Today, dear readers, this is the introduction to the New Bermuda Investing Primer Series, the first book of the overall Bermuda Fundamental Financial Planning Primer Ebooks Series that will cover all aspects of finance planning. These publications are Bermuda-focused, written specifically for Bermuda residents by yours truly for our sophisticated financial environment.
The materials, research, information sources, and discussions will cover the gamut — based upon the author’s extensive experience as an international tax and financial planning professional, as well as culled from almost 20 years of finance materials as the Saturday personal finance columnist for The Royal Gazette.
At the end of the series, or at some time during the series (I’ll never tell), the Moneywise: Bermuda Investment Primer will be available for download as an e-Book through an educational website, for free, or possibly a modest sum.
Significant detailed information will be available only in the book format, but hey, you can’t have everything through the personal finance column — space just does not permit the detail. Any sale proceeds (net of publishing costs) of the books will be donated to educational charities in Bermuda.
Why an investing book for Bermuda residents?
There is little local broad independent Bermuda investment data that can be accessed and utilised for making informed personal investment decisions. Yes, each local financial firm has their own proprietary investment information, while investors are often barraged with internet overseas investment offers, but that is not the same as being able, for instance, to compare a mutual fund offered by one domestic firm against a similar offering in another firm. The information is just not there.
Consequently, investors, both beginners and experienced individuals, for years have voiced frustration over the difficulty in figuring out how to invest, where to invest, who to invest with, and what to invest in.
The complexity of investments in our international financial centre of Bermuda abounds. Investment choices are confusing and often ambiguous. As a finance journalist and international financial planner, it is my mandated professional due diligence responsibility to understand our investment environment. This is what I do. It is also been a passionate mission for me to provide broad access to independently derived financial information.
I know that financial literacy is eagerly sought and needed when investors ask me if the interest rate on a mutual fund is guaranteed, or casually say, after it is explained that they’ve invested far too much of their hard earned dollars in a high risk alternative class hedge fund: “But they are nice people”.
Nice is meaningless, if you lose your capital.
Bermuda financial products are related to the global investment world, but you have to have the equipment, the software, and the knowledge to locate them elsewhere. The big favourite financial websites such as Yahoo Finance are great for general information if you are domestically resident in the US or the UK, for instance, but do not often translate into local investment choices.
Here are a some of the topics to be covered, along with the chapter titles:
• Why would cash be considered an investment? There are many types of cash, more than you realise, real cash, near cash, leveraged cash, currency holding choices, risk and safety consideration.
• Basic investments, types of securities and vehicles, their structures, their appropriateness for you, their best and bad sides.
• Products and plans available, but options to purchase and availability may be limited in Bermuda without some ingenuity.
• Needing help with your decisions? Understanding the experience of your financial sales representative, professional credentials, licences and qualifications.
• Do it yourself? Should you deal face to face or through an anonymous electronic person or system.
• Tired of working blind by investing in what you don’t understand. Develop your investment knowledge and get up to speed.
• Your pension (and retirement) are investments. What do you actually know about their content. Should you be actively monitoring your investment results?
• What to do about multigenerational multinational family investment and planning issues, these are particular traps for Pondstraddling Bermuda islanders.
• Investment tax traps (and the ever increasing burden of tax compliance issues) for Bermuda islanders with assets local and foreign-based.
The Chapters will be presented as follows and others will be added.
1. Why invest? The elements of cash and currency plays.
2. Stocks: the concept of capital through a ubiquitous mom-and-pop pizza operation, kinds of stocks, corporate buybacks, leverage, margin accounts, dividends, etc. Your pension may be your largest investment, are you paying attention?
3. Bonds: debt glorified, ratified, convertible, but always a promise to repay, never ownership.
4. Mutual funds, all sizes, all shapes, almost something for everyone for a fee.
5. Exchange traded funds and structured notes.
6. Alternative classes.
7. The use of leverage, margins, and management of market risk strategies.
8. Derivatives, options, futures, credit default swaps, CDO’s and other hard to understand, let alone buy, investment vehicles.
9. Fees, commissions, licences and full disclosure of vested interests from your investment provider.
10. Choosing (and trusting) your financial salesperson. Always remember, what is in it for them.
11. Financial behaviour, risk, fear and capital market volatility.
12. International tax implications inherent in all investments. Yes, you have to consider these issues as well.
13. The really hard parts: the investing process, establishing an account, reading the investment statements, understanding information in a prospectus, filtering through generic sales pitches (internet, physical) to what is relevant for your investment needs, setting up a comfortable investment allocation.
14. How capital markets work, domestically and abroad.
15. The Bermuda Stock Exchange.
Finally, I am asking you, dear readers, to submit your questions on investments (and investing stories) to me at email@example.com.
Your questions and answers will be posted within the investment primer, and possibly in subsequent column.
Your personal information will be kept completely confidential and anonymous. Know that as a licensed investment professional, I am mandated to adhere to confidentiality standards. Individual defining circumstances will also be changed so that your situation cannot be identified.
I look forward to receiving your input. Let me know what challenges you have faced in investing. Are you a beginner, more experienced, or just want to understand more about our island and the investment opportunities.
• Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette. All proceeds earned from this column go to The Reading Clinic. Contact: firstname.lastname@example.org