Global Local Investments — Investment basics, offshore investment

It's been one of those days, hey, one of those days indeed. But welcome to it. It is what's involved and tonight I'm very proud to introduce you to our segment sponsor for this evening, Global and Local Investment Advisors. You've heard the guys advertising with us and they decided they wanted to give back a little more. And by giving back a little more, they're going to be coming on to this show twice a month, if I'm not mistaken, for right about half an hour each time. And we're going to be chatting about what they do, how they do, why they do and how you and I can benefit. So without further ado for the first time tonight, we are joined by two of the directors from Global and Local Investment Advisors. We've got Michael Haldane, who's the Managing Director and hopefully I get this right. Mauro Faulin, did I get that right? Yeah, perfect. Thank you. There we go. You see. Welcome guys. Michael, good to have you with us. Mauro, good to have you with us. As I said, every two weeks, we're going to be having a chat to you. Tell us a little bit about what you guys are going to be doing. Mauro? Hi, David. Thanks for having us. We're so excited to be here. So Global and Local is an investment advisory firm.

We were formed sort of 21 odd years ago. Michael formed the company after a career in corporate. Which I hated. I was about to say shame. And we're not your average investment advisory company. We look to use our internal analytical team. That makes us completely different. They will analyze your investment portfolio, make sure that it's appropriate for you and your circumstances and your family. We will recommend something to you. And then we'll follow up and review it all the time. Now, internal analytical teams with advisory firms such as ours is quite rare and not everyone has them. We also get involved a little bit in transactional forex, not investment forex. We don't invest in forex, but we transact in forex. So if you need to exchange dollars for RANS or RANS for dollars, we can help you with that. Michael, do you want to talk a little bit about how much you got under management? Quite a lot. We have around three and a half thousand clients and we have assets under management of about five billion, the RAND. Five billion RAN. So our clients have basically trusted us with their lives. And that for us is what it's all about. Trust. You see, and the thing for me that I'm so excited about, okay, is I'm hoping that by having you guys here and talking about investment, because, you know, for a lot of people we all hear this save, save, save, invest, invest, invest, but it seems to a lot of people like it.

It's a totally foreign concept. And we don't know how to do it. We don't know where to start. We don't know where the best place to look is. And that's why when the opportunity came up to have you guys on the show and to chat to you about it, I thought, brilliant, let's do that. Because apparently as South Africans, we're quite bad at investing. We terrible. The official figure says that of South Africans, roughly 20% invest anything. I believe that figures a lot at least South Africans like new shoes, new cars, holiday house emissions on the side. And they all cost fortunes. And at the end of the month, they got, I'm going to buy an extra pack of coke, mulberries, whatever it is. And there isn't anything left. Let's say head to age 55, 65, they go, I'm not going to live on a government pension of 1,900 a month. And it's us. It's all about companies like ours and other 28,000 advisors in the country to hit everybody over the head and say, save money now before it's too late. Otherwise, you will end up in your son's outside room forever. Listen, it sounds like you're painting a big picture, but it's really not. I mean, I'm right there, you know, life has happened to me, you know, and divorces happened and all sorts of things like that.

I'm sitting in a position now where I'm going, whoops, I'm 52 now. And as things stand right now, it looks like I'm going to work until I kill over because that is the thing. But we often think that maybe this investing thing is expensive. We need lots of money to do it. Is that true? Do I need it more? Do I need a lot of money? No. So the important thing is to start. And you can start with pretty much anything from 500 rand upwards, even lower than that. A month. A month. Yeah. So you can start at reasonably low levels. You don't have to you know, investing, you know, the media, the movies always show these big moguls investing huge amounts of money. But investing is is putting away money for tomorrow and hoping that guys like you will spot the right places for us to invest. I mean, that's where your expertise comes in, doesn't it? It's all about maximum return, minimum risk with access on your funds. Fantastic stuff. Well, we are chatting to the guys and we're chatting. They are from Global and Local Investment Advisors. We've got two of the directors in here, Michael and Mauro. Michael is the managing director, founder as well. Yeah. I was the founder a very, very, very long time ago and now I have help us.

Good. One of the nice things that I noticed about you guys, because I was deciding like, okay, are we going to do this, how are we going to fit in, et cetera, et cetera. And one of the main decide is, is your big fans of MixFM and supporters of MixFM. So that's a big plus. Anyway, we will be back. We'll be chatting more to the guys. They're going to be with us every second Tuesday of each month for the next couple of months. And listen, if you want to know anything about investing, we're going to touch on some offshore investing a little later on. But if you'd like to know anything, please make use of the SMS line 41348. That is the SMS sign, 41348 SMS is charged at 150. Alternatively, you can WhatsApp us on 0848220938, 0848220938. It is what's involved, proudly brought to you tonight by Global and Local Investment Advisors. We'll be back chatting with the guys in just a bit. My special guest in studio with me tonight from Global and Local Investment Advisors, two of the directors, Michael and Mauro are here. I said we're going to chat a little bit about offshore investing because that is always both fascinated and terrified me because I have absolutely no idea about what any of that is about.

