NEBA

Oct - Dec 2023

INSIGHTS “WHY WE ENCOURAGE PEOPLE TO SAVE EARLY”

What Insurance Do I Need? When it comes to financial planning, different type of insurance serve different purposes. QUARTERLY MAGAZINE

ABOUT US NEBA Financial Solutions provide bespoke investment

INVESTMENTS BUILT WITH STRATEGY 

opportunities to IFAs and direct investors alike. We develop unique Structured Products and UCITS Funds designed to effectively manage risk, while maximizing yields. NEBA’s proven expertise in financial product design and delivery allows us to produce Structured Products that are both timely and reflect current market conditions. We pride ourselves on

Creating a Structured Product with a desired return for the investor requires extensive skill, research, insight and market knowledge assets that the team at NEBA Financial Solutions are proud of.  Each asset is painstakingly analysed to take into consideration the risk appetite of investors. We assess the volatility, history and correlation between the combination of assets.  We aim to keep the volatility the same across the underlying assets in the product and unlike other investment firms, we refuse to consider 'one bad egg in the basket' just to help with the pricing - our recommendations are based on our best assessment for the most profitable outcome. 

delivering exceptional service and support based on an approach built on transparency, trust and integrity. With an ever-expanding presence in LATAM, Africa, The Middle East, Europe and Asia, our team are able to provide unparalleled investment insight through our global network of partners.   Our truly international capability means that NEBA Financial Solutions can service Financial Advisers and their clients faster and more efficiently, while allowing us to develop closer working relationships and a genuine understanding of their requirements.   Our philosophy is built on a foundation of trust and transparency. We spend time getting to know our clients, their requirements and their investment strategies so that we can tailor suitable products that enhance and compliment their investment strategies.   The Structured Notes that NEBA produce typically have a theme designed to resonate with the investor, For example: - US Stocks - S&P Top 5   - UK Stocks - FTSE Top 5 - Global Indices   - Safe Stocks Basket, chosen for Market Capitalisation   - Sector Baskets

TABLE OF CONTENTS

06 WHAT INSURANCE DO CLIENTS NEED?

10 WHY SAVE EARLY!

14 PALY MONEY VS ESSENTIAL SPENDING

18 OPEN UP ABOUT MONEY

22 INVESTING IN CHILDREN

CEO Message John Beverley

Just as we enter the half year mark, take some time to reflect on how your 2023 goals are shaping up. Hopefully most of us are on track. I recently hung a new poster in my 17 year olds bedroom which I felt would share a positive call to action during his final months of schooling which could impact his next 50-60 years. It says "Your future is determined by what you do today". There have been things in my life I have regretted 'putting off' until another day. What are you doing today that will impact your tomorrow for the better? I hope that many of us will take the chance to do the things today which need to be done to protect our future and those we love. If needed, arrange a review with your advisor who can guide you on your most important priorities. You are in good shape when you are with NEBA!

NEBA SE R VI CE S P la t f or ms NEBA have TOB with a whole range of Platforms. If you don't have TOB with a particular Platform, instead of turning business away, you can manage your clients via NEBA.

F u nds NEBA have access to over 100 commission paying Funds. Choose what is best for your client and get paid.

S t ru ct ure d Not e s NEBA have access to more Notes that we advertise. See one you like, ask NEBA to get it for you.

I ns u ran ce NEBA have an Insurance Licence and can give you access to Health & Life Insurance Companies. Give your clients a FULL Financial Planning Service via NEBA.

Other Services you can partner with NEBA include: uk pensio n t r ansfers

existin g p ort fo lio review pro perty investments

wills

in tern ational mortga ge c urr en c y exc hange

in tern ational banking [email protected]

WHAT INSURANCE DO I NEED? When it comes to financial planning, different types of insurance serve different purposes. While critical illness insurance can be valuable, the importance of each insurance type may vary depending on a clients individual circumstances and priorities.

JULY 2023

Here are a few key insurance types commonly considered in financial planning:

1.HEALTH INSURANCE

2.LIFE INSURANCE

Health insurance is essential for covering medical expenses in case of illness or injury. It provides financial protection by helping to pay for doctor visits, hospitalization, medications, and other healthcare services. Without health insurance, medical costs can be substantial and could potentially lead to financial hardship.

