International Investment Products Explained
In this article we discuss the two main types of international investment products, how the work and what they are used for.
Regular saving plans
A regular saving plan is a long term investment which allows the policyholder to achieve personal financial planning targets. The client’s invests a regular contribution into a selection of mutual funds. The client determines the fund selection together with his adviser according to his risk profile.
The life insurance company’s fund selection consists of 150-250 funds which offers the investor a good cross-section of investment options. Funds range from low-risk money-market funds to single-sector specialist funds and everything in between. As a result the policyholder has an unlimited number of possible fund selections.
All regular plans have a so called ‘initial period’. For this minimum period the policyholder needs to maintain his contributions at the starting level. All contributions made during the initial period are normally only available for withdrawal at maturity. This way, the life insurance company secures a minimum income during the term of the plan.
Upon completion of the initial period the policyholder can freely reduce or temporarily stop his contributions. The initial period ranges from as little as a few months to a maximum of two years, depending on term of the policy.
Investors use regular saving plans to fund expenses towards the end of the policy term. For example, an investor saves for his pension but decides to withdraw some capital for his child’s education fees. The education fees can be easily withdrawn from the plan whilst the majority of the capital remains invested for the pension. There are many differences between plans of different providers and it would take more than the space available on this website to describe all differences in detail. Therefore, the easiest thing to do is to contact us for a personal meeting and discuss your wishes.
A portfolio investment is also known as a lump-sum investment. The main difference between a portfolio and regular saving plan is the investment frequency. The investor deposits capital on an ad-hoc basis into a plan, without any additional or regular contribution requirements.
A portfolio plan has a very flexible investment approach that is much wider than a regular saving plan. The investor will be able to invest in direct bonds, equities, exchange traded funds, mutual funds and structured notes. This flexibility is what makes a portfolio plan so attractive. Some people consider the portfolio as their personal investment fund through which they conveniently purchase and manage the assets of their choice.
The investor should only consider portfolio plans for long term capital growth and invest accordingly. There is no minimum or maximum investment period, but usually an amount between 2% and 10% of the invested capital has to remain invested with the provider for a period of five years following each contribution. Upon completion of this period the investor has full access to the portfolio. With this in mind, a portfolio is an ideal tool to accumulate long-term wealth outside of the typical high-street bank in a secure and well regulated location.
If you have questions about international investment products or have a policy that you need help with please contact us.