So Michael, can you sort of talk to me a little bit about this? I mean, in your radio ad, you speak about offshore investing and I always go, it sounds very fancy. Well, let me put it in simple radio person terms. So South Africa of world wealth represents comma 21%. So comma 21, Hong Kong represents comma 85%, UK 4%, China 19 and America 26%. So we are this meniscal little ant and if you only invest in South Africa, you lose out on 99.78% of all those other options outside. If you only invest, yeah, your element of risk is so much higher. Your other element is in 1982 I went to America, 75 South African cents equaled $1. Today 15 odd ran equals $1. On average from 1994, the ran falls against the American dollar by around 4.6%. So it's about earning in hard currency, but also if the ran falls, your real value doesn't fall with it. Okay, so I'm actually, I might look at and go, oh, well I've now spent 15 ran and I only have $1, but in the next two years I could be spending 18 ran for that same dollar. But because I invested it, I will have in effect 18 ran coming back to me. Correct. Okay. Can I come in? Yeah, please do. In the mid 90s, we had about 980 odd shares listed on the JSC. I think today we're down to 380 odd.

Yeah. So if you just look at the number of options you have to invest in a stock market in South Africa, it's very limited. Now, if you consider what's available globally, I mean you're talking tens of thousands, hundreds of thousands of shares available, millions of options. Your universe is just so much greater to select from. Well, I was reading the other day about what happened in the 80s and early 90s if you'd invested in stuff like Amazon or Apple or whatever. Even in our little shame, very sad ran state, you would be a millionaire today quite possibly. So I advise the clients, love the country, but think about letting your rans have an overseas holiday for a bit because you can always bring them back. Okay, well, let's get into that a little bit because that was also a very gray area for me. But Moro, if somebody wants to invest offshore, what do we need to look out for? What do we need to kind of be aware of? Okay, so in essence, there's five points. The first one is you need to consider the term. So investing offshore is not a short-term investment. You're not going to go in there, buy something, sell it, get out quickly. No, this is long-term. You got to look at five years minimum just to try and ride through the market cycles if there are any.

You then got to look at risk. So like Michael said, you've got to consider that when you're investing offshore, you have both an opportunity and you have a risk. And the opportunity and the risk are exactly the same. So your first risk or your first opportunity is the rand. So the rand has depreciated from, I don't know when Michael was saying, 1987 or something, and it's now roughly at 15, but it can appreciate. We saw it earlier in January when it was at 1430 to a dollar, and it's not close to 15. In fact, last week, on Friday, it was over 15. And then you've got the markets as well. So you got to go invest your money into a vehicle, a fund or something. And that fund is going to grow, but there are times when it might experience some volatility and it'll actually shrink and maybe lose you a bit of money. So opportunity and risk are the same thing, just on different sides of the spectrum. And in this case, you've got two of those. You've got the currency and you've got the vehicle that you've invested in. You've then got to look at your goals and objectives. Now, in South Africa, many of us have global families. So we have relatives who've moved out of South Africa, gone to live in Australia, New Zealand, Canada, wherever.

We've got children that might be ending school and saying, "Dad, I'd like to study in China," or wherever it is. Not right now. Not right now, yeah. And you've got to look at that and you've got to say, "Right, we've got a plan for that." Then you look at currency. So currency, what currency fits with you? Is it the dollar? Is it the euro? Is it the pound? Is it Australian dollars? Do you like Trump? Do you not like Trump? Yeah, can we get that? Foreign exchange control regulation. So at the moment, there's two ways that you can invest offshore from a foreign exchange perspective. The first way is to actually invest your capital offshore and that you do by taking your first million, it's called the single discretionary allowance, and you convert that to a foreign currency and you invest it offshore. Once you've passed that first million, you're going to go into the foreign capital allowance, which is 10 million. So if you've got that kind of money, you can literally invest 11 million rand a year per calendar year offshore. First of all, there's a couple of hurdles from size and you have to answer some questions. Where is it from and is your income tax paid? Once that is authorised, you can invest.

