Tag: Investments

Investments

The Cost of Waiting to Invest

Post author By Charles Mills
Post date 14 May 2025
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The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

There is an old saying you have might have heard: “It is time in the market, not timing the market.” While this phrase is often repeated, its relevance remains strong as ever.

With market volatility an ever-present feature of investing, whether influenced by geopolitical events or economic headlines, it is tempting to delay investing until the ‘right moment’. Yet, what many people do not realise is that these delays can quietly erode their long-term outcomes in ways that are not always immediately visible.

This article explains why delaying making your investments may cost you more than you think, and how compounding, inflation, and market rebounds work against ‘timing the market’.

The influence of Global events

In early April 2025, markets experienced a sharp correction following a landmark US tariff announcement (‘Liberation Day’) that rattled global trade expectations. While the selloff was short-lived, with most major indices showing clear signs of recovery by month’s end, it served as a reminder of how quickly global events can shake markets. Fear and uncertainty can often lead investors to make reactive decisions, hoping to time their way around volatility.

But this event, like many before it, could have been related to almost anything, whether a geopolitical development, a central bank comment, or a natural disaster. The reasons and severity may vary, but the pattern is familiar, with short-term volatility triggering reactive behaviour, even as long-term fundamentals remain intact.

The result?

Historically, many people would delay investing, waiting for the “right time.” However, for those who remained invested, the brief dip ultimately became a small footnote in an otherwise upward trend.

The real cost of waiting

It is understandable why you may want to delay investing. Markets feel uncertain, headlines are unsettling, and it may seem safer to hold off until conditions feel more stable. But waiting, even for what feels like a justified reason, can come at a cost.

Let us consider two hypothetical investors:

Investor A invests 100’000 on 1 January 2025.

Investor B waits until 1 January 2026 to invest the same amount.

Assuming a 7% average annual return, Investor A ends up with 761’226 after 30 years. Investor B, who delayed by just one year, finishes with 711’426, a difference of nearly 50’000 due to purely waiting one year.

This gap exists not only because Investor B missed a year of growth, but because Investor A’s money had more time to compound, generating returns on top of returns year after year.

Even if the time you enter the market initially appears volatile, or it seems like a better opportunity is just around the corner, history has consistently shown that markets recover and those who stay invested through the noise tend to be rewarded.

Short-term movements often smooth out over the long-term and the cost of waiting tends to outweigh the perceived benefit of trying to time things just right.

Inflation never waits

There is another factor quietly working against those who wait to invest and that is inflation.

While your money may appear safe in a bank account or savings vehicle, it may be losing value in real terms. When the interest earned is lower than the rate of inflation, your purchasing power declines year after year.

For example, a cautious saver earning 2% interest while inflation runs at 3% is effectively losing 1% of their purchasing power annually. That erosion may not be immediately obvious, as the monetary balance of the account does not reduce, but your money will continue to buy less and less over time, diminishing its real world value.

This silent loss can be just as damaging as market volatility, especially when left unaddressed over many years. While waiting may feel like a safer option, doing so in a rising-cost environment steadily diminishes your wealth.

Market timing: A game few win

Research consistently shows that even professional investors cannot time the market with accuracy. More often than not, you miss out on the best days by being out of the market during times of volatility.

One of the greatest examples of this is with the S&P 500. If you had invested in the S&P 500 over the past 20 years but missed just the 10 best trading days, your return would have been cut by more than 50%.

It just so happens that these ‘best days’ often followed closely after market selloffs which is precisely when many investors choose to exit or delay entry.

If you do not wish to invest everything at once, you can use a staggered approach, such as dollar-cost averaging, to help manage risk and smooth your overall returns. This can be useful to manage risk through changing market conditions.

What this means for you

Timing the market is rarely effective and often costly. The most consistent outcomes come from staying invested, not from trying to predict market moves.

The cost of waiting can be easy to overlook, but between lost compounding, inflation, and missed recoveries, the long-term impact can be significant.

At Patterson Mills, we help you cut through the noise with long-term investment strategies that are built to weather market ups and downs. Rather than trying to time the market, we focus on creating a clear, structured plan tailored to your goals.

If you are not sure where to begin, get in touch with us today to learn more about how we can help.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investing, investment, Investments, markettiming, personalfinance, timeinthemarket, timingthemarket

Investments

The Hidden Threat to Your Investments: Currency Crises Explained

Post author By Charles Mills
Post date 31 March 2025
No Comments on The Hidden Threat to Your Investments: Currency Crises Explained

The Hidden Threat to Your Investments: Currency Crises Explained

“Money is my military, each dollar a soldier. I never send my money into battle unprepared and undefended” — Kevin O’Leary

4 min read

The Hidden Threat to Your Investments: Currency Crises Explained

“Money is my military, each dollar a soldier. I never send my money into battle unprepared and undefended” — Kevin O’Leary

4 min read

Currency crises have historically led to severe economic turmoil, eroding wealth, destabilising markets, and triggering inflationary spirals. For investors (likely such as yourself), these crises highlight the vulnerabilities of relying too heavily on a single currency or economic system.

While some markets are more resilient than others, history has shown that no currency is completely immune.

This article explains how currency crises unfold and how investors can mitigate risks in today’s interconnected global economy.

What is a currency crisis?

A currency crisis occurs when a country’s currency rapidly loses value, often due to economic instability, political uncertainty, or a loss of investor confidence.

This devaluation increases the cost of imports, fuels inflation, and can lead to severe capital outflows, often in the form of ‘capital flight’, whereby investors move their money out of the country, selling local assets and converting funds into stronger currencies.

As a result, the exchange rate deteriorates further, making it harder for the country to finance imports, service foreign debt, or maintain economic stability.

