Investing offshore: Should you DIY or use an investment manager?

12 December 2016

GMI

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In most countries DIY refers to doing your own home maintenance. In New Zealand we’ll try it for anything from building a boat to running a business. But doing everything on your own gets harder the further we venture from our own patch.

This holds true for investors, who must look beyond New Zealand to build a well-diversified investment portfolio. Our new guide, Going Global: An introduction to global investing introduces the concept of investing overseas, and how to get started, whether DIY or engaging an investment manager.

New Zealand offers less than 0.2 percent of the world’s investment opportunities, with an economy that is overly concentrated on agriculture. And these days, online investing platforms have made it easier for a do-it-yourselfer to diversify their portfolio globally. 

But overseas investing is a huge job, and a critically important one if you wish to maintain your lifestyle in retirement. Your portfolio needs to provide steady cash flow and growth to last some 30 years. If you are keen to DIY, you must have the time and interest to dedicate to ongoing research and analysis of world markets. You’ll need to keep up with economic trends and market data from various countries and industries all around the world, and have professional tools to keep track of your portfolio.

Above all, you’ll need steady nerves, so you don’t ‘jump ship’ during times of market turbulence. Many investors prove to be their own worst enemies, buying into a fund at a peak in its valuation, then losing confidence and selling out in the trough. Another risk is trading too much, wherein trading costs and taxes become excessive and diminish your returns.


The advantages of using an investment manager

If DIY doesn’t sound like it’s for you, you can work with an investment manager, who provides these services for you. This is an individual or company who makes investments in a portfolio of securities on your behalf, according to defined investment objectives.  But how do you know who to work with?

 

How to engage an investment manager

Our guide offers a few tips for finding an investment manager and what you should expect. You’ll need to: 

  • Understand how the manager will invest your money. Check on their investment style, level of diversification, and check the liquidity of the assets you are considering.
  • Understand what the service will cost you. Check on when and how often you pay the fees.
  • Ask about communication and reporting. Find out what kind of information you will be given, how often, and how you can contact the investment manager.
  • Check for investment safeguards, such as a separate custodian account, independent auditing, and no conflicts of interest.

A note of caution: investment returns are never guaranteed, and past performance doesn’t mean you’ll see the same level of performance in the future. Beware of anyone who promises a given return, or shows you surprisingly high historic returns.


Why use an adviser?

You may also want some financial advice for planning your retirement. A good adviser can help you reach a higher level of performance or effectiveness – much like a sports coach or business mentor.  

There are various types of advisers with varying restrictions on the type of advice they can give. Anyone offering financial advice must be approved by New Zealand’s Financial Markets Authority (FMA) either personally or through the company they work for.

Authorised Financial Advisers, such as those you can work with at GMI, may provide personalised advice on complex investment products. They’ll help you assess your financial situation, set goals, and propose ways of investing in a well-diversified mix of assets, in line with your goals and investment timeline.

Research shows that investors who stick with such a plan grow their wealth much faster than those who try to time the market. In this your adviser can play a crucial role, helping you stay the course rather making snap decisions based on emotional factors.

Want to know more? Download our free guide, Going Global: An introduction to global investing to start on your international investing journey – the right way.

 

GMI is part of the Kiwibank QFE Group.

The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any investment decisions.

Topics: Investing

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Going-global
Going-global