6.05% Return On Sterling Investment

[Penkoprod]

Hi Penkoprod,

Thanks for your feedback.

I can use a Non-Immigrant 'O' Visa from Hull in England, its a one year multi-entry visa and fly back once a year to renew it, or alternatively I've heard KL are issueing these to?

I have property I let out in the UK, I'm relying on these for long-term growth. For inflation I'm relying on the rents going up. Therefore I think I'm covered on the long term angle.

For the moment I would like to figure out what is the best option for generating an income from this capital, ie. I would like to get the best return possible using only low risk investment strategy, I do not wish to loose the capital.

Arran.

Are you saying you have this capital ON TOP OF rental income?

If so then surely this (as income earned in UK) liable to tax IN the UK?

But, nevertheless its still a nice position to be in..........IF its on top of the 300k

One thing i am not too sure about is the granting of this Non-Immigrant 'O' Visa year on year

Remember, people could stay in Thailand for years on just visa runs every 30 days until a few short months ago, and, my gut feeling is that the next in line for scrutiny is.............Non-Immigrant 'O' Visas !!!!

Also, i think these Non-Immigrant 'O' Visas need to be renewed every 90 days

I am in a similar position to you, but i have a smaller lump sum, but with an early company pension coming to me soon, so i, too am researching possibilities similar to you, but am not even thinking of the visa you are looking to use, tbh........for the above reason.

My own "nighmare scenario" is one of the baht being 50 to the pound (or less!!!) and the monetary requirements for the "safer" visas hiked up to ridiculous levels.

Penkoprod

[topfield]

Alliance and Leicester currently gives you 6.1% in a bog standard internet savings account and they ain't even an offshore account.

Actually Alliance and Leicester offshore are paying 5.60 on their base rate tracker ! Cassandra was probably quoting the taxable onshore rate !

Arran, with regard to bonds there is very little over 6 percent. I assume you wish to stick to sterling.

Erm it's only taxable if you keep the UK as your country of abode. If you are resident in LOS and have no foot hold back in the UK then it is not taxable and will be interest paid at gross as you will be able to opt out of paying tax on it with the bank.

Right and wrong. Cassandra

Right that no tax payable onsghore if the income is below your 5K or so personal allowance .

Wrong as even a non resident /non ordinarily residents are liable tax on income arising in the UK (with a few exceptions such as gilts.) Thats the reason why Channel Isles and IOM are used by expats...the income does not arise in the UK so not taxable for above people.

It really is stupid the UK does not exempt expats as they would then place their funds onshore and the UK economy and banks would benefit. Same as Thailand forcing expats to visit Penang et al every 90 days . Were the visas easily obtainable in Thailand the money would be used locally instead of in Penang et al....

[ArranP]

Arran, with regard to bonds there is very little over 6 percent. I assume you wish to stick to sterling.

The eurosterling bond with the highest rate I could find is Cable and Wireless which matures in 2o12 and yields 8.4 percent annually and 7.61 to maturity. Pierson plc 2014 is yeilding 6.43 to maturity.

If you want a perpetual you have Standard Chartered yielding 6.2 per cent...it yielded 8 percent in 2002if I remember rightly.

Please do not ignore what I wrote in my first reply namely that Anglo Irish allow you to take out 60k in your case, so you can take out and place with them this amount at a higher rate without penalty should rates rate.....and that is a unique offer .

Thanks topfield, for these bonds.

Where can these and bonds likes them be found, are they listed on websites somewhere ?

I do take your point on giving due consideration to the Anglo Irish fixed term bond. I find myself reluctant to invest money easily, therefore this fixed-term deposit is my favourite. However, that being the case, in the meantime I would like to spend time researching other forms of investments.

Arran

[topfield]

Arran, with regard to bonds there is very little over 6 percent. I assume you wish to stick to sterling.

The eurosterling bond with the highest rate I could find is Cable and Wireless which matures in 2o12 and yields 8.4 percent annually and 7.61 to maturity. Pierson plc 2014 is yeilding 6.43 to maturity.

If you want a perpetual you have Standard Chartered yielding 6.2 per cent...it yielded 8 percent in 2002if I remember rightly.

Please do not ignore what I wrote in my first reply namely that Anglo Irish allow you to take out 60k in your case, so you can take out and place with them this amount at a higher rate without penalty should rates rate.....and that is a unique offer .

Thanks topfield, for these bonds.

Where can these and bonds likes them be found, are they listed on websites somewhere ?