Currency crises can be highly disruptive to your investments. Market volatility increases, purchasing power declines, and governments often impose restrictions on moving money across borders.

What triggers a currency crisis?

Currency crises are often a symptom than a cause, and are a reflection of deeper economic weaknesses. They can arise from a combination of factors, including:

High levels of foreign debt
- Countries that borrow heavily in foreign currencies struggle when their local currency weakens, making repayments more expensive.
Political instability
- Uncertain leadership or sudden policy changes can lead to market uncertainty and capital flight.
Inflation and poor monetary policy
- Printing too much money or keeping interest rates too low can weaken confidence in a currency.
External shocks
- A global recession, drop in commodity prices, or financial contagion from another country can trigger a crisis.
Trade imbalances
- Persistent current account deficits, where a country imports more than it exports, can weaken its currency as demand for foreign currency exceeds demand for the local currency.

What can history teach us?

The impact of currency crises varies depending on the severity of the depreciation, government responses, and underlying economic conditions.

Several past examples highlight key risks and patterns about which you should be aware:

Turkey (2018-Present)

A combination of high external debt, political uncertainty, and unorthodox monetary policies led to a sharp decline in the Turkish lira. Inflation soared, the cost of imported goods increased significantly, and businesses with foreign-denominated debt faced rising repayment costs. Investors holding Turkish assets experienced considerable volatility, with capital outflows further weakening the economy.

Venezuela (2016-Present)

Economic mismanagement, including excessive money printing, led to hyperinflation and a significant decline in the value of the bolívar. As a result, the purchasing power of wages and savings declined rapidly, and foreign currency became the preferred medium for transactions. Those with investments tied to the local economy faced difficulty preserving value.

Argentina (2001 & 2018-Present)

Argentina has faced multiple currency crises, with sharp devaluations driven by debt defaults, inflation, and capital flight. Frequent shifts in monetary policy and currency controls have made it difficult for investors to predict stability, leading many to seek alternative stores of value outside the country.

Zimbabwe (2000s-Present)

Inflationary pressures, government policies, and economic instability resulted in severe currency depreciation. The Zimbabwean dollar was eventually abandoned in favour of foreign currencies to stabilise transactions. Those who had savings or investments in the local currency saw a significant reduction in real value over time.

These cases demonstrate that high inflation, excessive reliance on foreign debt, and investor confidence play a crucial role in determining a currency’s stability.

How do currency crises affect your investments?

When a currency collapses or experiences extreme volatility, investments tied to that currency can face serious challenges including:

Loss of purchasing power
- Inflation caused by currency depreciation reduces the real value of savings and investments. Even fixed assets like real estate can lose value in global terms.
Stock market volatility
- Domestic stock markets often suffer sharp declines as foreign investors withdraw capital and local companies struggle with rising costs.
Capital controls & restrictions
- Governments often implement measures to prevent capital outflows, making it difficult for investors to move money out of the country.

How can you protect against currency risk?

While it is impossible to predict every currency crisis, you can take steps to reduce your exposure and safeguard your wealth:

Diversify currency exposure

Holding assets in multiple currencies reduces reliance on any single economy. The Swiss franc, US dollar, British pound, and other historically stable currencies offer relative security when compared to ‘developing’ economies.

Invest in global equities

Companies operating in multiple regions generate revenue in different currencies, helping to mitigate the impact of any one local currency devaluation.

Consider currency-hedged investments

Some ETFs and investment funds offer built-in hedging to reduce the impact of exchange rate fluctuations. This can be particularly useful when dealing with currencies that are more volatile or historically less stable. However, it can come with costs and is not always a good idea.

Currency risk is an inherent part of investing, particularly during times of economic uncertainty. While these strategies can help manage exposure, the right approach will depend on individual circumstances, investment goals, and risk tolerance.

Managing currency risk in volatile markets

Currency crises can occur in any economy under financial stress, and their effects can ripple through global markets. While some currencies benefit from greater stability due to their status, no economy is entirely immune.

Managing currency risk requires careful consideration of where you invest and how you diversify. By spreading exposure across stable assets and making informed financial decisions, you can better protect your long-term wealth.

At Patterson Mills, we help clients navigate currency risks and the global world of investments with strategies unique to them. Whether you seek diversification, wealth protection, or a resilient portfolio, our team is here to assist.

If you are looking for a place to ensure your wealth is cared for, get in touch with us today to learn more about how we can service your needs.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Tags currency, currencyexchange, exchangerates, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, fx, fxtrading, Investments, personalfinance

News

What is a Trade War?

“It’s very easy to slip into a trade war” — Jack Ma

4 min read

What is a Trade War?

“It’s very easy to slip into a trade war” — Jack Ma

4 min read

Trade is the backbone of the global economy, driving growth, creating jobs, and providing consumers with access to a variety of products at competitive prices.

However, when trade tensions escalate into trade wars, the smooth flow of international commerce is disrupted, often leading to widespread economic consequences.

This article explores how and why trade wars occur, their impact on industries, and why global trade plays such an essential role in the world economy.

What Are Trade Wars and Why Do They Happen?

A trade war occurs when countries impose tariffs (taxes on imports), quotas, or other trade barriers against one another in retaliation for perceived unfair trade practices or to protect domestic industries.

While the intention is often to protect local economies, trade wars can escalate and cause broader economic harm.

Some of the most common reasons trade wars arise are due to:

Trade imbalances
- Efforts by governments to reduce large gaps between imports and exports.
Protection of domestic industries
- Shielding local jobs and businesses from foreign competition.
Intellectual property disputes
- Responding to theft or misuse of technology and patents.
Political or geopolitical tensions
- Using trade as leverage during broader diplomatic disputes.

