Once you have provided for your own personal expenses and retirement, it may be time to consider how your money could benefit others. Giving away some of your money is a great way to support the people and organizations you love. But choosing the right strategy is essential for minimizing your taxes and meeting your personal goals. Gifting Strategy Overview Cash How It Works You make a donation directly via cash or check. It’s the giving strategy most are familiar with. Pros • Eligible for income tax benefits in the calendar year of donation (subject to limitations) • Straightforward tax benefits • Simple donation process Cons • Must acquire and track written record of donation to qualify for tax benefit • Capital gains tax may apply if you liquidate appreciated securities to make the donation Traditionally Used For • Those making smaller donations that don’t require liquidating appreciated securities • Those who want a simple donation process Securities How It Works Similar to cash donations, you can also gift different securities to a charity. Stocks are the most commonly gifted securities. Pros • Eligible for income tax benefits in the calendar year of donation (subject to limitations) • Avoids the capital gains tax you would incur if appreciated securities would need to be liquidated to make a cash donation • If you’ve held a stock for over a year and it has appreciated, you can deduct its fair market value from your taxes Cons • Must acquire and track written record of donation to qualify for tax benefit • Some charities struggle to liquidate complex or privately-held securities • If you’ve held your stocks for less than a year or they’ve depreciated, the tax benefits don’t apply Traditionally Used For • Those who want to maximize their tax benefits and have a portfolio that’s ideal for charitable giving • Those donating to charities that are accustomed to liquidating securities Qualified Charitable Distributions (QCDs) How It Works Funds transfer directly from your individual retirement account (IRA) to a qualifying charity of your choice. Pros • Lowers adjusted gross income (AGI) • Counts toward your required minimum distributions for the year in which the contributions are made • Reduces the amount of taxable money in the IRA overall Cons • You must be a certain age to contribute • There are contribution limits • Not all charities qualify to receive QCDs • Not eligible for itemized charitable tax deduction • Must work with your IRA custodian to make your contribution directly from the account • Must acquire and track written record of donation to qualify for tax benefit Traditionally Used For • Those who don’t want to or can’t itemize on their taxes but want to lower their required minimum distributions, which counts toward AGI • Those who want to convert their traditional IRA to a Roth IRA at a lower tax rate Donor Advised Funds (DAF) How It Works This method allows you to set aside assets in a special account, grow the funds over time, and then grant donations to qualifying charities of your choice at a later date. Pros • Eligible for income tax benefits in the calendar year assets are deposited • Ability to invest and grow contributions tax-free • Full control over where and when donations are distributed • Ability to pass the account to heirs Cons • Invested assets are irrevocable • Not all charities qualify to receive donations from a DAF • Minimums are often required to open an account • Asset management fees apply Traditionally Used For • Those still developing their philanthropy strategy • Those who want the tax benefits of a donation in a certain calendar year, but distribute the donation at a different time • Those hoping to avoid capital gains tax or estate tax on donations Pooled Income Fund How It Works This method allows multiple contributors to donate to a special account managed by a nonprofit. The assets can grow over time and pay out dividends to all contributors. After the contributors pass away, the remaining funds go to the managing nonprofit. Pros • Eligible for income tax benefits in the calendar year assets are deposited • Flexible payout options • Avoid capital gains tax on appreciated securities donated • Assets aren’t considered part of the donor’s estate and avoid probate Cons • Invested assets are irrevocable • Complex regulations around what types of assets can be donated • Assets aren’t available to the charity during your lifetime Traditionally Used For Those with a modest income who still want to make a charitable impact Charitable Lead Trust (CLT) How It Works Assets in a CLT create income for a charity over the term of the trust. After the term is over or the donor passes away, the remaining assets funnel to non-charitable beneficiaries. Pros • Eligible for income tax benefits in the calendar year assets are deposited • Charity payment amount, frequency, and duration are flexible • Avoid capital gains tax on any appreciated securities donated • Reduces estate and gift taxes • Ability to see the immediate impact of charitable donations • Ability to pass wealth to heirs Cons • Invested assets are irrevocable • Heavy