I do take your point on giving due consideration to the Anglo Irish fixed term bond. I find myself reluctant to invest money easily, therefore this fixed-term deposit is my favourite. However, that being the case, in the meantime I would like to spend time researching other forms of investments.

Arran

Eurosterling bonds are not listed/traded publicly....its an over the counter market .... a market between banks and brokers such as Meryll Lynch. Hong Kong /Singapore banks are where you get the buy /sell prices . Minimum amount usually 100K but sometimes lots of 50K available.

[Naam]

"Eurosterling bonds are not listed/traded publicly....its an over the counter market .... a market between banks and brokers such as Meryll Lynch. Hong Kong /Singapore banks are where you get the buy /sell prices . Minimum amount usually 100K but sometimes lots of 50K available."

Topfield is right. most corporate bonds issued during the last two years are traded in rather high minimum batches and OTC (however not limited to the mentioned asian banks). rule of thumb is GBP 50k, €UR 50k and USD 100k (exceptions prove the rule). the trend however is UP. i have seen the first new emissions in €UR min 100k and in USD min 200k. that caused a real headache for an investor like me who aims to diversify extremely broad, i.e. no position in the portfolio greater than 2%.

some months ago i formed a "pool" (with a bunch of trusted friends) making it much easier to buy minimum batches and distribute them [bank]internally in amounts we decide. our bank did not like it at first but finally agreed after we applied considerable pressure.

one caveat though! assuming a 200k batch is held by four or five investors ALL have to agree to sell.

it's worthwhile to mention that corporate bonds denominated in GBP are extremely limited in number and choice.

[ArranP]

Thanks to everyone for their comments so far.

In conclusion, to invest in bonds one needs to go through a banker or broker ?

Do all the major banks have these representatives for investing in bonds? which are the best organisations to contact to make these bond investments ?

Thanks for feedback

[Naam]

Thanks to everyone for their comments so far.

In conclusion, to invest in bonds one needs to go through a banker or broker ?

Do all the major banks have these representatives for investing in bonds? which are the best organisations to contact to make these bond investments ?

Thanks for feedback

i strongly advise you do conduct a bit more research before you jump into bonds. you can buy bonds through a bank or a broker but at your stage of financial knowledge (no offence meant, just stating the obvious) my advice is to go for a bond fund holding a variety of bonds thus reducing credit risk. unfortunately the choice of bonds and bond funds with denominations in GBP is extremely limited.

[sonicdragon]

As I mentioned already, you need to get some professional independent advice. Even a bond fund is not a good choice for you (if you can find one) if you don't have a thorough understanding of bonds. Any advice you get from a bank is tainted because they are getting commissions from the funds that they sell. Any advice you get from a broker is similarly tainted. You need to get advice from a truly independent adviser. Or, just go down the easy road and put it all in UK banks with a range of fixed terms, making sure that you can get the interest paid gross as a non-resident (or to be more precise, "not ordinarily resident") - fill in the form R105 (downloadable from hmrc.gov.uk) and give it to each bank.

[Naam]

As I mentioned already, you need to get some professional independent advice. Even a bond fund is not a good choice for you (if you can find one) if you don't have a thorough understanding of bonds. Any advice you get from a bank is tainted because they are getting commissions from the funds that they sell.

i humbly beg to differ dragon. there is a number of no-load funds available nowadays which can be bought by paying just the transaction fee of your bank. e.g. Goldman Sachs has a few publicly traded fund which consists of >500 individual debtors, i.e. a diversification a private investor can never achieve (except those with a net worth exceeding $50mm).

i am struggling already following the fundamentals and development of the nearly 50 bonds which i hold in my portfolio and i am seriously considering to add this GS fund to diversify even more.

http://www2.goldmansachs.com/client_servic...ation/4196.html

[ArranP]

How I do I find an independant advisor ? What checks can I make / questions can I ask to establish their degree of independance and authenticity?

How do I know I can trust them with my money ? Sorry to ask what may seem a simple question, but if/when I hand over my money how do I know I'm not being ripped off? Do I get a receipt or certificate ?

Thanks comments so far.

[ArranP]

Here is the rating for the Anglo Irish Bank - Isle Of Man

http://www.angloirishbank.co.im/about-aib/index.asp

It says it has an A+ rating, am I exposing myself to a high degree of risk If I were to put all my capital with them ? or should I divervsify ?

If I were to diversify, how many different institions should I use to spread the capital ? If this is more than 5 or 6 it gets difficult in: i - finding them, ii - registering, iii - getting the interest paid into central account etc.

