wealth management
wealth management
Podcast
30.8.2024
Many events have shaken the population in recent years. Alongside the coronavirus pandemic and the energy crisis, it was above all Putin's war of aggression against Ukraine that sent the world into turmoil. For the first time, the horror seemed close to home for many - and continues to this day. The conflict in the Middle East also proves how much a local tension can escalate and affect the whole world.
It is hardly surprising that people are beginning to ask themselves what would happen if the worst came to the worst and Putin, for example, expanded his agenda. Although it is very unlikely that this will actually happen, we would like to pursue the idea and provide some answers.
So what would happen if war broke out in Europe? How could you protect yourself and your wealth ?
The golden rule of pension provision is basically: the person comes before the property. First and foremost, you should always think of yourself and your family. How can you ensure that you are safe and that your well-being is guaranteed? As a rule, this means firstly clarifying where you could find another place to live and secondly, where you would set up a deposit for your living expenses.
Switzerland offers a popular solution in the search for suitable countries. Historically, it has proven to be neutral in past international conflicts and is still considered a safe haven today. Furthermore, its culture and legal system are not too different from ours. Nevertheless, there is the question of whether it could maintain its customary neutrality in an intra-European war if an aggressor did not respect it.
For this reason, Canada and New Zealand have now become equally popular candidates. They also offer living conditions that are not too different from ours and the great advantage of the English language. At the same time, they are considered to be less war-involved and offer more security for emigrants due to their location on other continents.
This criterion also applies to Singapore. Although the country is culturally and legally very different from German standards, it has developed over the last 20 years into an alternative for wealthy families and expats to consider. This is partly due to its high standing in the financial and banking sector and partly due to its structured management, which simplifies bureaucratic matters in particular. Consequently, the rules and regulations are strict, but those who know how to adapt can lead a comfortable life here.
Within the EU, it is very easy to travel between different member states and relocate as you wish. Internationally, however, it becomes more complicated. Each country has its own regulations on visas and residence permits, which need to be clarified in advance. For example, interested parties may have to have lived there for a certain period of time in order to be allowed to set up permanent residence. Some countries, on the other hand, offer the option of an "investor visa", which enables wealthy immigrants to establish a residence in the short term.
For this reason, many of our clients plan to have a second domicile abroad regardless of acute political situations - if only to strategically prepare themselves for the worst-case scenario.
Once you have found a suitable location for your second home, you should also consider how your asset allocation will react to a crisis situation and whether any adjustments need to be made. It is also important to select a custodian or bank with a view to possible geographical fluctuations so that you have sufficient funds available in the event of an emergency. The amount held in the country of choice should ideally be sufficient to last a few years without putting too much strain on your total assets. Of course, you can also invest this basic amount. You should check how the custody account is allocated and where the investments are physically held.
Diversification also plays an important role here.
From a historical perspective, there have already been many conflicts and crises in the past that have caused the markets to plummet over certain periods of time. The hypothetical war scenario in Europe would also be considered a crisis that would have a correspondingly negative impact on the capital market. However, it is interesting to note that stock market prices worldwide overcome such drastic events as wars in the long term.
When looking at the performance of the US stock market, for example, even the two world wars can only be recognized with the help of the arrows (chart 1). In contrast, the phases of euphoria up to 1929 (new industries such as radio, film, airplanes, electric motors in industry, etc.), the boom in telecoms and internet stocks up to 2000 and the residential real estate boom in the US up to 2006, which gave rise to the financial crisis, were really dangerous for equities.
Chart 2 shows how the share performance of war-losing nations fell sharply after the Second World War, but subsequently recovered and provided an important factor for wealth preservation in the long term - and still does today. If we look at the average of 17 industrialized countries in USD, we can clearly see why stock market-oriented investments play an important long-term role in a diversified portfolio and why it is more important to be invested at all than when to get in.