administrative demands and upkeep can make it expensive to maintain • Assets are part of your estate and aren’t entirely exempt from estate and gift taxes Traditionally Used For • Those that want to pass assets to heirs while reducing the impact of gift and estate taxes • Those who want to see the impact of their charitable giving upfront Charitable Remainder Trust (CRT) How It Works Assets housed in a CRT create income for non-charitable beneficiaries over the term of the trust. After the term is over or the donor passes away, the remaining assets funnel to charity. Pros • Eligible for income tax benefits in the calendar year assets are deposited • Assets aren’t considered part of the donor’s estate and avoid probate • Avoid capital gains tax on any appreciated securities donated • Generates income for you and beneficiaries • Income amount, frequency, and duration is flexible • Assets are generally not subject to gift or estate taxes Cons • Invested assets are irrevocable • Heavy administrative demands and upkeep can make the account expensive to maintain • Assets aren’t available to the charity during the trust term or your lifetime • The value of the charitable gift could be diminished significantly without proper income planning • CRT benefits won’t be realized with small gifts or estates Traditionally Used For • Those with large estates, gifts, or appreciated assets that want to maximize their tax benefits while gifting to a charity • Those who require income for themselves or others, but still want to give How to Identify the Right Strategy These are only some of the many giving strategies available. The best choice depends on many factors, including your unique financial and philanthropic goals. Talk to a financial professional about which giving strategy best suits you. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Buying a home is one of the most financially significant events of your life. But even after closing, your financial work isn’t done. There are a few more steps you should take to incorporate your home into your greater financial picture. 1. Adjust Your Budget After buying a home, the makeup of your monthly and annual expenses will change—especially if you’re a first-time homeowner. Though mortgage payments are generally cheaper than rent, once you account for other associated costs, homeowners with a mortgage pay $8,609 more than renters annually on average. To ensure you continue living within your means, adjust your budget as soon as possible. You’ll likely need to carve out space for the mortgage, property taxes, and homeowner’s insurance, as well as utility expenses and maintenance costs. Depending on how much your expenses increase, you may need to reduce spending in other areas of your budget, like dining out and recreational costs. 2. Rebuild Your Emergency Fund Between the down payment, closing costs, and other expenses, many people find their savings accounts drained after going through the homebuying process. But quickly rebuilding your emergency fund to cover unexpected expenses is crucial. Even if you’ve kept your emergency fund intact, consider increasing your savings. Experts generally recommend having three to six months worth of expenses saved, and once you become a homeowner, you’ll likely have more expensive emergencies to cover than when you were renting. For example, fixing a leaky roof or removing a large tree branch that has fallen on your home can consume the average person’s emergency savings in one swoop. 3. Expand Your Insurance Coverage Before closing on your new home, your lender requires you to have homeowners’ insurance. But that isn’t the end of the insurance adjustments you need to make. Homebuyers should revisit their life insurance and disability coverage. If something happens to you, your partner will be responsible for covering mortgage payments and other house-related expenses alone. Modifying your coverage will help your family avoid an unfortunate financial situation if you’re no longer able to work or contribute to home-related costs. 4. Revisit Your Tax Strategy Being a homeowner can open new tax possibilities for some buyers, such as deductions related to mortgage interest, property taxes, mortgage insurance, and more. Most of these tax advantages are only available if you itemize rather than taking the standard deduction. But itemizing isn’t right for everyone. A financial professional or tax planner can help you figure out which tax strategy will work best for your specific financial situation. 