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These are challenging times. It shows how far we have come (or regressed) as a species when “fight or flight” has been replaced as an instinct by “fight or do nothing”! In investment terms it rarely, if ever, makes sense to do nothing.

Doing nothing creates the illusion of safety in the eye of the storm – but in a post-pandemic world will reveal losses through both inflation and currency depreciation. If investments are turning bad then doing nothing will lock losses in. Wealth protection is vital. Protection is an active discipline – DO SOMETHING! And do it now.

Here is a basic guide to wealth protection in this crisis:

1.       Do have enough cash but not too much. Keep enough in the bank in your home currency to cover expenditure for 3 months.

2.       Ask for a written assessment of the specific effect of Covid19 on the investment you are considering. If they don´t have one then don´t invest

3.       This is the only time when cash is not king – it´s losing value in real terms particularly if it has an image of a gorilla on it! The Ugandan Shilling is going to lose substantial value against all key currency partners over the next 18 months so get out of UGX now.

4.       In an uncertain world fix your returns…….find investments that contractually guarantee the rate and date of return – and that back those guarantees with substantial assets

5.       Understand exactly how the investment that you are giving your money to plans to repay that money – it´s ALL about the exit plan. And make sure they have a back-up plan. Or two!

I have spent my locked-down weeks reviewing the investments that we like in the light of the pandemic. Some I like less and some I like more. One I no longer like at all.

Two of my own existing investments will mature in the next month and I will re-invest the capital and returns immediately into my two favourite pandemic-proof schemes:

UK Distressed Property Fund

One of the few businesses that welcomes the current chaos is a UK business with 30 years of experience in maximising the potential in distressed markets. The business plan is simple – use investor money to acquire properties at below market value; renovate them; rent them; refinance them. It offers:

·         12 month term

·         USD investment

·         15% yield

·         5% Interest payable every 4 months

·         Minimum $25,000

·         Charge over assets managed by a security trustee

French Holiday Resort Development

A project that has paid our clients on time and in full for more than 3 years of partnership. This is an expansion of an existing resort that allows investors to finance the development of properties that have already been sold. The investment offers increasing annual returns over a 3 year period and is made more attractive by two alternative exit routes. It offers:

·         3 year term with a  2 year break clause

·         USD investment

·         Year One: 13%

·         Year Two: 16%

·         Year Three: 20%

·         Interest payable every 6 months

·         Minimum $25,000

·         Charge over assets managed by a security trustee

I like these because they have a great track record, a good business plan, pay returns in USD, and offer a charge over substantial assets.

I will get an average return of 15% in USD – and so expect to make a further 10% profit when I convert back to UGX. A true win-win.

Written by Jon Bennion-Pedley