“You Don’t Have to Give 1% or More to a Bank and Will Most Likely Get Better Returns”

Group discussions at MyPrivateBanking.com in March covered a broad range of topics. Again costs have been a hot issue and we received several new postings, the latest on all-in fees (”Fee for fixed income portfolio of €2,000,000: 0.6% p.a. all in and for portfolio of equities and options of €2,000,000 per annum 0.8% all in”) by CDrewing. Still the differences between the providers are very high and 7chiffres can be congratulated for his excellent negotiations skills: For currency exchange transactions exceeding USD 20k he pays only 10 basis points, a number no one posted before for amounts south of USD 100k.

7chiffres is not only a good negotiator, but also follows a sound strategy and has a strong rationale for managing his assets himself.

“(..) It helps to remember you don’t have to give 1% or more every year to some 3rd party, and will most likely end up with better returns. If, like me you made your money yourself (vs. inherit), it also helps to remember that in comparison with the effort to earn the money, the effort to preserve it (my goal is preservation with moderate growth) is really not that big. Another way to think about it if you have built a business yourself, is this: would you just give control of that business to someone else based on a few meetings and no public track record and then stay away from that business hoping for the best? Probably not” (read full post)

It is also worth reading his other post on his use and experience of wealth managers. and as well investment strategy,.

Talking about avoiding the pitfalls and hidden cost of investment vehicles, Obsidian gave other members excellent advice on how to design a contract so that an investment does not only pay-off for the private equity company, but also for the investors.

“Always build a minimum floor return exclusive of fees, costs and commissions. If you deposit a substantial principal amount, normally in excess of $3M, your fund manager will agree to a floor. This is normally never discussed but it is available to the savvy investor. Remember the fund agreement is merely the starting point of your negotiation and engagement with your fund manager. In a market where cash is king you have more negotiating leverage than you can imagine.” (read full post)

Solarcell brought the harsh consequences new US regulations have on investors to the attention of members. Thanks! In fact the MyPrivateBanking.com editorial team also felt that these changes in regulations deserve a far more publicity than they’ve had so far and published their analysis and opinion on the site.

While interest and inflation rates are still close to record lows our members are rightly looking ahead and continue to discuss ways on how to avoid the negative effect of future inflation on their wealth. Our member Pedro was kind enough to share his strategy:

“(..) I bought some real return bonds, paid down my mortgage and actualized future projected consumptions (major renovations on our principal residence, and I am planning to be purchasing land for a possible future second home as soon as the renovations are over). Some wrote about investment real estate, I would be careful about that because of its inherent negative carry. If it procures you some positive marginal utility then go for it, but if you are only going to worry about it and do not enjoy having to maintain it (like I would) then I would not do that.” (read full post)

We thank all of our members for sharing their experiences and insights!

• “Chances that your wealth manager is a future Buffett are about as high as winning the lottery”