5. Review Your Financial Plan Though your new home will become a financial priority, that doesn’t mean that other priorities—such as retirement savings, student loans, and car loans—can fall to the wayside. If you have a financial plan, now is the perfect time to review and adjust if needed. Partnering with the right financial professional can help make this process easier and more comprehensive. Need to review your finances after your home purchase? Talk to your financial professional. #realestate #expats #financialplanning DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Should investors be worried that the Texas Rangers won the World Series? Is there actually a difference in stock market performance depending on who wins the World Series? Should you really change your investment plans based on an American League or National League victory? Of course not. But let’s explore anyway. The World Series The inaugural World Series took place in 1903, with the Pittsburgh Pirates, National League champions, competing against the Boston Pilgrims (now Red Sox), American League champions. Boston won that first World Series and through 2023, there have been 119, occurring every year except 1904 and 1994. The American League has outpaced the National League in these contests, 68-51. The New York Yankees have taken the lion’s share of AL victories, with 27. The St. Louis Cardinals, of the NL, are second in Series victories with 11. The Philadelphia/Oakland A’s have 9 as do the Boston Red Sox and the New York/San Francisco Giants have won eight. The Brooklyn/Los Angeles Dodgers have earned seven titles (including last year). A number of other teams have won five times or fewer. The Houston Astros had played in a World Series but had never won – until 2017 of course. The Washington Nationals won their first in 2019. And on November 1, 2023, the Rangers won the World Series after defeating the Arizona Diamondbacks in five games, achieving their first World Series championship in franchise history. The Stock Market Oddly enough, a pattern has (sort of) emerged. An academic study compared the performance of the Dow Jones Industrial Average in years following victories by AL or NL teams, for every World Series. This study used the geometric average of gains, a more advanced method of averaging. In the 51 years following a National League victory, the DJIA increased an average of about 8.4%. It increased only about 2.5% in the 68 years following an American League victory. Is that reason enough to have rooted for the National League Arizona Diamondbacks to win this year’s World Series? Maybe not. But, consider the World Series history from 1935-2008, where another analysis found distinctions in performance in the fourth quarter of the same year of the Series in question: • After a National League victory, the S&P 500 gained an average of about 4.2% in the fourth quarter. • An American League victory led to an overall return of about 2.8% in the fourth quarter. Is that reason enough to change your investments given the Texas Rangers victory this year? Probably not. Professors & Baseball In another study in the Journal of Accounting and Finance, five researchers also took on the question of whether the results of the World Series affected the stock market. The researchers examined the S&P 500 results for 1951-2011, excluding 1994 (no Series in 1994). The AL won 34 of the 60 World Series preceding these years, while the NL won 26. The S&P 500 rose, on average, about 15% after a National League victory and only about 11% when an American League team won. Based on their statistical analysis, however, the authors concluded that there was no actual correlation between the victors and the market. Warning investors not to rely on the World Series, they caution that “such anomalous investment strategies are detrimental to creating wealth.” However, it’s still interesting to consider the coincidental relationship, right? Specific Teams In the 20th century, the DJIA rose an average of 7.5% for all years following the World Series (1904 through 1999, excluding 1905 and 1994). Extending the time frame by another 22 years (1904 through 2022), the DJIA rose an average of about 7.9%. In the years after the Yankees won the World Series, the DJIA grew 8.3%, on average. However, the DJIA rises 12.9% after the Yankees lose the World Series (13 times). So, the market seems to prefer losses by the Bronx Bombers over wins. Their National League, cross-city rivals have fared even worse, however. The New York Mets have won the World Series twice, in 1969 and 1986. In 1970, the DJIA rose a mediocre 4.8%. And the Mets 1986 victory preceded the stock market crash of 1987, which saw the market plummet by 23%. Compare this to the Chicago Cubs, a three-time Series winner (1907, 1908 and 2016), whose victories preceded DJIA growth of 46.6%, 15.0% and 25.0% for 1908, 1909 and 2017, respectively. Following the 11 World Series victories of the St. Louis Cardinals, the DJIA rose 12.4% and the Giants’ first seven victories led to a rise of 10.5%. In the eight years following Red Sox titles, unfortunately, the DJIA grew only 1.1%. This includes large gains after their 1903 and 1918 wins, but also a big loss after their 2007 victory. The 2018 Red Sox victory – the ninth for the Red Sox – reversed this trend as the DJIA jumped 23% in 2019. No World Series The World Series has been cancelled on two occasions. In 1904, the NL champion New York (now San Francisco) Giants refused to play the AL champions. And then a prolonged players’ strike prevented the 1994 World Series. In 1905 and 1995, the DJIA shot up by 38.2% and 33.5%, respectively. That’s an average of 35.9%. Thus, the DJIA grows dramatically after seasons where