Furthermore, it is primarily physical assets that have proven their worth in past wars. Gold in particular has historically been considered a safe haven in times of crisis, as many investors feel more comfortable owning a real equivalent value that cannot be artificially and arbitrarily multiplied. The popular precious metal has thus protected against hyperinflation in the past and enjoys a certain crisis resistance.
The two world wars can also only be recognized in the gold price with the help of the arrows (chart 3). Only from 1968, the end of the gold backing of the US dollar and thus the beginning of the formation of the gold price through supply and demand, can crises and wars be recognized in the price.
Finally, there are some investors who, in their assessment of the current crises, have come to the conclusion that they should expand their wealth portfolio to include forestry holdings in order to be able to provide for themselves and generate an income if the worst comes to the worst.
In general, you should discuss in advance exactly how you want to make your investment. While some people buy their possessions abroad and store them there, others prefer to keep them with them and buy gold coins, for example, which can be easily divided up and transported. There are many options that require careful consideration.
It is very unlikely that war will break out in Europe. Nevertheless, this thought experiment shows some examples of actions that you can implement in your everyday life. Putting your well-being before your possessions, paying attention to the international diversification of your wealth and reacting flexibly to market changes are generally good guidelines for portfolio navigation.
At the same time, we are increasingly encountering clients in the family office who would like to open up a second residence abroad , including a custody account. It is important to note here that they are not driven by uncertainty or even fear - they are more interested in taking advantage of their opportunities and generally positioning themselves more flexibly. An attitude that we are very happy to support.
So if you also want to position yourself securely, make sure you are not guided by speculation. Instead, think about how exactly you envision your future and what steps you would like to take to achieve it.
wealth management
30.8.2024
Beatrice Reed
A war in Europe is unlikely. Nevertheless, let's ask ourselves the question "What if?" and discuss how you could protect yourself, your family and your wealth if the worst came to the worst and what steps you would need to take.
Many events have shaken the population in recent years. Alongside the coronavirus pandemic and the energy crisis, it was above all Putin's war of aggression against Ukraine that sent the world into turmoil. For the first time, the horror seemed close to home for many - and continues to this day. The conflict in the Middle East also proves how much a local tension can escalate and affect the whole world.
It is hardly surprising that people are beginning to ask themselves what would happen if the worst came to the worst and Putin, for example, expanded his agenda. Although it is very unlikely that this will actually happen, we would like to pursue the idea and provide some answers.
So what would happen if war broke out in Europe? How could you protect yourself and your wealth ?
The golden rule of pension provision is basically: the person comes before the property. First and foremost, you should always think of yourself and your family. How can you ensure that you are safe and that your well-being is guaranteed? As a rule, this means firstly clarifying where you could find another place to live and secondly, where you would set up a deposit for your living expenses.
Switzerland offers a popular solution in the search for suitable countries. Historically, it has proven to be neutral in past international conflicts and is still considered a safe haven today. Furthermore, its culture and legal system are not too different from ours. Nevertheless, there is the question of whether it could maintain its customary neutrality in an intra-European war if an aggressor did not respect it.
For this reason, Canada and New Zealand have now become equally popular candidates. They also offer living conditions that are not too different from ours and the great advantage of the English language. At the same time, they are considered to be less war-involved and offer more security for emigrants due to their location on other continents.
This criterion also applies to Singapore. Although the country is culturally and legally very different from German standards, it has developed over the last 20 years into an alternative for wealthy families and expats to consider. This is partly due to its high standing in the financial and banking sector and partly due to its structured management, which simplifies bureaucratic matters in particular. Consequently, the rules and regulations are strict, but those who know how to adapt can lead a comfortable life here.
Within the EU, it is very easy to travel between different member states and relocate as you wish. Internationally, however, it becomes more complicated. Each country has its own regulations on visas and residence permits, which need to be clarified in advance. For example, interested parties may have to have lived there for a certain period of time in order to be allowed to set up permanent residence. Some countries, on the other hand, offer the option of an "investor visa", which enables wealthy immigrants to establish a residence in the short term.
For this reason, many of our clients plan to have a second domicile abroad regardless of acute political situations - if only to strategically prepare themselves for the worst-case scenario.