Trade wars usually end in one of three ways:

One country unilaterally withdraws tariffs to de-escalate tensions.
Both parties negotiate an agreement, compromising on key issues.
In extreme cases, conflicts can escalate politically or militarily, though modern international treaties and diplomatic efforts generally work to prevent such severe outcomes.

Impact on Prices, Industries, and Consumers

Trade wars can significantly affect economies, industries, and consumers both in the short- and long-term. Key impacts can include:

Higher consumer costs

Tariffs raise the cost of imports, which businesses often pass on to customers. Everyday goods, such as groceries, clothing, and technology, can become more expensive, reducing household purchasing power.

Supply chain disruptions

Global supply chains become less efficient, leading to delays and increased operational costs.

Rising inflation and squeezed profit margins

Higher import costs can fuel inflation, reducing consumer purchasing power and eroding corporate profits as businesses face increased costs, ultimately affecting jobs and company valuations.

Retaliatory measures

Countries hit with tariffs may impose their own in response, further disrupting international trade and hurting export-dependent industries that rely heavily on foreign markets for revenue.

Slower economic growth

Trade restrictions reduce global commerce, often dampening GDP growth, and can hinder business expansion and consumer spending over time.

Market volatility

Uncertainty surrounding trade policies can cause significant fluctuations in stock markets, affecting investments.

While these outcomes are generally negative for global commerce, there can be domestic benefits:

Boost to local manufacturing

Higher import costs may encourage companies to produce locally.

Job creation in domestic industries

Factory employment can rise as businesses increase local production to replace more expensive imports.

Why Global Trade Matters

International trade contributes to nearly 60% of global GDP, making it essential for economic stability and growth. The value of global trade is reflected in several key ways, including:

Greater consumer choice
- Access to a variety of goods at more competitive prices.
Economic growth
- Expands markets for producers, stimulating job creation and driving growth.
Increased efficiency
- Global supply chains and specialisation lower production costs.
Enhanced competition
- Drives innovation and improves product quality.

Trade wars often diminish these advantages, resulting in higher prices, reduced economic cooperation, and slower growth.

Consumers can feel the effects most acutely through increased costs for everyday goods and weakened purchasing power.

Long-Term Implications

Prolonged trade disputes can reshape the global economy, with consequences that extend well beyond immediate price increases and market disruptions.

Some possible long-term effects include:

Shift in global supply chains
- Companies may relocate manufacturing to avoid tariffs, potentially raising production costs.
Reduced global cooperation
- Trade tensions can spill over into diplomatic relations, hindering collaboration on global challenges.
Changes in consumer behaviour
- Higher prices may reduce spending, impacting economic recovery.
Economic decoupling
- Countries may reduce reliance on foreign trade partners, leading to fragmented global markets.
Domestic economic shifts
- While some industries benefit from renewed local demand, others may suffer from export restrictions and input cost increases.

Will Trade Wars Impact Your Investments?

Trade wars do not just affect governments and corporations, they can impact your investments, purchasing power, and long-term financial planning.

As global markets remain interconnected, understanding these dynamics is crucial for navigating financial markets and protecting your financial interests.

At Patterson Mills, we help our clients understand how global economic factors, including trade wars, can impact their financial plans. Whether you are looking to safeguard your investments, plan for international exposure, or simply gain clarity on how global events affect your portfolio, our team is here to guide you.

Get in touch with us today to learn how we can support you to a brighter financial future amid an ever-changing global landscape.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Tags finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, internationaltrade, investmentboost, Investments, personalfinance, portfolio, trade, tradewar

ESG Investing

Is ESG Still Relevant in 2025?

Post author By Charles Mills
Post date 6 February 2025
No Comments on Is ESG Still Relevant in 2025?

Is ESG Still Relevant in 2025?

“Sustainability is no longer about doing less harm. It’s about doing more good” — Jochen Zeitz

3 min read

Is ESG Still Relevant in 2025?

“Sustainability is no longer about doing less harm. It’s about doing more good” — Jochen Zeitz

3 min read

In 2025, sustainable investing (known as “ESG” or “ESG-SRI”) is facing new challenges, from shifting regulations to political opposition.

Although sustainable investing has seen rapid growth over the past decade and remains an area of interest for many investors, its role in financial markets is shifting.

So, now we are in 2025, where does it stand today?

Changing ESG Landscape

In recent years, ESG investing has come under scrutiny.

Some argue that it has not always delivered strong financial returns, while others suggest that it has been marketed in a way that overstates its impact. Concerns about “greenwashing” have led regulators to introduce stricter rules on how ESG investments are defined and reported.

While new regulations surrounding ESG criteria aim to improve transparency, they also increase compliance costs for companies. Meeting ESG standards often requires additional reporting, operational adjustments, and sustainability initiatives, all of which often add expenses. As a result, this can often make ESG investments a more expensive option compared to ‘traditional’ (non-ESG) options. Many ESG-centric companies do indeed perform well, though it can be more challenging to do this while managing these additional costs.

Another notable discussion around ESG investing and its relevance in business practices has been whether it creates unnecessary restrictions that could limit economic growth. This is particularly relevant in the US, where recent comments from President Trump have questioned the relevance and impact of ESG policies on businesses and markets.

With Trump’s administration set to place less emphasis on ESG initiatives, companies may adjust their approach in the coming years, potentially reducing the prioritisation of ESG considerations in corporate strategies and impacting your investment returns.

How ESG Fits into Investment Strategies

A common criticism of ESG investing is that it may not always deliver competitive returns compared to non-ESG investments, particularly for the cost. In some cases, ESG funds have greatly underperformed, whilst in other cases it has significantly outperformed.

Interestingly, as many investment funds today include a blend of assets, this often means they can have some exposure to ESG-focused companies or funds themselves. If you do not stay updated about in what your funds are investing, you may be exposed to ESG investments and not even know!