there is no World Series. Interesting… Summary & Conclusion As these analyses show, the market has surprisingly done better in years after the National League wins the World Series. In addition, it appears that: • The market does especially well after there is no World Series. • The DJIA increases more in years after the Yankees lose the Series than in years they win. • When the Cubs, Cardinals, or Giants win, the DJIA shoots up in the following year. • After Red Sox, Mets, or Pirates victories, the market grows, but not very much. There is, of course, no correlation between the World Series victor and the stock market. Even if there were a correlation, only the Yankees have enough victories (27) to form a statistically significant number for study. But the fact is that people like to look for patterns in random data. It makes life more interesting. However, the key to successful long-term investing, of course, lies elsewhere.

This past weekend, we went into daylight savings time, often credited to our beloved founding father Benjamin Franklin (be careful of falling down the Wikipedia rabbit hole of the number of founding fathers, 55, 39, or 7), although he didn't precisely propose the system we have today. His idea related to maximizing daylight and conserving candles, and it was presented in a somewhat satirical manner. In 1784, he wrote a letter to the editor of the Journal of Paris under the pseudonym "F.B." In this letter, he humorously suggested that people could economize on candles by waking up earlier to use the natural daylight. He facetiously proposed that cannons should be fired and church bells should ring loudly to wake up the slumbering citizens of Paris so they would take advantage of the early morning sunlight. Here's an excerpt from his letter: "I say, then, that the real waking-time of our internal clock is that point of our sleep at which we can first remember a sense of light; which, as days grow longer as the summer advances, must come every day nearer the sleeping-time, and will at length be the same." Franklin's idea wasn't implemented during his lifetime, and it wasn't until the 20th century that the concept of daylight saving time was seriously considered and adopted in various parts of the world, including the United States. The goal of modern daylight saving time is to make better use of natural daylight during the longer days of summer, thereby reducing energy consumption for lighting and heating, but that hasn't helped the price of candles. Household debt appears to be an emerging concern, as nearly one-third of Americans currently hold car loans, and there are indications of increasing auto loan delinquencies, potentially signalling broader market challenges. Over time, household debt has risen in tandem with inflation and now appears to be concentrated in higher interest rate obligations. Where is our Benjamin Franklin, who can help us find ways to reduce our consumption? Market Update: Navigating The Ghouls and Goblins The recent 10% drop in the S&P 500, which is officially categorized as a correction, has indeed generated concerns among investors. This correction, occurring since its peak on July 31st, can be attributed to various factors that have left many people apprehensive. It's important to analyse these concerns in a formal and neutral manner. Some of the reasons contributing to the apprehension surrounding this correction could include: I. Energy Price Volatility The ongoing conflict in Ukraine and its potential impact on energy prices is indeed a matter of global concern. The situation in Ukraine and now the Middle East has geopolitical implications that can affect energy markets, and the cooperation between Russia and Saudi Arabia in the energy sector can add to these complexities. Let's address this issue in a formal and neutral manner. Conflict in Ukraine: The conflict in Ukraine, particularly in the eastern regions, has been ongoing for several years. It has the potential to disrupt energy supplies, as Ukraine serves as a transit route for Russian natural gas to Europe. Any escalation or instability in the region can lead to concerns about energy security. Energy Alliances: The collaboration between Russia and Saudi Arabia in the energy sector can impact global energy markets. Both countries are major oil producers, and their decisions regarding oil production and pricing can influence oil prices worldwide. This alliance can lead to fluctuations in oil prices, affecting Western economies, including the United States. Impact on Energy Prices: High energy prices can have various consequences for Western economies. They can contribute to increased costs for consumers, affect inflation rates, and impact industries that rely heavily on energy, such as transportation and manufacturing. II. Central Banks' Monetary Policies The recent shift in interest rate policies by central banks in the USA, UK, Europe, and the potential move by Japan to increase rates highlights the evolving global economic landscape and its impact on various stakeholders. This development indeed has implications for governments and corporations. Inflation