Updated August 31, 2021
Custodian Life review 2021- that will be the topic of today’s article.
Custodian Life is a fast-growing investment company, which is becoming more popular in the expat market and beyond.
This article will review the investment. If you have a Custodian policy, or have been proposed one and want a second opinion, you can contact me via the WhatsApp function or email me – email@example.com.
Now would certainly be a good time to review your existing portfolio, and consider what to do with your spare cash, considering that stock markets and interest rates are down.
Importantly, this article has been updated. I used to think Custodian was one of the best options in the expat market.
That has changed. When the facts change, I change my mind. I will explain more on this article.
Where is Custodian Life based and who do they bank with?
Custodian Life are based in Bermuda and bank with The Bank of Butterfield, which has existed for over 150 years.
What are the positives associated with Custodian Life?
- The policy is much cheaper than most expat investments. The exact charging structure will depend on several factors, but are nowhere near as expensive as some of the policies I have reviewed before.
- The speed of service is quick. You don’t need to send in physical documents. This means that setting up the policy, adding money and withdrawals is quick and easy. Or at leas they used to be quick (more on that later on).
- The minimum investments are only $30,000, 20,000GBP or 25,000 Euros which is much lower than most competitor companies.
- You can hold pretty much any asset on the Custodian Platform. Individual stocks, funds, professional investor assets and even Bitcoin and several crypto currency. You can also segregate your assets. For example, have $90,000 in conventional assets and $10,000 in non-conversational assets.
- The previous point also means you can gain access to investments that are usually reserved for high net wealth (HNW) investors. Whilst many private banks require people to invest $1m+ in such investments, it is possible to go into these assets with lower account amounts with Custodian
- Custodian Life have partnered with Extante in the EU. This helps an investor gain access to “Custodian Trader” and further increase their investment opportunities.
- Security. Custodian Life have a “segregated account system” which means a clients assets are held separately from the companies liabilities. So even in the unlikely event of a bankruptcy, a clients assets shouldn’t be used to pay off liabilities. This is a much better security than a government “guarantee” that only covers a specific amount of cash.
- There are not usually big penalties associated with getting out of the investment, which is unlike most of the traditional expat investments.
- It is a tax-efficient structure for most expats.
- As most of the procedures can be done without the need for physical documents, it is a portable investment. In other words, if you get a job in another location, it won’t affect your investment as much as some of the old-fashioned providers that require a lot of documents to be sent by post.
- 24/7 online access to valuations.
- Locals and expats can sign up, which is excellent for people that want international solutions, even if they aren’t an expat.
- They can take money from both cash and under-performing investments. In other words, if you have $100,000 in cash and $100,000 with an expensive investment you aren’t happy with, you can make a $200,000 investment. However, it can take 4-8 weeks, for cash or assets to be sent from other investment providers.
What are the negatives with this investment?
- Like most other expat providers, Custodian Life can no longer accept American expats, or indeed American taxpayers. So if you are British, but with an American passport, you probably can’t be accepted anymore.
- As you will go into Custodian Life with an advisor, your mileage will vary. In other words, Custodian is merely “an umbrella” to hold any investment. How that umbrella is used, is key. This isn’t a negative about Custodian per see, but merely that your returns will also depend on your advisory company. For example, in the last 12 months markets have been up substantially, but your returns would have depended on the investment decisions made on your behalf.
- As time is going on, they are becoming picker about processes and compliance. This is slowing down things for clients and advisors alike, and therefore gradually taking away some of the aforementioned positives.
- In addition to the last point, client withdrawals, top ups and admin is now taking a while to process. I have seen Custodian refuse to send client funds for months due to silly reasons.
- Custodian Life got caught up with the Reykars situation. This wasn’t their fault and clients money was returned. However, clients couldn’t withdraw some funds for over a year, until it was sorted out.
Frequently asked questions
The following section will answer some frequently asked questions (FAQs).
Is it a life insurance company?
Custodian Life is regulated as an insurance company, but it isn’t life insurance in the traditional sense of the word.
Your beneficiaries only get 101% of your account value. So if your policy is worth $100,000, your beneficiaries will get $101,000.
There are advantages, including tax benefits, of being regulated as a life insurance company, even if the policy is in reality an investment.
What currencies can you invest in?
You can invest in USD, British Pound Sterling, Euros, Norwegian krona (NOK) and Swedish Krona.