In some cases, investment funds may have their own selection criteria which excludes companies with unsustainable practices or will have a minimum percentage quota for sustainable companies. While this is far from a full commitment to ESG practices, it provides a degree of exposure while ensuring access to the entire investment universe, which can be enough for a lot of people.

Those who invest exclusively in ESG stocks may find their investment universe significantly limited, as the range of companies meeting increasingly strict ESG criteria is naturally smaller compared to the broader market.

In this sense, ESG investing is commonly finding greater relevance as part of a diversified approach rather than a full commitment, especially for investors who do not wish to be restricted in their investment choices.

Is ESG Relevant in 2025?

For some of you reading this, ESG is your whole world, whilst for others, you want the best return whether that be ESG or not.

The real answer to this question, as it always has, lies in your own personal beliefs. Consider what you are setting out to achieve with your investments.

Are you looking to have a greater positive impact on the planet, or a greater investment selection aimed at enhancing returns?

ESG remains, and is likely to remain, relevant in the broad world of investments for 2025, but there are battles ahead. Only time will tell if ESG investments can continue to evolve and adapt to the market and retain its appeal to investors.

Do Your Research

No matter your thoughts on sustainable investing, the key is to be informed.

Understanding how ESG factors influence investment performance, knowing the costs involved, and recognising whether sustainable investing has a place in your portfolio or not is part and parcel of our service at Patterson Mills.

So, send us an e-mail or pick up the phone and let’s get you on the path to greater financial success, no matter your ESG preferences.

Get in touch with us today and you can book a no-cost and no-obligation meeting introductory meeting to find out more.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Tags ESG, ESG-SRI, ESGinvesting, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investmentboost, Investments, personalfinance, portfolio, Sustainability, sustainableinvesting

Opinion

Will a Santa Rally Boost Your Portfolio?

Post author By Edward Mills
Post date 23 December 2024
No Comments on Will a Santa Rally Boost Your Portfolio?

Will a Santa Rally Boost Your Portfolio?

“At Christmas play and make good cheer, for Christmas comes but once a year” — Thomas Tusser

3 min read

Will a Santa Rally Boost Your Portfolio?

“At Christmas play and make good cheer, for Christmas comes but once a year” — Thomas Tusser

3 min read

The end of year holiday season is a time of celebration, reflection, and for many, a chance to consider the year ahead. But did you know that as the festive season approaches, financial markets often experience a phenomenon known as the Santa Rally.

While the name might bring to mind holiday traditions rather than financial trends, this term actually refers to a period of stock market gains typically observed during the last week of December and the first two trading days of January.

Read on to explore what the Santa Rally is, why it happens, and what it means for you.

What is a Santa Rally?

The Santa Rally refers to a historical trend where stock markets experience higher-than-average returns during the final days of December and the early days of January. Since the term was first coined in the 1970s, data has consistently shown positive performance during this period.

Of the 94 Decembers since 1930, nearly three-quarters of all these Decembers have achieved positive growth. This consistency has made December a standout month for market optimism and investor confidence.

However, it is also worth noting that around 60% of all months since 1930 have delivered positive returns, giving investors better odds than a coin flip for gains throughout the year anyway.

In this sense, while December may historically perform well compared to other months, the Santa Rally may not be as magical as it first appears.

Why Does It Happen?

The exact causes of the Santa Rally are debated among financial experts, but several theories offer explanations:

Optimism and holiday cheer
- The Christmas season often brings increased consumer spending and a sense of optimism, which can lift market sentiment
Year-end portfolio rebalancing
- Institutional investors may look to adjust their portfolios to lock in gains or reduce tax liabilities before the end of the year
Lower trading volumes
- Many institutional traders are on holiday during this period, which can lead to reduced market volatility and exaggerated price movements
Expectations for a strong New Year
- Investors may position themselves early in anticipation of positive market trends in the coming year

While these factors may contribute to the trend, it is also important to note that the Santa Rally is not a guaranteed phenomenon and should not be relied upon as a certainty.

What Is the Significance of a Santa Rally?

The Santa Rally is often considered a short-term trend, though it can carry wider implications for you and your investments. It is seen as a reflection of positive sentiment heading into the new year, which in turn can influence broader market trends and set the tone for the months ahead.

Hence, for you, this period can offer an opportunity to adjust your portfolio by rebalancing assets, locking in gains, or reviewing allocations to ensure they align with your long-term financial goals and plan.

Importantly, whilst it is implausible to time the market precisely, seasonal trends like the Santa Rally can provide useful context for making informed investment decisions.

Should You Act on a Santa Rally?

While the Santa Rally can be an exciting trend to observe, it is important to remain grounded in your long-term investment strategy and stick to your plan.

Rather than reacting impulsively to short-term movements, focus on these principles:

Ensure your portfolio aligns with your risk tolerance and financial goals
Avoid overtrading or chasing gains based on seasonal trends
Use the period as an opportunity to review your financial plan and prepare for the year ahead

The Gift of Financial Success

The Santa Rally is a fascinating market trend that combines elements of behavioural finance, seasonal patterns, and market dynamics. However, whilst it offers insights into investor sentiment, it should not overshadow the importance of a disciplined, long-term investment approach.

If you are looking to head into 2025 with confidence, get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Tags christmas, finance, finances, financetips, financialadvice, financialadviser, financialadvisor, financialeducation, financialknowledge, financialliteracy, investmentboost, Investments, personalfinance, portfolio, santa, santarally

Investments

OEICs and SICAVs: Exploring Investment Fund Structures

Post author By Edward Mills
Post date 25 March 2024
No Comments on OEICs and SICAVs: Exploring Investment Fund Structures

Structural engineer and foreman worker with touch pad discuss, plan working for the outdoors building construction site.

