hong Kong represents 0.085%. UK – 4%. China – 19% and America 26%.
So, we are this miniscule little ant and if you only invest in South Africa, you lose out on 99.78% of all those other options outside. If you only invest here, your element of risk is so much higher. Your other element is in 1982 I went to America, 75 South African cents equalled 1 Dollar, today about R15 equals 1 Dollar. On average from 1994 the Rand falls against the American Dollar by around 7.6%. So it’s about earning in hard currency, but also if the Rand falls, your real value doesn’t fall with it.
David:
Okay. So I actually might look at it and go “Oh well, I’ve now spent R15 and I only have 1 Dollar, but in the next two years I could be spending R18 for that same Dollar, but because I invested it, I will have in effect R18 coming back to me?
Michael:
Correct.
Mauro:
Can I come in here? In the mid 90’s we had about 980 odd shares listed on the JSE, I think today we down to about 380 odd, so if you just look at the number of options you have to invest in a stock market in South Africa, it’s very limited. Now if you consider what’s available globally, you’re talking hundreds of thousands of shares available, millions of options, your universe is just so much greater to select from.
David:
Well, I was reading the other day about what happened in the 80’s and early 90’s if you had invested in stuff like Amazon or Apple etc. even in a very little sad Rand state, you would have been a millionaire today quite possibly.
Michael:
So, I advise clients, “love the country, but think about letting your Rands have an overseas holiday for a bit”, because you can always bring them back.
David:
Okay, let’s get into that a little bit, because that was also a very grey area for me. Mauro, if somebody wants to invest Offshore, what do we need to look out for? What do we need to be aware of?
Mauro:
Okay so, in essence there’s 5 points:
- You need to consider the term – Investing Offshore is not a short-term investment, you not going to go in there, buy something, sell it, get out quickly. No, this is long term, you’ve got a look at 5 years minimum just to try and ride through market cycles if there are any.
- You’ve then got to look at Risk, like Michael said, you’ve got to consider that when you’re investing Offshore you have both an opportunity and you have a risk and the opportunity, and the risk are exactly the same. So, your first risk or your first opportunity is the Rand, so the Rand has depreciated from 1987 or something and it’s now roughly at 15 or something but it can appreciate. We saw it earlier in January when it was at R14.30 to a Dollar. And then you’ve got the markets as well, so you’ve got to go invest your money into a vehicle, a fund or something and that fund is going to grow but there are times when it might experience some volatility and it will actually shrink and maybe lose you a bit of money. So, opportunity and risk are the same thing, just on different sides of the spectrum and in this case you’ve got two of those, you’ve got the currency and you’ve got the vehicles that you’ve invested in.
- You’ve then got to look at your goals and objectives, now in South Africa many of us have global families, relatives who have moved out of South Africa, gone to live in Australia, New Zealand, Canada etc. We’ve got children who might be ending school and saying “Dad, I’d like to study in China or wherever it is. You’ve got to look at that and you’ve got to say right we’ve got to plan for that
- Then you’ve got currency, what currency fits with you, is the Dollar, is it the Euro, is it the Pound is it Australian Dollars?
- And the Foreign exchange control regulation, at the moment there are two ways to invest Offshore from a foreign exchange perspective.
The first way is to actually invest your capital Offshore. And that you do by taking your first R1 million, it’s called your single discretionary allowance and you convert that to a foreign currency, and you invest it offshore.
Once you’ve passed that first R1 million, you going to go into the foreign capital allowance which is R10 million.
So, if you’ve got that kind of money, you can literally invest R11 million a year per calendar year, Offshore.
Michael:
First of all, there are a couple of hurdles from SARS, you have to answer some questions, where is it from? And is your income tax paid? Once that is authorised, you can invest.
David:
Now this is the kind of thing that you guys help with, I mean, we would come to you and we would go” Okay, guys this is what I want to do, these are my goals, and you will then be able to advise.
Michael:
Absolutely. So, Mr X would say “I have R100 000, I don’t want access to it for next 5 years, I’m interested in a mix of Dollars, Pounds, Yen. What would you recommend?
