...I would not be on my own. In October, the Daily Telegraph reported on research from the Centre for Economic and Business Research. It showed there are more than 820,000 "demi-millionaires" - that is, those worth at least £500,000 and that the number is growing at more than 10% per year.
The wealth figure does not include pension rights and is based on net wealth, meaning liabilities like mortgages are deducted.
Interestingly, most demi-millionaires are aged between 45 and 64 and just over 40% of them are women.
It would be easy to assume that this is all as a result of the strong growth in property and so is not necessarily increasing these lucky people’s need for immediate financial advice. But apparently, this is not so. The report states that indeed more than a third is, in fact, tied up in property but that the next highest allocation of personal wealth is in securities such as shares and corporate bonds.
This trend all bodes well for the recommendation of offshore bonds in the UK. Offshore bonds have always been seen as a choice in the high net worth market. Why? Beneficial tax treatment and a wide investment choice.
The beneficial tax treatment is a result of the fact that the bond
- grows virtually free of tax;
- that 5% of the original investment can be withdrawn each year (for a maximum of 20 years) with no immediate tax liability, and
- switches between investments can be made with no capital gains tax liability - which is very important as this is a group of people likely to be using their annual CGT free allowance.
The superb investment choice is reflected in the vast array of investments that can be used. If sipp choice of around 1,500 equals a supermarket, then an offshore bond is a hypermarket. This is because they can access oeics/unit trusts, offshore deposit accounts, hedge funds and experienced investor funds.
If I were a rich man, I would want an offshore bond.
Steve Whalley is head of marketing at Aegon Scottish Equitable International.
The views expressed are those of the author and not those of the company he represents.IFAonline
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