OEICs and SICAVs: Exploring Investment Fund Structures

“Invest for the long haul. Don’t get too greedy and don’t get too scared” ― Shelby M.C. Davis

4 min read

OEICs and SICAVs: Exploring Investment Fund Structures

“Invest for the long haul. Don’t get too greedy and don’t get too scared” ― Shelby M.C. Davis

4 min read

The vast amount of differing fund structures available when you are looking to invest can be daunting. One such structure that you will likely see is the ‘Open-Ended Investment Company’ (OEIC), also known as the ‘Société d’Investissement à Capital Variable’ (SICAV) in some jurisdictions.

Unlike traditional mutual funds, which are common in the United States, OEICs and SICAVs are prevalent in Europe and other regions.

OEICs and SICAVs offer several advantages over other investment vehicles. Their open-ended nature allows investors to buy and sell shares at the prevailing Net Asset Value (NAV) per share, ensuring liquidity and transparency. Additionally, these structures provide access to a wide range of asset classes and investment strategies, catering to various risk appetites and investment goals. As global financial markets continue to evolve, OEICs and SICAVs remain popular choices for those seeking exposure to international markets and professional fund management expertise.

Keen to know more? You are in the right place!

What is an OEIC (or SICAV) Investment Fund Structure?

An OEIC (or SICAV) is a collective investment scheme that pools money from multiple investors to invest in a diversified portfolio of assets. Unlike closed-end funds, which have a fixed number of shares traded on exchanges, OEICs and SICAVs are open-ended, meaning they issue and redeem shares based on demand.

This structure allows you to buy and sell shares at the fund’s Net Asset Value (NAV) per share, which is calculated daily based on the value of the fund’s underlying assets.

Key Features of OEICs and SICAVs

Diversification: OEICs and SICAVs offer access to a wide range of assets, including stocks, bonds, and other securities, providing diversification benefits to mitigate risk.
Liquidity: Buying and selling shares in OEICs and SICAVs on a daily basis provides liquidity and flexibility when managing investment portfolios.
Professional Management: These investment funds are typically managed by professional fund managers who make investment decisions based on the fund’s objectives and investment strategy.
Regulation: OEICs and SICAVs are subject to regulatory oversight by financial authorities in their respective jurisdictions, which helps add a level of protection and transparency.
Tax Efficiency: OEICs and SICAVs often benefit from tax-efficient structures, which can result in lower tax liabilities compared to direct investment in securities.
Investor Protection: Both OEICs and SICAVs are regulated investment structures, offering protection through compliance with regulatory requirements and standards.
Global Access: OEICs and SICAVs provide access to a diverse range of international markets and asset classes, allowing for global investment opportunities and portfolio diversification.

Net Asset Value (NAV) Explained

So, you can trade assets at the fund’s “Net Asset Value”, but what does this mean?

Well, Net Asset Value (NAV) per share, is a measure used to determine the value of each share in a mutual fund, exchange-traded fund (ETF), or other investment vehicle. It is calculated by dividing the total net asset value of the fund by the number of shares outstanding.

The net asset value (NAV) of a fund represents the total value of all the fund’s assets, including cash, securities, and other investments, minus any liabilities such as expenses or debts. By dividing this total value by the number of shares outstanding, the NAV per share reflects the value that each individual share represents.

NAV per share is typically calculated at the end of each trading day or at regular intervals determined by the fund’s management. Investors use NAV per share as a reference point to determine the fair market value of their investment and to track the performance of the fund over time. It is important to note that NAV per share can fluctuate based on changes in the value of the fund’s underlying assets and liabilities.

Let’s say the fund has the following assets and liabilities:

Total value of assets (stocks, bonds, cash, etc.): 10’000’000

Total value of liabilities (expenses, debts, etc.): 1’000’000

Number of shares outstanding: 500’000

To calculate the NAV per share, you would follow these steps:

Subtract the total liabilities from the total assets to determine the net asset value (NAV) of the fund: NAV = Total assets – Total liabilities = 10’000’000 – 1’000’000 = 9,000,000
Divide the NAV by the number of shares outstanding to find the NAV per share: NAV per share = NAV / Number of shares outstanding = 9’000’000 / 500’000 = 18

What Now?

Overall, understanding the structure and mechanics of OEICs and SICAVs is an important step for those looking to diversify their portfolios.

So, what now? Patterson Mills specialise in navigating the complexities of investment funds like OEICs and SICAVs.

With our expertise and experience, we can help you make the investment choices that give you the best possible chance of success. Don’t wait any longer to optimise your investment strategy – get in touch with us and book your initial, no-cost and no-obligation meeting.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Tags finance, finances, financetips, financialadvice, financialadviser, financialplanning, independentfinancialadvice, investmentfund, investmentfundstructure, Investments, OEIC, SICAV, wealth

Pensions

Understanding Your Retirement Requirements

Post author By Charles Mills
Post date 18 March 2024
No Comments on Understanding Your Retirement Requirements

Understanding Your Retirement Requirements

“Today people have to be self-reliant if they want a secure retirement income” ― Scott Cook

4 min read

Understanding Your Retirement Requirements

“Today people have to be self-reliant if they want a secure retirement income” ― Scott Cook

4 min read

Retirement planning is a crucial aspect of your financial management, yet it often has many misconceptions and unecessary complexities that can hinder people’s progress in ensuring a they can enjoy a comfortable and worry-free retirement.

Today, we are going to take a look at the intricacies of pension planning, aiming to provide clarity and understanding as to what your own retirement requirements may be.

It’s not just about saving money or having the largest pension fund you can get; it’s about envisioning and actively working towards the kind of retirement lifestyle you desire.

This may well include accruing the largest pension fund you are able, though it also requires making strategic decisions about your finances, health, living arrangements, and leisure activities.