Control: Controlling inflation remains a key objective for central banks. Rising inflationary pressures have led to considerations of rate hikes in some regions, as higher rates can help cool inflation by reducing borrowing and spending. Borrowing Costs: Higher interest rates can impact governments and corporations by increasing their borrowing costs. Governments may need to allocate more funds to debt servicing, potentially impacting fiscal policies. Corporations may need to adjust their financial strategies and investment plans in response to higher financing expenses. Economic Strength and Challenges Despite these challenges, it's important to note that the US economy has shown remarkable resilience due to savings rates, low unemployment, and wage increases. Gross domestic product (GDP) in the US grew by 4.9% over the past year, primarily driven by consumer spending. The question is whether this can continue as accumulated savings dwindle. Debt and Refinancing However, there are challenges on the horizon. US corporations face a significant increase in debt due next year, which will require refinancing at potentially higher rates. Similarly, government debt concerns have led to political tensions. Valuations It's important to consider various factors when making investment decisions, including the valuation of companies and their earnings potential. It's wise to be cautious in markets with low expectations for earnings growth. Additionally, avoiding leveraged companies and real estate can be a prudent strategy during uncertain times. Investment Opportunities Amidst the turbulence, there are opportunities to explore. Short-term fixed-income investments offer attractive returns above 5%, outperforming long-term averages. As the equity market recovers, these investments can potentially deliver above-market-rate returns. The Path to Recovery As we continue to navigate the ever-evolving landscape of financial markets, it's crucial to stay informed and adapt to the changing environment. In this month's newsletter, we discuss the factors influencing market recovery, our recent portfolio adjustments, and our outlook for the future. Market Recovery and Corporate Strategy In these times of significant market headwinds, there are opportunities for savvy investors to navigate and thrive. Exploring Buffer Funds One of the recent adjustments to our portfolio involves the addition of buffer funds. Buffer funds, also known as risk buffer or cushion funds, play a vital role in protecting portfolios during market volatility. These funds are designed to mitigate potential losses by selling derivatives that are more profitable in sideways markets, lose less in bear (downward) markets, but also make less in bull (upward) markets. By adding buffer funds, we aim to provide an extra layer of protection against market fluctuations, but we also hope that we are wrong, as we would always prefer a bull market! Small-Cap Funds for Value When the recession truly begins, we plan to increase our allocation to small-cap funds. Small-cap stocks often represent excellent value opportunities, especially considering their price-to-earnings ratios. They have been some of the hardest hit on the downside but would offer great upside from cheap valuations, increased mergers and acquisitions, and sadly, the bankruptcies of many of their over-leveraged peers. The last being the main reason that we don't want to be too early into this trade. Short Duration Strategy In anticipation of expectations for interest rates to stay higher for longer, we have adjusted our portfolio to focus on a short-duration strategy. Short-duration investments are less sensitive to interest rate changes, making them a prudent choice during periods of increasing or stagnant rates. As we monitor market conditions, we will seek opportunities to extend our portfolio's duration to lock in these favourable rates in case the central banks decrease rates in the future (we don't expect this until 2025 at the earliest). Upcoming Events We hope you’ll join us for our last few events this year as we discuss immigration to France and estate planning in the UK. Our new year will start with our first quarter update, which you can sign up for here. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

In recent newsletters, we have discussed the growing significance of lunar developments, and it appears that NASA's recent announcement corroborates this narrative. The agency's conceptual 3-D renderings of a lunar residence by 2040 offer a glimmer of optimism in what has otherwise been a challenging year for the real estate sector. The conventional real estate market has been facing a series of adversities, including elevated property prices, escalating interest rates, and region-specific declines in demand owing to the rise of remote work. Further exacerbating the situation are accounting scandals that have severely affected the Chinese real estate market. In light of these multi-faceted challenges, we have made the strategic decision to remove real estate from its previously core position within our investment portfolios. A historical