[sonicdragon]

As I mentioned already, you need to get some professional independent advice. Even a bond fund is not a good choice for you (if you can find one) if you don't have a thorough understanding of bonds. Any advice you get from a bank is tainted because they are getting commissions from the funds that they sell.

i humbly beg to differ dragon. there is a number of no-load funds available nowadays which can be bought by paying just the transaction fee of your bank. e.g. Goldman Sachs has a few publicly traded fund which consists of >500 individual debtors, i.e. a diversification a private investor can never achieve (except those with a net worth exceeding $50mm).

i am struggling already following the fundamentals and development of the nearly 50 bonds which i hold in my portfolio and i am seriously considering to add this GS fund to diversify even more.

http://www2.goldmansachs.com/client_servic...ation/4196.html

We may be talking at cross purposes. I'm talking about ArranP getting independent advice. Who is going to recommend that GS High Yield fund or other ETFs ? That's my point. I hope that he doesn't buy something like that fund after hearing about it on here

I do realise that there are products out there where you don't pay any fees going in - but who is going to recommend them ? Not your high street bank, and I don't think an average broker is a suitable adviser for something like this. I rather got the impression that he was talking about walking in to his high street bank and asking for their advice. He will get a very slick presentation by one of their professional investment advisers on the pros and cons of various investments, be asked to give some risk-profile info, sign a disclaimer, and have the option of investing in various products all of which the person selling them will be getting hard cash or soft sales commission. This is from my experience of dealing with many banks, in the UK and Hong Kong over the years. I admit there may be some exceptions. But it doesn't nullify my point about getting independent financial advice.

For your own purposes, you probably already know this, but in case not, you might want to consider a custodian account service of one of the big european insurers - you can get access to some very interesting products that are normally reserved for insitutional investors only, with a relatively modest account balance. I got into an aggicultural commodities fund last year by doing that, after playing around with CFDs from cantor (which was fun for a while, but very time consuming).

[sonicdragon]

Here is the rating for the Anglo Irish Bank - Isle Of Man

http://www.angloirishbank.co.im/about-aib/index.asp

It says it has an A+ rating, am I exposing myself to a high degree of risk If I were to put all my capital with them ? or should I divervsify ?

If I were to diversify, how many different institions should I use to spread the capital ? If this is more than 5 or 6 it gets difficult in: i - finding them, ii - registering, iii - getting the interest paid into central account etc.

First of all, I would say to keep your money onshore - you can then choose among some of the highest rated institutions in the UK. You can get paid gross interest. And you can benefit from significantly better deposit insurance.

Second, yes, I do think there is some risk. A+ is closer to junk status than "riskless" ! But if you keep your money onshore the risk is significantly reduced for the reasons just cited. If you want to be ultra-safe you could do something like spread it among 3 or 4 well known banks and have a range of different term maturities.

Third, if I were your adviser (which I'm not) I would suggest some exposure to bonds in order to benefit from possible falling interest rates over the coming year or two. If you can find a suitable bond fund, then it would by definition be diversified. But you need to understand about bonds first, and then get some professional advice about what is most suitable.

Edited March 25, 2007 by sonicdragon

[sonicdragon]

How I do I find an independant advisor ? What checks can I make / questions can I ask to establish their degree of independance and authenticity?

How do I know I can trust them with my money ? Sorry to ask what may seem a simple question, but if/when I hand over my money how do I know I'm not being ripped off? Do I get a receipt or certificate ?

Thanks comments so far.

It's a very good question. And I think that's the best question to ask !!

For one thing, many truly independent advisers will simply take a fee from you for giving their advice. As far as the safety of your money goes, you should never be giving your money to them directly to invest. It should always be either a direct investment, or through some kind of custodian (where the actual investments are held). The custodian will be a large internation bank / financial services company and you would not have to worry about the security of holding your funds there. Of course, you will have to worry about the suitability and risk of the underlying investments.

For what it's worth I can personally recommend Bridgewater in Hong Kong, but I'm sure others will jump in here with their own recommendations (Bridgewater are atmittedly a little on the radical side). As for the general question of how you can assure their independence and autheticity, you should start by ensuring that they are based in a country with a strong level of regulation/supervision. That counts out Thailand. In the region, Hong Kong and Singapore would be the ones to go for. You could also look at Australia and the UK of course. Start by simply asking them whether or not they are independent, and how they earn their fees from advising you.

[Steve2UK]

How I do I find an independant advisor ? What checks can I make / questions can I ask to establish their degree of independance and authenticity?