With a comprehensive review of these factors, Patterson Mills are able to formulate a retirement plan that not only sustains you financially, but also supports your overall wellbeing and happiness in your golden years.

Evaluating Your Current Financial Situation

The first step in this process is to assess your current financial position.

This involves evaluating your income, expenses, savings, investments, and any existing pension provisions you may have. Understanding this information allows you to set realistic retirement goals and devise a tailored pension strategy.

You might also spot any areas for improvement or potential obstacles to achieving your retirement goals that you did not even know were there! In essence, gaining clarity on your financial position can help you make informed decisions and take proactive steps to secure your financial future.

Setting Retirement Goals

Setting clear and achievable retirement goals is a great idea when it comes to effective pension planning.

Consider factors such as your desired retirement age, lifestyle aspirations, healthcare needs, and potential legacy plans.

Moreover, it’s crucial to factor in inflation and a potential rise in the cost of living when setting retirement goals. Whilst it may be challenging to estimate future expenses, incorporating inflation figures (or at least, estimated / average inflation figures) into your calculations ensures that your retirement savings will adequately cover your lifestyle needs and expenses over time.

Additonally, be realistic about your retirement goals! There is no point in setting yourself a goal that might be near-impossible to achieve as it may needlessly negatively impact your mindset when approaching retirement planning.

Periodically reassessing your retirement goals and adjusting your pension plan accordingly is also necessary as your circumstances evolve. Life events such as marriage, parenthood, career changes, or unexpected expenses may necessitate modifications to your retirement strategy and ultimate retirement goals.

Pension Contribution Strategies

Once you’ve evaluated your current financial situation and defined your retirement goals, it’s time to implement a pension contribution strategy (i.e. putting some savings aside!).

This involves determining how much you need to save regularly to achieve your desired retirement income. Explore options such as employer-matched contributions, voluntary contributions, and tax-efficient pension schemes to maximise your savings potential.

You could also automate your pension contributions to ensure consistency and discipline in your saving habits. Setting up automatic transfers from your salary or bank account to your pension fund can streamline the saving process and prevent procrastination or impulsive spending.

As you progress in your career or experience changes in your financial situation, you could also consider increasing your pension contributions accordingly.

Aiming to contribute a percentage of your income, for example around 10% or more, towards your pension fund can help you stay on track towards your retirement goals. When adopting a proactive approach to pension contributions and regularly reassessing your saving strategy, you can enhance the growth of your retirement nest egg and ensure a comfortable financial future.

Who Do You Talk To?

Now you understand the very basics of how you can implement a solid retirement planning strategy and navigate the complexities with ease. However, this article is just scratching the surface.

It is far easier said than done when formulating and implementing such plans, but fear not! Patterson Mills are your specialists in all things retirement planning and we are here to guide you through every step of the process.

From assessing your financial situation to designing a tailored pension strategy, we will ensure that you are able to make informed decisions and have the best possible chance of achieving your retirement goals.

Don’t let uncertainty hold you back from planning for your future — get in touch with us and book your initial, no-cost and no-obligation meeting. Take control of your retirement journey, today!

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Tags finance, finances, financetips, financialadvice, financialadviser, financialplanning, independentfinancialadvice, Investments, wealth

Opinion

The Impact of Artificial Intelligence (AI) on Finance

Post author By Edward Mills
Post date 11 March 2024
No Comments on The Impact of Artificial Intelligence (AI) on Finance

Woman opposite AI. The concept of confrontation between humanity and artificial intelligence. Portrait with selective focus and copy space

The Impact of Artificial Intelligence (AI) on Finance

“Technology, through automation and artificial intelligence, is definitely one of the most disruptive sources” ― Alain Dehaze

3 min read

The Impact of Artificial Intelligence (AI) on Finance

“Mutual funds were created to make investing easy, so consumers wouldn’t have to be burdened with picking individual stocks” ― Alain Dehaze

3 min read

Artificial intelligence (AI) is reshaping how people see and interact with the world, and the Finance industry is no exception to this.

Already, we are witnessing new ways of writing about financial markets and ways of streamlining data analysis processes on a massive scale in just the blink of an eye. With its ability to process such vast amounts of data at such high speeds, whilst also then having the ability to make complex decisions, AI is transforming various aspects of finance, from investment management to risk assessment and customer service.

How is AI doing this? Find out below!

The Impacts on Investment Management

When we look at impacts on investment management, we can see that artificial intelligence (AI) is changing how analytics are used to identify patterns, forecast market trends, and refine investment strategies. These AI algorithms are able to formulate data-driven patterns and correlations that human analysts may overlook.

This could lead to fund managers and investment analysts making better informed decisions, leading to enhanced portfolio performance. However, whilst AI processes are very useful in such cases, it is important to retain a human element as relying on AI algorithms (or any algorithms for that matter) can come with issues that are often realised too late.

Such issues can include their predictive capabilities being manipulated or potentially producing the wrong answer that results in a negative return. Whilst not the norm, these potential risks should be recognised and protected against.

Improving Customer Experience

You may notice when visiting various websites that a key way AI is improving the customer experience is through the implementation of chatbots and virtual assistants. The financial sector is no exception to this and you could well be chatting to an AI bot when visiting investment websites!

These AI-driven tools are able to stay awake when a human counterpart cannot, providing 24/7 support and thus improved customer satisfcation and operational efficiency.

Such virtual agents can handle routine enquiries, transactions and even engage in potentially meaningful conversations by addressing customer queries promptly and accurately. In addition, AI systems can allow humans to spend more time on more complex issues, streamlining operations and reducing costs.

Strengthening Risk Management

AI-powered risk management systems analyse real-time market data to identify potential threats and implement proactive risk mitigation measures. Detection of such anomalies and enhancing fraud detection can protect financial institutions against fraudulent activities.