No, but this is the kind of thing that you guys help with. I mean, we would come to you and we would go, okay, guys, this is what I want to do. These are my goals. And you would then be able to advise. Correct. Mr X would say I have 100,000 rand, I don't want to access on it for the next five years. I'm interested in a mix of dollars, pounds, yen, what would you recommend? We then take their hand, outline the options and invest for him. I think it's fantastic. Just a reminder, by the way, if you want to ask the guys a question, we actually are going to set up. I think we can actually give it out now. If you've got any questions, if there's anything you'd like to ask either of my guests tonight, all you do is you drop an email to info@globallocal.co.za. So that's globallocal with two Ls, okay? So it's globallocal.co.za, info@globallocal.co.za. Drop them your questions. They can either then come and they'll get back to you probably immediately. But I think if somebody does ask you questions, it'll also be nice because as far as I believe, the only silly questions are the ones that you don't ask. So if you do get awesome questions, bring them in and let's discuss it because I'm sure it'll give people, other people answers as well.

So we're talking very quickly because once again, we are running out of time terribly quickly. Can we talk about how we actually do this investing thing? Okay, I come to you, you're going to hold your hand, but what about our unit trust? Do they still play a role? All right. So offshore options you have, you can invest in index funds, shares and funds. The easiest way is an offshore unit trust. That could be in cash, property, shares or a mix of all of it. And that could be in a specific country, a specific sector, mining, healthcare. There are myriads of options, but generally we are very risk averse. And we ask a client, can you afford to lose anything? And 99.9% of the time, the answer is, preserve my capital and earn what I can earn in the bank. And I'm happy. Which is really not difficult these days. Especially in England where you can, you can earn an interest rate of around comma 5%. In Japan now it is negative comma 2.5, so we can definitely out-earn that. Okay. Negative. Negative comma 2.5. Okay, I'm trying to wrap my head around that, it's like you invest money and it becomes less. You're paying the bank. So we try to really keep it simple and we, from the second they enter our office they become family.

This is something I've noticed and it's something that I think you guys do, but you can correct me if I'm wrong is for you, it's not just about, it's not just about the backs. It's about actually wanting to help people and to help people become financially more stable. Am I correct in saying that? Cause we do, we call a spade a spade on the show, just so you know. We have such fun. We meet street sweepers, we meet surfers, we meet MDs and we treat everybody exactly the same. And it's how often you can actually laugh every day and give someone hope that they have a better future. Because for me, and this has happened before and it hasn't been with investments, but it's been with like policies and stuff like that. People are happy to take your money. They sign on the dotted line, there you go, you're going to send, your stop order's going to go off for however many thousand every month and we'll see you in 10 years when something may or may not go wrong. And in the interim, the bottom falls out of wherever they put your money, but nobody's got the guts to come back and say, listen, maybe it's a bad idea. You guys are not like that. We are independent, we are investment advisors, we are not makalas.

We offer you what you need. And then we earn fees based on your earnings. So the more we earn for you, the more we earn for us. So a lot more ethical. And if you're unhappy with us, you fire us. And we nag you nicely to invest. But this is the thing, I mean, I was reading somewhere that there's people literally that you've advised and advised and advised and they're going, oh, thank you, thank you. And eventually they go, okay, we've now seen what you guys do. And they've become lifelong clients. It's I have clients that I've had for 23 years and they come and have coffee more than anything else. And they go, if there's anything wrong with my investments, please just amend it. And that's about pure trust. I think that's brilliant that you get if you get that level with somebody that to me is I mean, that's a big thing, but more envy. We do make errors and we say sorry, and we fix it. Look, and I think this is something that people need to realize. And that's why I've I've always been a little averse to this because things can go wrong. They can and it's not stuff you guys are able to follow trends, but you do not have a sort of a magic ball that you can look into and know that this is exactly we do have two crystal balls in the office and I don't work.

The pastries are flat. It's the magic eight ball. What should I do today? You can give it a shake. But gentlemen, this is such a massive field. I'm so looking forward to you guys coming in and chatting and teaching us and letting us learn more about the world of investment, about how we can secure our futures. I know for a fact for myself, for example, I am South African through and through. I have no plans of leaving. I love this country. I don't love what's happening to it, but I love the country. I love the people. But I would like a way to be able to secure some of my money for, you know, just the eventuality that maybe we let the wrong people run this country for longer than they should. So I think it's a great, great opportunity. I'll give you that. It's their website. If you've got any questions, OK, there is they're not going to ask you for any money. You don't have to pay for any. If you've got any questions, info@globallocal.co.za, that's with two L's, OK, info@globallocal.co.za. Give the guys a shout to drop them some questions. You guys, by this time, I've got all of my contact details. I'll be happy to pass on any questions as well. And then we will have a chat and we'll see what's happening.

We've just touched the surface. There's so much more. We're going to see you again in two weeks time. Yep. Thank you. Thank you very much for coming out, having a chat to us. I look forward to getting to know you guys, getting to know the business and to share that with our listeners. I think it's going to be brilliant.