How do I know I can trust them with my money ? Sorry to ask what may seem a simple question, but if/when I hand over my money how do I know I'm not being ripped off? Do I get a receipt or certificate ?

Thanks comments so far.

ArranP, I echo those who have recommended that you seek independent financial advice. A certified IFA has a duty of care to inform him/herself as to the full range of your needs - short and long term - and then give you "best advice" based on that profile. For starters, check out the site below to get a better idea of what's involved and how IFA's function - it also includes a search function so that you can find an IFA near to where you live/work as well as searching by areas of expertise.

http://www.unbiased.co.uk/about-us/

Edited March 25, 2007 by Steve2UK

[Naam]

"I'm talking about ArranP getting independent advice"

perhaps i am wrong but my experience shows clearly that there is no independent advice. each and every chap, no matter how hard he tries, is somehow biased, has his/her own views and a different risk perception. and that goes for you and me too.

when i threw in the GS fund i surely did not mean that ArranP should put all his eggs in one basket. but in his case investing a rather small portion of his cash into a broadly diversified HY bond fund would boost his yield without big risk.

however, as ArranP is already worried that an A+ rated bank could be too risky i prefer to withdraw from this discussion.

[PCA]

"I'm talking about ArranP getting independent advice"

perhaps i am wrong but my experience shows clearly that there is no independent advice. each and every chap, no matter how hard he tries, is somehow biased, has his/her own views and a different risk perception. and that goes for you and me too.

when i threw in the GS fund i surely did not mean that ArranP should put all his eggs in one basket. but in his case investing a rather small portion of his cash into a broadly diversified HY bond fund would boost his yield without big risk.

however, as ArranP is already worried that an A+ rated bank could be too risky i prefer to withdraw from this discussion.

No, how can someone like you be wrong?

ArranP.

The advantage of an IFA is that he is chosing precisely on the profile of your demand. The risk you are willing to take, the maturity you intend to hold and the performance you suppose to get.

You will have to pay him also commission and a fee for consulting. But he is not depending on selling a certain fund or basket to you like it is the case in every bank or brokerage firm.

First he will show you what is possible and then how to optimize it due diversification.

[ArranP]

Is interest from a UK onshore savings account classified as "uk derrived income" ? If so, is there not tax to be paid ?

Also, how does the R105 form relate here ?

Thanks.

Arran.

[Khun ?]

Depending on what you need to live on for a few years. Put 50K in a money market which pays about

5% with payments made monthly on interest which most do. Put the rest with 2 or 3 different brokerages with about 30 to 40% moderate risk level for 3 years.

See how they do and which ones you like to stay with. You may end up getting around 10% with little risk and upside of 15%+ when the markets are good that will also protect you from currency changes.

Some attractive hedge funds out there that you can invest with through a certified brokerage firm.

Check out morning star and lipper websites would be a decent start.

http://funds.ft.com/funds/guideHelp.do

http://www.investorprofit.com/stocks/stocks-09.html

[sonicdragon]

Is interest from a UK onshore savings account classified as "uk derrived income" ? If so, is there not tax to be paid ?

Also, how does the R105 form relate here ?

Thanks.

Arran.

Please see here for details, in particular Q7:

http://www.hmrc.gov.uk/cnr/faqs_general.htm

[topfield]

So to sum up if you are a UK non resident and accepted as such by HMRC, the income from offshore investments is non taxable.

Inheritance tax , fixed at 40 percent is a different and far more unsure and complicated matter !

Edited March 26, 2007 by topfield

[sonicdragon]

So to sum up if you are a UK non resident and accepted as such by HMRC, the income from offshore investments is non taxable.

Inheritance tax , fixed at 40 percent is a different and far more unsure and complicated matter !

Not sure if you meant to say "onshore", but as far as bank interest is concerned if you are not ordinarily resident in the UK then you can have interest paid by onshore banks without the deduction of interest. As for inheritance tax, not sure why you would bring that up, but yes it's a much more complicated matter. Capital Gains Tax is a more relevant topic to this thread, but let's not go there !

[topfield]

Just check Mustafa baht buying rate in Singapore !

I did last week and after all expenses and costs selling back the Sing dollars at Super Rich one could make B16,000 on each million. OK here are my wrists....you can put on the handcuffs, Inspector BOT

[JimsKnight]

Yorkshire Building Society - Guarenteed Investment Account.

Minimum £3000.

Interest 14% minimum guarenteed!

Can go above this (dependant on FTSE 100 index)

But if the market goes pear shaped you still get 14% interest clunking into the account

Catches...