However, if you send money from another currency into the USD account, it will automatically be converted.
In other words, sending South African Rand into the USD account would be automatically converted to USD, rather than sent back.
What are the minimum top ups?
If you want to increase your investment over time, the minimum increase is $10,000, 10,000GBP and 10,000 Euros.
Can you invest with a partner?
You can have a joint policy with a husband or wife.
I have been proposed a Custodian – how do I know the investments held within the bond are sound?
This depends on many things. If you have been proposed a Custodian and want a second opinion, please email me.
What can I do if I am not happy with my policy?
If you want me to review your policy, you can contact me at firstname.lastname@example.org. Realistically, you have three options; change the investments within your policy, surrender the policy completely or partially withdraw from the policy.
As the charging structure in Custodian Life tends to be much better than other expat investments as a generalization, it does often make sense to stay within the policy, but amend the investments inside it.
In other words, if you aren’t happy, it is more likely to be due to the investments within the bond or markets have gone down, rathe than Custodian themselves.
Custodian Life used to be an excellent alternative in the expat market. However, your returns will of course, partially depend on what assets you invest in within the investment.
If your investment is being mismanaged, your returns won’t be as high, as if sensible investments are being used.
In addition to that, as time is going on, compliance and admin is getting worse. I now, therefore, think that better alternatives exist for new customers.
Old customers used to get the benefits of Custodian’s system which now no longer exist.
September 16 update – I will be having a client event on November 2 with Dragon’s Den star Kevin O’Leary. To have the chance to attend, click here. All existing clients will automatically be invited.
Pained by financial indecision? Want to invest with Adam?
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I am the most viewed writer on Quora.com globally for financial matters, with over 222.2 million answer views.
In the article below I discuss
- What are inverse ETFs in 2021? What are the best inverse ETFs in 2021 or beyond? I explain below why the answer is……none of them!
- If you invest $1,000 a month into the stock market every month, how long until you can become a millionaire? You might be shocked by the answer to this one, and the maths behind it!
- Are technology stocks more volatile than normal stocks? Is this volatility a problem if you are a long-term investor? Also, should we make a clear distinction between individual technology stocks and the Nasdaq as an index, which is tech-focused?
Here is a preview of the article
I will give you some maths/statistics later on which will shock most people…..even some people who have read a lot about investing.
Before doing that, it has to be mentioned that the answer depends on the following variables:
- How the stock markets perform? You can’t control this one and nobody can predict this for sure.
- More specifically, which years market perform after you get started. More on that below.
- If you are looking at $1million in nominal terms or real terms after inflation.
Let’s take the S&P500 as an example. It has given investors about 11.1% since 1950, adjusted for dividend reinvestment.
That is over 7% per year adjusted for inflation.
Yet some periods, like the 1990s and 2010-present, are better than that, and some are much worse.
There have been some decades where it has given 0%. Other decades where it has done as much as 16%-18% adduced for dividend reinvestment.
Let’s imagine the S&p500 did exactly 11.1% every year.
It won’t happen but just let’s do this as an exercise.
It would take you about 21.5 years in that case to become a millionaire in nominal terms, 27 years to reach 2 million, 31 years to reach 3 million.
It will take you 40 years to reach 8 million and about 42.5 years to reach $10 million.
The speed in which you would accumulate wealth at the later years would accelerate due to compounding.
Of course, if inflation is running at 2% per year, it will take you longer to reach those thresholds.
However, as mentioned, that won’t happen.
So let’s look at two different example scenarios to illustrate a point:
Example scenario 1.
You invest $1,000 a month consistently with no lump sum injections.
Years 1–5 you get 0% per year.
Years 6–10 you get 2% per year
Years 11–20 you get 17.7% adjusted for dividends reinvested.
In this case you have reached millionaire status in 20 years. 1.5 years quicker than the constant 11.1% example given above.
Example scenario 2
You invest $1,000 a month consistently with no lump sum injections.
Years 1–10 you get 17.7% adjusted for dividends reinvested.
From year 11 onwards you get 2% per year
Do you know how many years it will take you to become a millionaire in this situation……37–38 years.
Yes 37–38 years.Almost a decade longer than in example scenario one.
If you don’t believe check out this calculator – Compound Interest Calculator
Here is example scenario one:
To read more click below