Life insurance provides a payout to beneficiaries in the event of death. It is particularly important if clients have dependents who rely on that income. Life insurance can help replace lost income, pay off debts, cover funeral expenses, and provide financial support to loved ones.

3.DISABILITY INSURANCE

4.CRITICAL ILLNESS INSURANCE

Disability insurance offers income replacement if clients become disabled and are unable to work. It can provide a portion of income, helping to cover essential expenses while unable to earn. Disability insurance is important for protecting financial well-being in case of a long-term disability.

Critical illness insurance pays a lump sum if clients are diagnosed with a specified critical illness, such as cancer, heart attack, stroke, or kidney failure. The payout can be used to cover medical costs, living expenses, or any other financial needs that arise due to the illness. Critical illness insurance can provide a financial safety net during a challenging time, allowing clients to focus on recovery without worrying about financial obligations.

Whether clients need critical illness insurance depends on their personal circumstances, health history, and risk tolerance. Consider factors such as age, family medical history, existing health coverage, and ability to handle potential medical expenses. Critical illness insurance can be valuable for individuals who want additional financial protection and peace of mind in case they face a serious illness. However, it's important to carefully evaluate the terms, coverage, and cost of the insurance policy before making a decision.

When planning insurance needs, it's advisable to consult with a qualified financial advisor or insurance professional who can assess your specific situation and provide personalized recommendations based on your goals and circumstances. NEBA know Financial Advisors all over the world and help put clients in touch with qualified, experienced and reliable consultants.

Talk with NEBA about the range of Insurance products we have access to.

NEBA'S PORTFOLIO SOLUTIONS NEBA’s  Risk Rated Portfolio Solution will divide your clients capital investment into a range of building block UCITS Funds. The percentage of your capital suggested for each fund will be in line with your attitude to investing e.g. Adventurous, Balanced, Cautious, etc. The allocation of the clients capital put into each Fund can be found at www.nebafinancialsolutions.com/Risk-Rated-Portfolio-DFM.

10%

13%

2%

2% 15%

32% 18%

ATP PROGRESSIVE

25%

ATP BALANCED

13%

8% 10%

20%

20% 13%

NEBA’s UCITS Funds target cash plus returns, meaning the investment portfolio strategy has an absolute benchmark and objective. Each building block fund brings exposure to different asset classes and strategies meaning overall your portfolio is invested in a wide range of investments to improve diversification and smooth out investment returns. Given that the portfolio strategy targets cash plus returns over a full market cycle, many of the investments are less correlated to stock markets and their returns are not driven by the same investment conditions. Each UCITS Fund can also be invested individually. Learn more at www.nebafinancialsolutions.com *NEBA will only promote UCITS Funds as they are the only Funds that meet our high standards.

Direction, not intention, determines destination Our market-leading service can help you and your clients along the way

05

July 2023

WHY DO WE ENCOURAGE PEOPLE TO SAVE EARLY?

SAVING MONEY EARLIER IN LIFE CAN HAVE SEVERAL ADVANTAGES. HERE ARE A FEW REASONS WHY IT IS BENEFICIAL TO START SAVING AT A YOUNGER AGE:

1. COMPOUND INTEREST Saving early allows your money to grow over time due to the power of compound interest. Compound interest is the interest earned on both the initial amount you save (principal) and the accumulated interest. The earlier you start saving, the longer your money has to compound, potentially resulting in significant growth over time.

2. FINANCIAL SECURITY Saving early helps you build a financial safety net. Life is unpredictable, and unexpected expenses or emergencies can arise at any time. Having savings can provide a cushion to handle such situations without relying on credit cards or loans, which can lead to debt.

3. MEETING LONG-TERM GOALS Saving early provides a head start in achieving long-term goals such as buying a house, starting a business, or retiring comfortably. By starting early, you give your money more time to grow and accumulate, making it easier to achieve your financial aspirations.