Furthermore, AI enables financial institutions to conduct more accurate and comprehensive risk assessments by, as mentioned already, analysing vast amounts of data from various sources. Such an approach to risk management can allow organisations to anticipate and mitigate potential threats before they escalate, thereby safeguarding assets and maintaining stability in the financial markets.

Facilitating Regulatory Compliance

AI can play an important role in ensuring regulatory compliance within the financial industry. By monitoring vast amounts of data and analysing transactions, AI algorithms can help financial institutions adhere to evolving regulatory requirements, reducing the risk of non-compliance penalties and enhancing transparency.

By streamlining the process, corrective action can be taken promptly, ensuring continued compliance and meeting of regulatory standards. By automating compliance procedures, AI not only reduces the burden on compliance teams but also minimises the likelihood of human error, ensuring accuracy and consistency in regulatory reporting.

It is also possible for AI-powered compliance tools to adapt to changes in regulations more efficiently than traditional manual methods. Machine learning algorithms can quickly incorporate updates to regulatory frameworks, ensuring that financial institutions remain up-to-date and compliant with the latest standards. This agility in regulatory compliance can help navigate complex regulatory landscapes more effectively, mitigating the risk of regulatory fines and reputational damage while maintaining the trust of Clients and customers.

Robot Revolution or Handy Companion?

It would likely be inadvisable to rely 100% on AI processes throughout your business, day-to-day life or any other circumstances. Hence, it is probable that human operators will be necessary going forward.

This means that AI is able to complement the day-to-day tasks of professionals in the finance sector and enhance the services that are able to be provided to Clients.

However, AI is not right for everyone! There are certainly downsides to using AI, including a potential lack of personalisation, potential for manipulation and more. Certain areas may require the diligent attention of a human and are potentially outside of the remit of AI.

As with stock markets, the future cannot be known and AI will likely continue to develop over the coming years.

With Patterson Mills, you can be sure of a 100% human service, tailored to you. So, get in touch with us and book your initial, no-cost and no-obligation meeting and talk to one of our Advisers today!

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Tags AI, artificialintelligence, finance, finances, financetips, financialadvice, financialadviser, financialplanning, independentfinancialadvice, investmentfunds, Investments, wealth

Investments

Re-Invest Or Withdraw? Accumulation Versus Income Funds

Post author By Charles Mills
Post date 4 March 2024
No Comments on Re-Invest Or Withdraw? Accumulation Versus Income Funds

Re-Invest Or Withdraw? Accumulation Versus Income Funds

“Mutual funds were created to make investing easy, so consumers wouldn’t have to be burdened with picking individual stocks” ― Scott Cook

3 min read

Re-Invest Or Withdraw? Accumulation Versus Income Funds

“Mutual funds were created to make investing easy, so consumers wouldn’t have to be burdened with picking individual stocks” ― Scott Cook

3 min read

Within the world of mutual funds and exchange-traded funds (ETFs), you will often have the choice to opt for accumulation or income.

What’s the difference you may ask?

Put simply, accumulation funds re-invest any income or dividends generated by the underlying assets back into the fund.

On the other hand, income funds distribute any income generated by the underlying assets to you, the investor. This is often in the form of cash dividends or interest payments.

However, just knowing what these are is not necessarily enough to make informed decisions on your investments. Which type is suitable for you? What are the benefits? Read on to find out!

Accumulation Funds

Accumulation funds, often shortened to ‘Acc’ or known as ‘capital growth’ funds, are designed for those who wish to re-invest any income back into the fund in which they are invested.

With this type of investment, the process is automatic and any dividends, interest payments or other distribution types will be re-invested without you having to do anything (at least, nothing beyond buying into the fund in the first place!).

Why might you wish to do this? Because you will benefit from compound growth over time that could have a huge impact on the gains you see when you come to withdraw in the future!

As an example, should you have CHF 1’000 invested and receive a CHF 100 distribution (e.g. as a dividend payment), you would then have CHF 1’100 invested (if you did not take it as income). This is CHF 100 more that can potentially increase both your returns and even future distribution payments.

The longer you leave your funds, the more time this type of approach has to grow your wealth. Hence, this strategy is typically better-suited if you have a longer-term investment horizon and prioritise capital appreciation.

Income Funds

Income funds, you will not be surprised to read, are also sometimes known under another name!

Not only are the often shortened to ‘Inc’, they are alternatively known as ‘distribution’ funds (sometimes shortened to ‘Dist’). As mentioned, these types of investment provide regular income paid out as dividends, interest or through other means.

Income funds are generally more suitable for when you are retired or if you are relying on investment income to cover defined living expenses.

Naturally, this makes the key advantage of income funds exactly that: their ability to provide a steady stream of income.

What’s more, this income is provided to you without the need to sell off your shares!

Which One Is Right For You?

Now you know what both types of funds are, who they may be more suitable for and how they could benefit you.

This then leaves the question: which one should you choose?

Naturally, each of you reading this will be unique and there is no one-size-fits-all answer.

So, when deciding between accumulation or income funds, consider your investment objectives, risk tolerance and income needs. If you have quite some time before you wish to access your investments, you may be more suited to accumulation funds. On the other hand, income funds provide a regular income that you may prefer.

However, in both cases, assess any tax implications, fees and the benefits you may receive from compounding, or the potential drawbacks if you take the income out of the investment.

Here For You

There are more considerations than those which are in this article, and so you are must do your own research before making any decisions.

Yes, it can be complex, but Patterson Mills are here to help and explain your options in a jargon-free manner that ensures your complete understanding of your most effective route forward.

So, get in touch with Patterson Mills and book your initial, no-cost and no-obligation meeting. Your future financial success is our priority!