method of timekeeping by our ancestors, this October, we welcome the Hunter's Moon, which followed the Harvest Moon in September. We will spend part of this newsletter to better understanding the global harvest festivals and how those countries central banks can help us hunt for opportunities! Not All Harvest Festivals are Created Equally France "In the heart of Montmartre, where art meets tradition, the Fête des Vendanges celebrates not just the harvest of the vine, but the richness of life itself. As we raise our glasses under the sparkle of Parisian fireworks, let us also toast to a more promising economic landscape, marked by a lower inflation rate of 5.7%. Germany The tradition of Erntedankfest honours the harvest with a blend of faith and festivity, this year's celebrations may carry a more sombre tone. Labelled as the 'sick man of Europe' by The Economist, the nation is grappling with an inflation rate of 6.4%. United Kingdom The Harvest Festival traditionally celebrated on the Sunday nearest to the Harvest Moon. As churches and schools join in decorating spaces and collecting food for those less fortunate, this year's celebrations may also serve as a moment of reflection. With an inflation rate of 6.7% and some of the highest interest rates in the Western world, the British populace faces the prospect of a challenging winter ahead. Japan The tradition of Niiname-sai provides a moment to give thanks for the year's harvest, connecting both the celestial and the earthly through offerings of newly harvested rice. As even the Emperor partakes in this solemn Shinto ceremony, the ritual underscores the nation's deep-rooted respect for the land and its bounty. Meanwhile, in the economic sphere, the Bank of Japan's policy of maintaining short-term interest rates at -0.1% and capping 10-year yields around 0% serves as a stark contrast to other nations grappling with high inflation. As efforts continue to reach a 2% inflation target. This negative interest rate has led the Topix market to being the top performing market globally in USD terms at 25.8%! India India has a range of harvest festivals, given its diversity and varying agricultural practices across states. Prominent among these are Pongal in Tamil Nadu, Makar Sankranti in various parts of India, and Baisakhi in Punjab. These festivals are celebrated with various rituals, fairs, and India had much to celebrate with an expanding economy, and a stock market that was up 8.7% at the writing of this newsletter. Activity in Canada might cause some issues regarding this near term outperformance. United States The timing of Thanksgiving has historical rather than agricultural origins. President Abraham Lincoln proclaimed a national day of "Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens," to be celebrated on the last Thursday in November, during the midst of the American Civil War in 1863. The aim was to foster a sense of national unity. Before Lincoln's proclamation, Thanksgiving was celebrated on various days in different states. The choice of the fourth Thursday was later ratified by Congress in 1941, solidifying its place on the national calendar. The late November timing makes Thanksgiving one of the last harvest festivals of the year, positioned closer to the onset of winter rather than the end of the actual harvest season. Despite its late timing, it serves similar purposes to other harvest festivals: celebrating community and giving thanks for the bounty of the year. Hopefully, these views of unification will be remembered as we navigate an already intricate economic landscape. The United States is confronted with yet another budgetary deadlock. With a looming deadline of November 17th, just in time to ruin our favourite American harvest festival and no apparent resolutions on the horizon, the impasse adds another layer of complexity to fiscal planning and market stability. Compounding this challenging scenario, we are witnessing a surge in oil prices, attributed to reduced supply from major producers Russia and Saudi Arabia. The prices are potentially nearing the $100 per barrel mark, a development that could have far-reaching implications for both consumers and investors. This escalation in oil prices coincides curiously with ongoing discussions to curtail military spending related to the situation in Ukraine. The confluence of rising interest rates and escalating oil prices imposes a de facto tax on consumers, exerting downward pressure on demand. In economic theory, a decrease in demand would generally lead to a correction in prices, potentially stabilizing or reducing oil prices in the near term. However, given the complexities of the current situation—including geopolitical tensions and supply chain constraints—this rebalancing may lead to a cold and hard winter for some. Inflation and interest rates have a complex but interconnected relationship, often influenced by the broader economic environment and the specific policy objectives of central banks. Below is an explanation of how they generally interact, followed by an overview of what central banks in the U.S., U.K., Europe, Japan, and