4. DEVELOPING GOOD FINANCIAL HABITS Saving money requires discipline and good financial habits. By starting early, you can develop and strengthen these habits, making it easier to manage your finances effectively throughout your life. Saving early also allows you to learn valuable lessons about budgeting, prioritizing expenses, and distinguishing between needs and wants.

5. TAKING ADVANTAGE OF INVESTMENT OPPORTUNITIES Saving early opens up opportunities to invest your money. Investments can potentially generate higher returns compared to traditional savings accounts. By starting early, you have more time to ride out market fluctuations and take advantage of long-term investment growth.

6. ENJOYING THE POWER OF TIME Time is a valuable asset when it comes to saving. The earlier you start, the more time you have to accumulate wealth. Saving early means you can save smaller amounts over a longer period, making it more manageable and less stressful.

IT'S IMPORTANT TO NOTE THAT IT'S NEVER TOO LATE TO START SAVING, AND EVEN SMALL CONTRIBUTIONS CAN MAKE A DIFFERENCE OVER TIME. HOWEVER, STARTING EARLY GIVES YOU A SIGNIFICANT ADVANTAGE IN TERMS OF BUILDING WEALTH AND FINANCIAL SECURITY.

At Custodian Life, innovation sets the standard of getting your business forward.

Dedicated to serve investors worldwide

Custodian life is continuously developing the client offering and as a result, introducing our new online trading plat form with enhanced f unc tionalities and produc t s . T his is the outcome listening closely to the needs from our par tners where we now, nex t to the traditional market s , also will be able of fering cr ypto currencies . Onboarding processes has been improved and simplified where time to market are signific antly reduced for the p olicies with a desire handling their own p or t folios .

custodianlife.com Registered office: Canon's Court, 22 Victoria Street, Hamilton HM 12, Bermuda. Email our Sales office at: [email protected] Custodian Life is registered in Bermuda with registration number 45484 and regulated by the Bermuda Monetary Authority.

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PLAY MONEY vs.

ESSENTIAL SPENDING The type of money you have determines the best way to invest it.

Money earned is a precious commodity. There are various ways people choose to spend their money, here we prioritise spending behaviours and explore what investment stategies might be appropriate for you.

1

2

3

ESSENTIAL SPENDING

INSURANCE & SAVINGS

PLAY MONEY

This would include your mortgage (or rent), food and other household bills. Even Christmas, birthdays and a holiday can be included in this section. Ultimately, it encompasses the day to day essentials everyone spends money on. These cover life's necessary expenditures and shouldn’t be used for any other spending. Unfortunately some people can only afford these expenses and have nothing left over at the end of each month to save or invest with.

This also an essential spend which sadly not everyone can afford. This covers your Health & Life Insurance, and savings or investments for education and retirement. If you are fortunate to have an income that exceeds your expenses, you are privileged to prepare for the future.- do it now, while you can! The money you save for the future is not put at risk but set aside to grow steadily over the years until needed. The insurances are crucial to take care of any unexpected circumstances that may put that future for you or your loved ones at risk. 

Q&A: JOHN BEVERLEY MANAGING DIRECTOR, NEBA FINANCIAL SOLUTIONS WHO SHOULD INVEST? I have met so many different people who invest. and their reasons are so varied. However, an investment plan can be made for anyone!

HOW DO I KNOW IF IT'S A "BAD" INVESTMENT BEFORE IT'S TOO LATE? Some high risk, high return investments are categorised as non-essential spending, so if you don't have the "play money" these might not be for you. Ensure you are entering the right investments for your current financial situation. Essential spending needs to be prioritised. So unless you have 'play money' you could live without, stick with mainstream steady growth investments rather than unknown alternatives regardless of how well they are presented to you.

This is the surplus money you have left only once the other essential items are taken care of. Very few people in the world are actually in this position. They can gamble the money away in risky ventures and activities without worrying if the money is lost. If they lose $200,000, it does not phase them as they know that they have taken care of the essential spending already. This is the group that can buy into one or two start up companies.