Once you have found a suitable location for your second home, you should also consider how your asset allocation will react to a crisis situation and whether any adjustments need to be made. It is also important to select a custodian or bank with a view to possible geographical fluctuations so that you have sufficient funds available in the event of an emergency. The amount held in the country of choice should ideally be sufficient to last a few years without putting too much strain on your total assets. Of course, you can also invest this basic amount. You should check how the custody account is allocated and where the investments are physically held.
Diversification also plays an important role here.
From a historical perspective, there have already been many conflicts and crises in the past that have caused the markets to plummet over certain periods of time. The hypothetical war scenario in Europe would also be considered a crisis that would have a correspondingly negative impact on the capital market. However, it is interesting to note that stock market prices worldwide overcome such drastic events as wars in the long term.
When looking at the performance of the US stock market, for example, even the two world wars can only be recognized with the help of the arrows (chart 1). In contrast, the phases of euphoria up to 1929 (new industries such as radio, film, airplanes, electric motors in industry, etc.), the boom in telecoms and internet stocks up to 2000 and the residential real estate boom in the US up to 2006, which gave rise to the financial crisis, were really dangerous for equities.
Chart 2 shows how the share performance of war-losing nations fell sharply after the Second World War, but subsequently recovered and provided an important factor for wealth preservation in the long term - and still does today. If we look at the average of 17 industrialized countries in USD, we can clearly see why stock market-oriented investments play an important long-term role in a diversified portfolio and why it is more important to be invested at all than when to get in.
Furthermore, it is primarily physical assets that have proven their worth in past wars. Gold in particular has historically been considered a safe haven in times of crisis, as many investors feel more comfortable owning a real equivalent value that cannot be artificially and arbitrarily multiplied. The popular precious metal has thus protected against hyperinflation in the past and enjoys a certain crisis resistance.
The two world wars can also only be recognized in the gold price with the help of the arrows (chart 3). Only from 1968, the end of the gold backing of the US dollar and thus the beginning of the formation of the gold price through supply and demand, can crises and wars be recognized in the price.
Finally, there are some investors who, in their assessment of the current crises, have come to the conclusion that they should expand their wealth portfolio to include forestry holdings in order to be able to provide for themselves and generate an income if the worst comes to the worst.
In general, you should discuss in advance exactly how you want to make your investment. While some people buy their possessions abroad and store them there, others prefer to keep them with them and buy gold coins, for example, which can be easily divided up and transported. There are many options that require careful consideration.
It is very unlikely that war will break out in Europe. Nevertheless, this thought experiment shows some examples of actions that you can implement in your everyday life. Putting your well-being before your possessions, paying attention to the international diversification of your wealth and reacting flexibly to market changes are generally good guidelines for portfolio navigation.
At the same time, we are increasingly encountering clients in the family office who would like to open up a second residence abroad , including a custody account. It is important to note here that they are not driven by uncertainty or even fear - they are more interested in taking advantage of their opportunities and generally positioning themselves more flexibly. An attitude that we are very happy to support.
So if you also want to position yourself securely, make sure you are not guided by speculation. Instead, think about how exactly you envision your future and what steps you would like to take to achieve it.
About the author
Beatrice Reed
Beatrice Reed works as a Senior Family Officer at FINVIA. Born in Munich, she holds a Bachelor's degree in International Management and French (UMIST, Université Paris Dauphine) and a Master's degree in Management (London School of Economics and the University of St. Gallen) with distinction. She then began her professional career in London, initially at the management consultancy Accenture.
Beatrice Reed then moved into wealth management and has now been advising high-net-worth families, single family offices and foundations for almost 20 years - often with complex international and intergenerational structures. From 2006, Beatrice Reed worked at UBS in London for four years, followed by 6 years at Deutsche Bank in London. Since 2015, Beatrice Reed has returned to her hometown of Munich and, prior to Finvia, worked for the independent asset manager Hartz Regehr for almost six years as a senior client advisor and member of the management team.
