Offshore Investment Management Should you be lucky enough to come into a fortune, Michael Wilson advises that you scale up your investment approach and start to think like a fund manager Everyone with a substantial sum of money to invest faces similar problems. A million bucks is really quite a lot of money to place, let alone US$100 million, which is how much some offshore fund managers have to position.
If you are a private investor and suddenly find yourself sitting on a really substantial sum of money, the first thing you should do is to sit down, pour yourself a long cool drink and take an even longer look at your situation. Think about your age, your children, the country you’re living in (and the country you’d like to be living in), and think about your family’s needs in the next few years. Think about taking a couple of weeks’ holiday before you do anything else with your money, just to make sure that you reach the right decisions for the long term. But these are not normal times, and right now there are people telling you that you don’t have any time to waste on holidays. Invest it all now or regret it by Christmas, they’re saying. Offshore Investment Management - Financial Armageddon They’ll tell you that financial Armageddon is now homing in on us, and that you ought to be sheltering under cash, bonds - anything but shares - while you’ve still got the chance. They say that the euro will finish us all off if the millennium bug doesn’t do the job first. They’ll tell you that America’s ‘New Paradigm’ economy is driving not just Wall Street but the whole Western world off a cliff. And the annoying thing is that, even if you’re sure they’re all talking rubbish, you’ll probably be forced to agree that it’s a bad moment to take your eye off the ball. Better do some hard thinking now. But do it gently, please. There’s nothing to be gained by letting other people panic you into a rash decision because their own neuroses are getting in the way. You’re about to make a long-term decision that will affect the way you and your family live for the next 30, 40, 50 years. Your own personality ought to define the ground rules. But first, a blunt and necessary question. Do you spend it, invest it, or give it away? Offshore Investment Management - Professional Fund Investment We’re going to assume, for the time being, that only the second of these options is what you want, because that’s what professional fund investment managers have to do all the time; they have no alternative. If the first one is top of your agenda, you won’t have any difficulty in finding yacht salesmen, fine art dealers and hoteliers who will be only too pleased to help you out of your pecuniary embarrassment. If your heart’s set on giving, then good luck to you. (Do try and make sure you get the tax breaks.) But if you’re serious about making your money work for you, the only place for you to be is in equities, long term, and probably managed by a professional. The professional fund manager won’t ask you whether you intend to retire on your new-found fortune, using it as a source of income, or whether you want to carry on working instead and use your cash pile instead to accumulate a somewhat larger capital sum for your old age. This question in itself can be a bit of a shock for people who’ve never doubted that they’d need to earn their own keep for the rest of their working lives. So it’s as well to have your answers ready in advance - not to mention your research. If you fancy a quieter life now, then you’ll almost certainly be drawn toward a safer, high-yield sort of balance in your portfolio, with only a limited amount of capital appreciation. If, on the other hand, you’re dead set on long-term growth, then you’ll be happy to take a few carefully selected risks, secure in the knowledge that even the worst stock-market crises always sort themselves out in the end. Over the last 99 years stocks have beaten cash and bonds hands down. With, admittedly, some very big bumps along the way. 
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