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Tags accumulationfunds, finance, finances, financetips, financialadvice, financialadviser, financialplanning, funds, independentfinancialadvice, investmentfunds, Investments, wealth

Investments

Keeping More Money in Your Pocket: Tax-Loss Harvesting

Post author By Edward Mills
Post date 15 January 2024
No Comments on Keeping More Money in Your Pocket: Tax-Loss Harvesting

Keeping More Money in Your Pocket: Tax-Loss Harvesting

“Whatever you tax, you get less of” ― Alan Greenspan

4 min read

Keeping More Money in Your Pocket: Tax-Loss Harvesting

“Whatever you tax, you get less of” ― Alan Greenspan

4 min read

Tax-loss harvesting is a sophisticated strategy that you can use to optimise your investment portfolio(s) and reduce your tax liabilities. Today, we are looking into the intricacies of this strategy that you may not have heard before!

Read on to discover the upsides, downsides and how you can implement this technique to enhance your overall financial wellbeing.

Tax-Loss Harvesting: The Basics

Tax-loss harvesting is a proactive investment strategy designed to mitigate tax liabilities and enhance overall portfolio performance. The process hinges on the strategic selling of investments that have incurred losses, creating an opportunity to offset capital gains and, consequently, lower your taxable income. Seems simple enough, right?

To execute tax-loss harvesting effectively, it is important to closely examine your investment portfolio. This involves identifying specific assets that have experienced a decline in value. These underperforming investments become valuable tools in the tax-loss harvesting toolkit, as their losses can be strategically realised to counterbalance any capital gains within the same tax year.

The key principle is to turn temporary setbacks into long-term advantages. By intentionally selling assets that are currently at a loss, you create a deliberate taxable event. This loss can then be used to offset capital gains, either reducing or entirely eliminating the associated tax obligation. This approach not only minimises the immediate tax impact but can also allow for for improved tax efficiency and potential long-term capital growth.

With regards to which assets to sell, it’s surely just any that have made a loss? Well, whilst that could be the case, it’s actually prudent to identify assets with unrealised losses that align with the your overall financial goals and risk tolerance. Selecting the investments to sell that ensures your investment strategy can remain on track, or making adjustments as required.

Additionally, the process must adhere to any regulatory guidelines where you are based. Some jurisdictions have laws in place to prevent manipulation of tax benefits such as selling an asset at a loss and buying it back immediately or shortly afterwards.

What is Good About it?

The benefits of tax-loss harvesting extend beyond just a reduction in taxable income; it is a strategic financial tool with many advantages that can significantly impact your overall wealth management plan(s).

Minimising Taxes: Naturally, an immediate reduction in your taxable income is one of the main benefits to tax-loss harvesting. Minimising taxes through this strategy translates to more disposable income that can be redirected towards further investments, other financial goals or a nice holiday.
Balancing Portfolios: An often overlooked benefit of tax-loss harvesting is its role in portfolio rebalancing. In your usual portfolio, you should aim to maintain a specific asset allocation aligned with your financial objectives and risk tolerance. However, market fluctuations can skew this balance. Therefore, tax-loss harvesting allows for strategic selling of underperforming assets without incurring substantial tax consequences. If done correctly, you are able to keep your portfolio in line with your risk tolerance and goals whilst reducing your tax liability!
Creating Tax Efficiency: The cumulative effect of consistent tax-loss harvesting is increased tax efficiency over the long term. As losses are strategically realised, they can be used to offset future capital gains, providing a shield against unnecessary tax liabilities. This enhanced tax efficiency ensures that a larger portion of your returns contributes to growth or income rather than being diverted towards taxes. Over time, this can result in a more streamlined and effective approach to wealth accumulation.

Are There Any Downsides?

Of course, nothing is without it’s disadvantages! Here are some of the key ones that apply to tax-loss harvesting:

Complexity and Monitoring Requirements

Tax-loss harvesting involves a thorough analysis of an investment portfolio to identify opportunities for realising losses. This process can be complex, requiring continuous monitoring of market conditions and individual securities. You need to stay informed about changes in the value of your holdings and make strategic decisions to optimise tax outcomes. The complexity of tracking and managing multiple investments can be overwhelming for some!

Transaction Costs and Fees

Engaging in tax-loss harvesting often involves selling and buying securities, which can trigger transaction costs and fees. These expenses have the potential to erode the tax benefits gained from harvesting losses. Additionally, if you’re not careful, frequent trading may lead to increased transaction fees, impacting the overall returns of the portfolio. It’s crucial to weigh the potential tax advantages against the costs associated with executing the necessary trades. Ensure you speak with your Patterson Mills Financial Adviser before making any decisions.

Potential Market Timing Risks

Tax-loss harvesting requires selling investments at a loss, and the decision of when to execute these sales introduces potential market timing risks. If you sell during a market downturn to realise losses, they risk missing out on a subsequent market upturn. The challenge is to balance the tax benefits of harvesting losses with the uncertainty of market movements. Attempting to time the market can be unpredictable, and decisions made solely for tax purposes may not align with your broader investment strategy.

Can You Benefit?

If you are able to identify losses to offset your gains whilst adhering to applicable regulations and ensuring your investment strategy remains on plan, you can!

If it sounds like the monitoring required, careful selection of which assets to sell and adherance to applicable regulations could be too time consuming for you, it is time to get in touch with Patterson Mills and book your initial, no-cost and no-obligation meeting. Your investments will thank you and you too will be pleased that you have the peace of mind you deserve.

Send us an e-mail to contactus@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all information within this article has been prepared for informational purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Tags finance, finances, financetips, financialadvice, financialadviser, financialplanning, financialstrategy, investing, Investments, investmentstrategy, tax