Some people like to talk about what might make a good investment, for example when the oil price crashes or COVID 19 lockdown causes Netflix subscriptions to spike. However, speculating and acting on speculation are two very different things. You should only act on speculation if you can afford to lose the money. Be wise with your finances and stick to the essential spending unless you can afford to shrug your shoulders and say, “Aww well. Maybe I’ll do better next time”.  All NEBA Financial Advisers are qualified to determine which kind of spending you are able to afford and identify suitable investments for you. We don’t speculate with your essential spending. We aim for steady long term growth through tried and tested methods whilst considering your eligibility for more elaborate methods.

What is your savers profile? You have a job, live modestly, work hard and maybe even volunteer in the community. You don't have enough income to pay for the bills of now, not the future. Your rent or mortgage is covered, you can afford food, electricity, a car and all the necessities of life without borrowing.  Christmas spending and an annual holiday in the sun is also the norm. Saving for retirement is not a reality and you are hoping for a government or company pension upon retirement.

You are a "Day to Day Survivor" You budget well and don’t rely on handouts. Unfortunately, you rarely have any money left for the future (except maybe an unexpected car repair bill etc..). Day to day survivors do not generally invest money, and nor should they as they don’t really have any money to spare.

You are a "Steady Surplus Saver"

You have money left over each month. Maybe there are two breadwinners in the home. You have a higher than average income, or lower living expenses. You often have a steady surplus of cash each month. You can afford to treat yourselves to luxury essentials and vacations. You pay for life and health insurance and plan financially for retirement or unexpected events.

You do not not take risks on unknown investments. Generally, you wouldn't invest in the stock market or buy and sell investments like a day trader. You avoid speculation on potential areas of investment and use your financial adviser to invest according to your risk profile and age group to make the most of your surplus money.

You are a "Hobby Investor"

You have enough money that you don't worry about the the future. You have plenty of savings. The money you need for your future is set aside and you have fun money remaining.

You can afford to take risks and venture into elaborate investments that are verging on gambling. If you lose $200,000, it wouldn't be too bothersome.

WHAT HAPPENS WHEN YOU OPEN UP ABOUT MONEY? DISCUSSING MATTERS OF MONEY DOES NOT COME NATURALLY. TALKING ABOUT OUR FINANCES, SUCH AS HOW MUCH WE EARN OR HOLD IN SAVINGS, IS TABOO FOR MANY OF US.

It is no wonder, then, that we are often unable to open up to even close family members about our financial affairs. For women, this might come down to not feeling confident enough to discuss what can, on the surface, appear to be complex financial arrangements, such as investing and pension plans. Many of us are too embarrassed to ask questions for fear of appearing ignorant. If you have ever felt this way, you may be reassured to know you are not alone. Research by YouGov, commissioned by Lloyds Banking Group, found that 44% of people have avoided having a discussion about money. Among those who had

No financial surprises a conversation about finances with their family and friends, 32% found it stressful, while 43% Talking about wealth is only one aspect – it’s also important identified feeling embarrassed. that you are actively taking part in the decision-making. A However, it is vital that we worldwide study by UBS, called ensure these conversations take Own Your Wealth, found that place in the home – not only in the UK, 62% of women defer between spouses but also with to their partner when it comes dependents. The more open to longer term financial families are about their finances decisions and only 15% take the and what the older generation lead. intends to do with their wealth, the better the outcome when the At a practical level, being up-tonext generation inherits those assets. This not only ensures that speed with family finances and those inheriting can act on their feeling able to discuss parents’ or grandparents’ wishes, investments, pensions and savings openly is important, but they will also have the given that women can expect to knowledge and tools to manage live longer than men. In the the wealth responsibly.

ONLY 15%OF WOMEN TAKE THE FINANCIAL LEAD event there is a change in circumstances, such as death, serious illness or divorce, understanding your financial position can make a stressful or life-changing event that bit easier to cope with. he Quilter Women and Wealth Management Strategic Report cites a UBS study that interviewed widows and divorcees. It found that 74% ‘discovered negative financial surprises’ and that 76% wished they had been more involved in long-term financial decisions. One way to ensure both partners in any relationship remain on top of all household finances and investments is to instigate regular discussions – whether weekly, monthly, or as often as is necessary. This also goes for attending meetings with financial planners and investment managers, as it is important that both people in a relationship understand how family assets are being managed. If you have neither a spouse nor dependents and all the financial decisions fall to you, choose an adviser and investment manager that you feel comfortable talking to and asking questions of. The more often you discuss your finances, the easier it will become.

