US Interest Rates - BVI Property Guide

Rising US Interest Rates - BVI Property Guide
by Adam Stauffer, CFA, Chief Investment Officer at Offshore Investment Advisor

In the last months of 2010, US Treasury rates—or the interest on US government debt—started to climb from near historic lows.

The combination of a second round of quantitative easing by the Federal Reserve and an extension of former US President George W. Bush-era tax cuts sparked a rally in 10-year Treasury rates from a low of 2.45% in early October to around 3.5% at the time of this writing.

While the prospect of rising rates is welcome news for investors in CDs, many of whom have realised negative real rates of return over the last several years due to near zero percent interest rates, the impact on short-term CDs will be muted. In fact, the benchmark three-month CD rate only increased to 0.29% from 0.27%. Instead, the primary impact will be felt in mortgage rates and more generally across an investor’s portfolio.

Real Estate - BVI Property Guide

Real Estate and Asset Allocation

by Adam Stauffer, CFA, Chief Investment Officer at Offshore Investment Advisor

US home equity peaked in 2005 at $13.1 trillion when it accounted for over 22% of households’ net worth, according to the Federal Reserve. Now five years later it stands at $7 trillion and accounts for only 13%. The magnitude of this fall and its unprecedented global reach have left many investors breathless—questioning the role that real estate plays in maximizing long-term wealth.

Historically, real estate has been an excellent way for individuals to not only save but to build wealth. Despite this, many wealth managers do not include it in their asset allocation calculations. In fact, there is a relative dearth of research on how home equity fits into an individual’s overall portfolio. In my opinion, this is a mistake. Not only can real estate offer great diversification relative to other assets, such as stocks and bonds, but it also forces investors into a regimented savings plan.

Labour Lowdown - BVI Yacht Guide

Labour Code Lowdown: Retirement Benefits

by Adam Stauffer, CFA, Offshore Investment Advisor

After 35 years without revision, the territory enacted a new labour code, Labour Code 2010 on October 4, 2010. As with most change, the new code is not without critics. One controversial section on Retirement Benefits has scared many employers. Their fears are warranted, given the gloomy state of the economy and slow pace of recovery. However, there are steps employers can take to minimize the impact to their bottom line.

With the average life expectancy steadily increasing, retirees find themselves in the bittersweet position of having to make their savings last longer so they can enjoy their longer lives. The retirement benefits section is one way to address the issue. However, it is by no means an end all—everyone should have a retirement strategy in writing and save accordingly.