The Investment Markets Have Changed… Have you?

The Investment Markets Have Changed… Have you?

Austin Hess 2020-11-27 09:43:53

In the wake of the COVID-19 Pandemic, the global economy and investment markets have changed and may never be the same again.

It has never been so important for investors to re-evaluate their investment portfolios and strategy.  The markets adapt to the ever-changing economic scenarios, but many investors stay in old, outdated strategies.

Today we have the pleasure of discussing this topic with Charles Burrows of Empire Consulting Global Wealth Advisors.  For the past 20 years, Charles has been helping investors across the globe to stay ahead of the markets.   Today he will tell us strategies he designs for his clients, and how investors can stay safe and maintain consistent growth of their investment portfolios in such uncertain times.

Charles, tell us a bit about yourself!

 

After 20 years working in banks, financial advisory firms and family offices, I founded Empire Consulting Group with the objective to provide conservative investors with high-yield fixed-income returns, while preserving and protecting their invested capital.

Empire specializes in designing structured investment products (SIP’s) that offer annual returns of 7% - 14% per year in USD, combined with a very-high level of risk protection.

 The products that we develop are designed by Empire but issued by the world’s largest banks.  Clients can purchase our products via their investment banking accounts and wealth management platforms directly from the issuer, without taking any counterparty risk of Empire as a company.

 How do you see the market following COVID and what is the biggest challenge investors face today and what can they do to improve and protect their investment portfolios?

Today many investors are faced with a serious dilemma!  Global interest rates are at record lows, meaning that investors struggle to generate a decent income without taking risks.  Many investors have been pushed out of bonds and fixed income into stocks, yet the stock market has never been as overvalued or as risky as it is today!

Most investors are unaware that they have alternative options available to them. There is a middle ground that can offer the security of fixed income, but with stock-market-style returns, and protect their assets even if the market crashes or goes sideways.

So, what is the alternative?

Structured Investment Products (SIP’s) allow investors to take a what-if-scenario approach.  Typically, an investor will buy an asset like a stock or a bond as they believe that it will be a good investment.  If it is a good investment, they will make money; but if they are wrong, they will lose money.

In such an uncertain time, we prefer to try not to guess how the market will behave.  Instead, we assume that the market could get worse, and that any investment made today could lose value.  Our clients can make solid returns even if the market is flat or negative!

How do Structured Investment Products work?

There are infinite possibilities with structured investments, but the most popular for conservative investors are Protected Dividend Income Bonds (PDIB). A PDIB is a dividend contract with a bank.  The bank will pay the client a regular cash income as long as the assets within the bond do not fall below the protection barrier.

Typically, a well-structured bond will pay between 7%-14% per year, even if the assets within the bond were to fall 40%-50% from where they are today!

The bond will track an asset, such as a stock like Apple, or a group of stocks like the FAANG index or the Nasdaq. The bond will have a protection barrier level, for example, -50%, and the bond will pay a cash dividend every month, as long as the stock(s) have not fallen more than the barrier (-50%).

How long is the typical duration of the bond?

The bond can be for any period of time, from 1 month to 10 years in duration, at the choice of the client.

The bond will pay back 100% of the invested capital at maturity, as long as the stock(s) are not below the barrier level.  So, even if the stocks in your bond were down by 50% at maturity, you would still get 100% of your investment back, and you would have received 100% of the dividends.  In comparison, as a stockholder, you would simply be facing a 50% loss of capital.

Can you sell these bonds early before their maturity?

Yes, the bonds have daily pricing and daily liquidity.  If you want to sell your bond before maturity, you can sell it for its market value just as you would a stock.

What if during the lifetime of the bond the stock(s) go below the barrier level?

Then you will miss the dividend payment that month and every month the stock is under the barrier.  However, all of our bonds have a dividend-memory feature.   In the unlikely event that the stocks did fall under the barrier level, they will be accumulating in memory and you would get paid any missed dividends as soon as the stocks were back above the barrier level.

Why do you believe that this is the best kind of investment right now?

Typically, stock market investors have made 8%-12% over the long term, 10 years – 20 years, no matter when they entered the market. The traditional Warren-Buffett style value investing of buying and holding good quality blue-chip stocks was a smart and easy way to invest in the past.

Unfortunately, due to the huge problems created by COVID on the global economy the markets have never been so risky.  Investors in the market today may go through years of flat or negative growth and suffer emotional stress watching their portfolios behave erratically.

Structured Investment Products allow for the worst-case scenario. If the market is flat or negative for the next 3-5 years, our products will still be generating a strong cashflow to the investor and protecting their accumulated wealth.  The cash income helps investors to live off their portfolio revenue in times of low-to-zero interest rates, and the protection barriers eliminate the emotional stress of the market volatility.

Empire launches new products every month.  Our products are designed to the highest standards to ensure the best levels of return and the highest-possible levels of protection.

Our products hold the best-in-class assets, such as major blue-chip stocks or major stock market indexes.  We ensure that the underlying assets are strong by analyzing short-and-long-term debt-to-asset liabilities, discounted cash flows, future earnings expectations, etc.

Our products offer the highest yield possible to investors, as we eliminate the sales commissions and fees that are typically built into products. 

Investors can choose from a diverse range of products that are open in the market, or we can tailor-make a product for a client’s exact requirements.

How can people contact you if they are interested or want to learn more?

We are happy to offer free consultations to anyone who would like to have an independent review of their current portfolio, and see if they could improve the security and returns they are getting.  You can email me directly at charles@empire-consulting.net, or go to our web page, www.empire-consulting.net and book a time in our agenda via the online-booking tab on our home page.

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