The next generation Over the next 10 years, $8.6 trillion of global high net worth wealth is expected to change hands, according to a Global Data report Intergenerational Wealth Transfer: Seizing the HNW Opportunity. This intergenerational wealth transfer is already underway.

If the next generation are to inherit a potentially significant sum of money, they need to know what to do with it. This is why it is so important that conversations about money and investments include any dependents. A report by the WealthiHer Network from 2019 found that 59% of women stated the purpose of wealth was mainly to offer security and comfort to the family. Given that research has shown wealth and family go hand-in-hand for women, ensure that discussions around family finances take place. In particular, make it a priority to discuss inheritance. It may come as a surprise for children – especially adult children – to learn that they will inherit some money. But it will be an even bigger shock if they are under the illusion they will be left a certain amount of wealth, only to find out a parent’s will has changed, or the taxman can claim a proportion.

Here at NEBA Wealth, we hope that by imparting our knowledge we can make those conversations free of stress and embarrassment. In turn, you can talk about wealth, investments and inheritance with ease and confidence to any family member.

INVESTING FOR YOUR CHILDREN’S EDUCATION

UK independent schools are world renowned for their excellent quality of education and student prospects. Indeed, the 2020 Independent Schools Council annual consensus showed that of the 537,315 students attending independent schools 90% went onto higher education. The majority, 51%, went to one of the top 25 UK universities of which 5% chose to study at Oxbridge. It is not the education alone that sets these schools apart. They often have exceptional facilities, offer a myriad of extracurricular activities, and have a diverse cohort of international students, all of which cultivates the mind and character of students.

Worth the Cost?

Audora

However, such a start to a child’s life comes at a substantial cost. Whereas a state school will on average cost the taxpayer around £6,000 per year, independent schools can charge anything from around £13,000 a year up to £40,000 at a top boarding school. Over five years, this represents a considerable financial commitment and hopefully one that will yield enormous returns in a child’s later life. To be able to provide for this education can for many seem like an unachievable aspiration. However, with a few simple steps one can come closer to realising this ambition through investment.

A segregated investment pot offers some peace of mind that this commitment could be met regardless of job security and increases in schooling costs (which have risen faster than inflation since 2000). Furthermore, if a family is willing and able to assist, they may consider asking for the gift early on. If received and invested now, as explained in Step 3, the sum can produce returns that pay for the school and means the donor does not have to part with as much to begin with. *Please note that the following principles can also be applied to meet other goals for one’s children. These may be ensuring the children begin their adult lives without the cost of student debt by paying for university, or perhaps even providing the deposit on their first property.

1. Plan ahead The first step on this journey is deciding whether to send children to an independent school and take on the necessary financial commitment. The earlier this decision can be made the better as one can begin to set aside surplus cash from, for example, salaries, bonuses, gifts or inheritances in order to invest it specifically for schooling.

2. Choose an investment ‘wrapper’ Next it is important to take advantage of the many ways in which investments can be held. Think of the investment wrapper as the basket that holds the investments, different baskets have different purposes and advantages. A common example of which is an Investment Wrapper. Some wrappers, insulate the investments from income tax and capital gains tax. Therefore, it is well worth exploring the different tax-efficient options available to maximise saving potential.

3. Begin investing and stay invested The importance of investing early is due to the simple but powerful force known as ‘compounding’. This is the idea of earning a return not only on the original investment but also on the accumulated interest that is reinvested. This may sound obvious or trivial, but the long-term effects can be startling: Take for example, if when a child was born the parents invested £20,000 into a stocks and shares ISA (the maximum allowance for tax year 2020/21), made annual contributions of £15,000 in monthly instalments, and invested in the market returning an annualised 5.3% per year. By the time this child went to school aged 13 – the investment would have grown to £320,831.70 (before associated costs). This would be enough to pay for two children to attend simultaneously (with today’s purchasing power).