Money is locked in for 4 years minimum

14% over what period ? Obviously not per annum. I assume over 4 years ? Of so then it's equivalant to around 4.5% gross per annum, which is not bad considering that 4 year gilts yield around 5.2% and you have a call optioj on the stock market.

Do you have a link to more info on this ?

Its a very exclusive deal (I only found out about it by telephone from the Bank Manager).

And yest like you I said, NO WAY.

But WAY! It is 14% (Actually 15% cause of a bonus for transferring a mini-ISA) Per Annum! Not split over 4 years as you assumed it is tax free (for Mini ISA transfer).

Its a good groove for money you want squirrelled away for retirement.

Heres the link where they stand and deliver!

http://www.ybs.co.uk/investment/guaranteed-investment.jsp

The maximum is 45K sterling you can put in (Direct Deposit). And at the end of the term you get your Tax Free ISA back again!

The offer closes on the 5th April 2007 so get your skates on!

[sonicdragon]

Its a very exclusive deal (I only found out about it by telephone from the Bank Manager).

And yest like you I said, NO WAY.

But WAY! It is 14% (Actually 15% cause of a bonus for transferring a mini-ISA) Per Annum! Not split over 4 years as you assumed it is tax free (for Mini ISA transfer).

Its a good groove for money you want squirrelled away for retirement.

Heres the link where they stand and deliver!

http://www.ybs.co.uk/investment/guaranteed-investment.jsp

The maximum is 45K sterling you can put in (Direct Deposit). And at the end of the term you get your Tax Free ISA back again!

The offer closes on the 5th April 2007 so get your skates on!

I replied on this earlier in the thread - on closer inspection it is not very interesting. 14% over 4 years equates to a miserly equivalent annual rate, and the equity option they are giving you in return is similarly miserly :- 28% out of the money going in, and with a payoff on only 50% of the upside. You would be a lot better off owning 4 year gilts and buying a 4 year ftse option.

[JimsKnight]

I see. Hmm glad I didn't transfer the money fully, off to the bank tomorrow to drag the funds back.

Thanks for the second opinion

Edited March 26, 2007 by JimsKnight

[topfield]

I see. Hmm glad I didn't transfer the money fully, off to the bank tomorrow to drag the funds back.

Thanks for the second opinion

Here's a third opinion....Sonic is 100 percent correct in my view. Also its 15 percent over the whole period NOT PER YEAR.

If you are a non UK resident and not liable to UK Income and Capital gains tax, ...something you can check up on, ....why choose an investment structured mainly to avoid / mitigate UK income and gains tax ?

[ArranP]

Interest from UK "OnShore" Savings accounts is classified as "UK derived income" and therefore liable for uk tax. The R105 only defers this tax payment, until a self assesment is completed and tax liability calculated from here.

However there is tax to be paid on interest from onshore UK savings accounts.

The only way to not pay UK based income tax, is to bank with offshore savings accounts.

Just spoke the HMRC to clarify this point.

[topfield]

Interest from UK "OnShore" Savings accounts is classified as "UK derived income" and therefore liable for uk tax. The R105 only defers this tax payment, until a self assesment is completed and tax liability calculated from here.

However there is tax to be paid on interest from onshore UK savings accounts.

The only way to not pay UK based income tax, is to bank with offshore savings accounts.

Just spoke the HMRC to clarify this point.

True but you have your personal allowance of around 5K so if you dont exceed that and have no other UK income you will pay no UK tax

By the way Arran if you want meaningful advice it would help if you tell us whether you are UK resident or parhaps have been resident for years in Thailand.. Who knows ! Can you provide any info on this ?

[ArranP]

Interest from UK "OnShore" Savings accounts is classified as "UK derived income" and therefore liable for uk tax. The R105 only defers this tax payment, until a self assesment is completed and tax liability calculated from here.

However there is tax to be paid on interest from onshore UK savings accounts.

The only way to not pay UK based income tax, is to bank with offshore savings accounts.

Just spoke the HMRC to clarify this point.

True but you have your personal allowance of around 5K so if you dont exceed that and have no other UK income you will pay no UK tax

By the way Arran if you want meaningful advice it would help if you tell us whether you are UK resident or parhaps have been resident for years in Thailand.. Who knows ! Can you provide any info on this ?

hi Topfield,

I am UK resident until the end of the this year or early next year. Then will re-locate to Thailand.

This year I spend putting my affairs into order, my UK tax allowance will be taken up by UK rental income. I have £300k+ to find a home for with low risk and maximum return, this together with UK rental income is to be used as my income.

Arran