Non-stock market investments

Date: Monday 1st December 2008

Publication: Cyprus Living

The turmoil in global stock markets over most of 2008 has understandably dissuaded a number of investors from committing any new money to investments in any stock market related investments. Seasoned investors, however, understand how cyclical markets can be and the successful investor is the one who seeks opportunities when others are running for the hills! That being said, it is clear that we will be well into next year before we can expect any real sustained recovery.

If you are not investing in the stock market and have instead kept your money ‘safely' on deposit you will also be concerned with the recent interest rate cuts in both the UK and the Eurozone. At the time of writing, UK interest rates have hit a 50-year low of 3 per cent with the Euro rate closely behind at 3.25 per cent. Unfortunately, we can expect rates to continue to fall aggressively as world governments struggle with the ongoing credit crisis, which is more bad news for savers. With inflation now above interest rates, the net effect on cash deposits is a negative real rate of return.

For these two reasons - uncertain stock markets and falling interest rates, at Hollingsworth International we have identified new opportunities for savers and investors to receive rates of return on their savings some 4 per cent or more above the bank base rate. Importantly, these opportunities are not correlated to the volatility of stock markets at all. This means that regardless of daily swings in the equity markets, these investments are designed to offer steady, smooth returns. At the same time, even if interest rates continue to fall, the returns offered are not affected.

An example of one such opportunity is in the UK waste management industry, which is faced with a need to meet ambitious recycling and landfill diversion targets. This offers significant development opportunities for companies in this growing sector as it provides a solution to local authorities and major PLCs seeking a politically acceptable and environmentally friendly alternative for the management of waste, thus providing attractive returns to investors participating in these ‘waste management funds'.

Under the EU Landfill Directive, the UK is required to meet the following targets:

• 2010 - reduction to 75% of 1995 levels
• 2013 - reduction to 50% of 1995 levels
• 2020 - reduction to 35% of 1995 levels

It is clear, therefore, that opportunities exist for companies involved in waste management to benefit from EU requirements by providing alternatives to traditional landfill sites.

The important point to remember with this example is that returns to investors have no bearing on what is happening with global stock markets, i.e. there is no correlation. Instead, you are investing part of your money into a developing sector, which can only grow due to EU legislation. Investment funds now exist that allow investors to participate in the industry, offering strong potential returns with low potential risk.

To learn more about this and other innovative ways of making money in a falling market, please contact one of our qualified advisors. All consultations are held privately and without obligation.