We then take their hand, outline the options and invest for him.
David:
I think that’s fantastic, just to remind you by the way, if you want to ask the guys a question, all you do is drop and email to info@globallocal.co.za. Drop them your questions, they’ll get back to you probably immediately, but I think if somebody asks you questions, bring them in and let’s discuss it because I’m sure that will give other people answers as well.
So, we are talking very quickly because once again we are running out of time terribly quickly. Can we talk about how we actually do this investing thing? I come to you, you going to hold my hand but what about Unit Trusts, do they still play a role?
Michael:
Alright so, Offshore options, you can invest in index funds, shares and funds. The easiest way is an Offshore Unit Trust, that could be in cash, property, shares or a mix of all of it and that could be in a specific country, a specific sector, mining, health care. There are myriads of options, but generally we are very risk averse and we ask a client can you afford to lose anything? And 99.9% of the time the answer is “Preserve my capital and out earn what I can earn in the bank and I’m happy”.
David:
Which is really not difficult these days.
Michael:
Especially in England, where you can earn an interest rate of 0.5%, in Japan now it is -0.25%, so we can definitely out earn that.
So, we try to really keep it simple and from the second they enter our office, they become family.
David:
This is something I’ve noticed, for you it’s not just about the bucks, it’s about actually wanting to help people and to help people become financially more stable, am I correct in saying that? Because we call a spade a spade on this show, just so you know.
Michael:
We have such fun, we meet street sweepers, we meet surfers, we meet MD’s and we treat everybody exactly the same and it’s how often you can actually laugh everyday and give someone hope that they have a future.
David:
Because for me, and this has happened before and it hasn’t been with investments, but with policies and stuff like that, people are happy to take your money, they say sign on the dotted line, there you go, your stop order is going to be how ever many thousand every month, then we’ll see you in 10 years when something may or may not go wrong. And in the interim, the bottom falls out of wherever they put your money, but nobody has got the guts to come back and say listen maybe it’s a bad idea, you guys are not like that?
Michael:
We’re independent, we are investment advisors, we offer you what you need and then we earn fees based on your earnings, so the more we earn for you, the more we earn for us. It’s a lot more ethical and if you unhappy with us, you fire us, and we nag you nicely to invest.
David:
But this is the thing, I was reading somewhere that there’s people literally that you’ve advised and advised and advised and they go “Thank you” and eventually they go ”Okay, we’ve now seen what you guys do” and they’ve become lifelong clients.
Michael:
Yes, I have clients that I’ve had for 23 years and they come and have coffee more than anything else and they go “If there’s anything wrong with my investments, please just amend it” and that’s about our trust.
David:
I think that’s brilliant, if you get to that level with somebody that to me is a big thing.
Michael:
But more importantly, we do make errors and we say sorry and fix it.
David:
Look and I think this is something that people need to realise and that’s why I’ve always a little averse to this because things can go wrong and you guys are able to follow trends and you don’t have a magic ball that you can look into and know that this is exactly what’s going to happen.
Mauro:
We actually do have 2 crystal balls in the office, and they don’t work.
David:
Gentleman, this is such a massive feel, I’m so looking forward to you guys coming in and chatting and teaching us and letting us learn more and the world of investment, about how we can secure our futures.
I know for a fact, for myself for example, I am South African through and through, I have no plans of leaving, I love this country, don’t love what’s happening to it but I love the country, I love the people, but I would like a way to be able to secure some of my money for the eventuality that maybe we let the wrong people run this country for longer than they should. So, I think its great great opportunity.
If you’ve got any questions, they not going to ask you for any money, you don’t have to pay for anything, if you’ve got any questions, info@globallocal.co.za
We’ve just touched the surface, there’s so much more, we going to see you again in two weeks’ time.
Gentleman, thank you so much doe coming out, having a chat to us. I look forward to getting to know you guys, getting to know the business and to share that with our listeners, I think it’s going to be brilliant.