Forecasts are not a reliable indicator of future performance.

This annualised return of 5.3% mentioned above represents the annualised total return investors have received over 20 years. This return is above the general rate of inflation, meaning investors have increased their ‘real’ wealth over this time. recognizing their most recent achievements. You can even invite more sociable aspects into the playing field by including pieces of fluff information, such as newlyweds and parents-to-be within the office.

It is important to emphasise that markets fluctuate in the short term due to many factors including global crises and periods of rapid economic growth. Generally speaking, over the long-term markets trend upwards. This is because investors are rewarded for tolerating the extra volatility (risk) of the stock market. This is why the annualised growth remains positive even during the recent period that saw the Coronavirus sell-off, the Global Financial Crisis and the bursting of the Dotcom Bubble. The old investment adage remains true: “It’s about the time in the market rather than timing the market.” Therefore, to reiterate, begin investing and stay invested.

To withdraw funds during tumultuous times is a temptation many investors succumb to. However, the best days of market returns tend to follow shortly after the worst. Indeed, being fully invested (not withdrawing funds and reinvesting dividends) in the FTSE All Share for 20 years would have given an investor almost double the money compared to someone who missed the best 10 days in the market. The results are even bleaker if an investor missed the best 20, let alone 40, market days as money would have been lost. The below chart illustrates how much a portfolio would be worth this year with a £1million investment made in 2000:

4 . C on sid er a d d it ion a l cost s on t op of t he school fees. T he fu ll be n e fit of in de p e n d e n t s chool i n g d e r i v e s f r om t he e x t r acu r r icu lar act iv i t i e s of f e r e d s u ch a s s chool t r i p s a n d m u sic le sson s. T hou g h f or m a t i v e f or the st u d e n t s, t he se can place a n a d d i t i on a l f i n a n ci a l bu r d e n . It i s i m por t an t t o plan a he a d f or t he s e e v e n t u a l it i e s an d fact or addit ion al cos t s i n t o f i n a n ci a l p l a n n in g .

5. Commit to being able to pay for the duration of their school life. Leaving a school can be difficult for both the child and family. Unfortunately, being unable to continue paying the fees can happen. Whilst we can never be sure what the future holds, it is important to protect a child’s education. One way of achieving this is by reducing the investment’s exposure to risk in the run up to, and during, children’s schooling. As discussed in Step 3, investors are typically rewarded for taking on higher market volatility with higher market returns. However, moving a portfolio into traditionally less volatile assets (such as fixed interest and cash), provides ballast against market downturns and gives greater certainty that fees can be met.

Final Thought WHILST THE ABOVE STEPS, I HOPE, HAVE HELPED DEMONSTRATE HOW ONE MIGHT BE ABLE TO PAY FOR AN INDEPENDENT SCHOOLING, OR ANY OTHER FINANCIAL GOAL FOR A CHILD’S FUTURE, PROFESSIONAL HELP IS AVAILABLE AT EVERY STAGE ALONG THE WAY. A FINANCIAL ADVISOR CAN HELP FINESSE A TAILOR-MADE SOLUTION TO EVOLVING CIRCUMSTANCES AND OBJECTIVES. MOREOVER, A DEDICATED INVESTMENT MANAGER WOULD DEVISE AND MANAGE AN APPROPRIATE PORTFOLIO OF ASSETS TO MEET INDIVIDUAL GOALS. SUCH SERVICES DO ADD ADDITIONAL COSTS TO THE INVESTMENT PROCESS BUT PROVIDE EXPERTISE AND ACCESS TO ASSETS ONLY AVAILABLE TO INVESTMENT INSTITUTIONS. WE IN THE FINANCIAL SERVICES AIM TO SIMPLIFY AND ENHANCE THE INVESTMENT EXPERIENCE.

NEBA FINANCIAL SOLUTIONS STRUCTURED NOTE BUILDER

Design your own investment The NEBA Structured Note Builder allows for a personalised approach when investing in our structured products.  By describing what your clients  needs are, NEBA can design a product that meets their specific needs. To get started, visit www.nebafinancialsolutions.com/structured-product-builder 27