China aim to achieve. Correlation of Inflation Rates to Interest Rates Inflation Up, Interest Rates Up: Central banks often increase interest rates to combat high inflation. Higher interest rates typically lead to lower spending and investment, cooling the economy and thereby reducing inflationary pressure. Inflation Down, Interest Rates Down: In a low-inflation or deflationary environment, central banks may reduce interest rates to stimulate spending and investment, aiming to increase inflation to a target level. Objectives of Central Banks in Different Regions United States - Federal Reserve The Federal Reserve aims for maximum employment and stable prices. It uses the federal funds rate as its primary tool and also engages in open market operations, among other strategies. United Kingdom - Bank of England Similar to the Federal Reserve, the Bank of England targets an inflation rate of 2%. It uses the Bank Rate as its primary tool and engages in quantitative easing to stimulate or cool the economy as necessary. Europe - European Central Bank (ECB) The ECB aims for price stability, targeting an inflation rate of below, but close to, 2%. It uses main refinancing operations, among other tools, to influence interest rates across the Eurozone. Japan - Bank of Japan (BOJ) The BOJ has a unique challenge of combating prolonged deflation and aims for controlled inflation. It has resorted to unconventional policies like negative interest rates and yield curve control to stimulate inflation. China - People's Bank of China (PBOC) The PBOC has multiple objectives, including economic growth, full employment, and price stability. Unlike other central banks, the PBOC isn't independent but operates as part of the government. It employs a range of tools, including reserve requirement ratios and open market operations, to control money supply and influence interest rates. The yield curve is a graphical representation that shows the relationship between interest rates and the maturity of bonds. Usually, the curve slopes upwards, meaning that longer-term bonds offer higher yields than shorter-term ones. This is because investors generally expect higher returns for taking on the greater risk associated with holding bonds over a longer period. We have an inverted yield curve, which happens when short-term interest rates are higher than long-term rates. This is considered unusual and is often interpreted as a sign of economic uncertainty or even an impending recession. When the yield curve inverts, it means investors are seeking the safety of long-term bonds, driving up their prices and lowering their yields. Our strategy of continuing to buy short-term bonds (under a one year duration) is quite conservative. We are also increasing our positions to a higher allocation of fixed income from alternatives and global equities at this point. A normalizing yield curve suggests that investors are growing more confident in the economy's long-term prospects, moving away from the safety of long-term bonds. Central banks like those in the US, UK and the Eurozone appear to be taking a cautious approach, holding off on immediate rate hikes while monitoring upcoming inflation data. This could indicate a level of economic uncertainty that makes short-term bonds a prudent choice. In September, the broader financial market grappled with the prospect of a sustained period of higher interest rates, triggered in part by Crude Oil prices nearing the $100 per barrel threshold. This sentiment impacted multiple asset classes, leading to a general market pullback. The renewable energy sector was notably affected, facing challenges from both the macroeconomic environment and industry-specific factors. Elevated interest rates have a detrimental effect on the balance sheets of emerging companies in this sector, making it more expensive for them to borrow and finance growth. Concurrently, the industry is witnessing a decrease in demand for solar and wind projects. This decline can largely be attributed to diminishing financial support for such initiatives, resulting in a tepid pipeline of upcoming projects for companies dependent on both public and private sector energy infrastructure investments. In our latest market overview, large-cap growth equities continue to dominate, with Latin America (Lat-AM) and the United States showing particularly strong regional performance. One key driver behind the robust showing in Lat-AM is the prominence of the carry trade, specifically JPY/MXN, which has been highlighted by Bank of America as the "world's favourite carry trade this year." This has resulted in an influx of "hot capital" into the region, creating a ripple effect that has also boosted the equity markets. Additionally, the relative strength of Lat-AM can be attributed to the region's advanced position in the interest rate cycle compared to Western nations. Latin American countries were quicker to adjust interest rates, and their inflation rates have remained largely in line with central bank targets. This advantageous situation has made the region less susceptible to the broader inflationary pressures affecting other parts of the world. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Representatives Don Beyer (D-VA) and Dina Titus (D-NV) introduced the Tax Simplification for Americans Abroad Act of 2023 (H.R.5432) on September 13, 2023. While limited in its scope, it makes important changes that simplify tax return filing requirements, expand the type of income which can be excluded from tax and make detailed changes in FBAR and Form 8938 reporting rules. In general, the Tax Simplification for Americans Abroad Act (“TSAA”) mandates that a simplified income tax form be made available for certain taxpayers residing abroad, expands for eligible individuals the scope of income allowed to be excluded from tax under existing section 911 (Citizens or Residents of The United States Living Abroad) and changes the Bank Secrecy Act/anti-money laundering rules and the tax reporting rules enforced by Form 8938 (Statement of Foreign Financial Assets). Use of the new simplified form is not mandatory; individuals can choose not to use it. The BSA/AML and Form 8938 rules are applicable not just to individuals residing abroad but to all individuals. In a September 13, 2023 Press Release, the two sponsors said: Today, U.S. Representatives Don Beyer (D-VA) and Dina Titus (D-NV) announced the introduction of the Tax Simplification for Americans Abroad Act, legislation to help American taxpayers living overseas comply with their U.S. tax obligations by calling on the IRS to create a short form certification for Americans living abroad who owe no U.S. tax and earn below $400,000 annually. The bill would expand the Foreign Earned Income Exclusion to include additional types of income that are earned overseas like pensions and distributions from retirements funds. It would also consolidate duplicative and burdensome forms that taxpayers must file under the Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act. “Ordinary Americans living abroad are often overlooked when U.S. tax policy is written, which can make it extremely difficult and expensive for them to navigate the tax system,” said Rep. Don Beyer. “I saw a record-breaking number of Americans renounce their citizenship when I served as the U.S. Ambassador to Switzerland, and the needless complexity of the U.S. tax code was often cited as a reason. This bill would help ordinary Americans fulfill their obligations without having to retain an expensive accountant to certify that they owe no U.S. taxes and remove some of the frustrations faced by Americans living abroad who just want to follow the law.” “Americans abroad face a uniquely complex set of reporting requirements that we here at home aren’t subject to. I’m joining Rep. Beyer to create a simplified income tax return for taxpayers living abroad because Americans shouldn’t have to jump through extra hoops simply because they reside or work overseas,” said Rep. Dina Titus, Chair of the Americans Abroad Caucus. “This legislation is an important step in the right direction. It greatly simplifies things for many Americans abroad. Much remains to be done, but this is a step that we have all asked for for a long time. Retirees living overseas will be especially interested in the details,” said Marylouise Serrato, Executive Director, American Citizens Abroad. Click for a Technical Explanation of the Bill and a copy of the Bill itself. Join our write-in campaign to support Congressman Beyer's efforts. Click here for the original article from American Citizens Abroad (ACA). #Tax #Legislation #AmericanTax #AmericanExpats DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

Today, on August 30th, 2023, we witness a celestial rarity: a Blue Moon. While many know the term "once in a blue moon" to express a rare event, not everyone realizes its astronomical significance. A Blue Moon refers to the second full moon in a calendar month, gracing our skies approximately once every 2.7 years. Just as a Blue Moon is unusual, we find ourselves in an unexpected position in the real estate market, often considered a once-in-a-blue-moon situation. Historically, real estate was viewed as a primary asset class in the 1960s. In those days, the average price of a home was less than $10,000, a sum comparable to today's car prices. The escalating real estate prices from the 1980s to the present day weren't purely a result of the appeal of bricks and mortar but were primarily driven by plummeting interest rates. As these rates reduced, the allure of owning property grew. However, as the tides of time change, so do financial climates. With mortgages now rising above 6% in many parts of the developed world, we are seeing unprecedented challenges in the realm of real estate. This has tested its mettle as an asset class, prompting much reflection and analysis. Given the current trajectory and market dynamics, we have taken a cautious stance, i.e. we are choosing to watch from the side-lines, hoping that our apprehensions prove misguided for the sake of the broader economy and that we regret missing any potential growth. In other words, we’d rather miss the boat than be caught in the middle of a storm. The Blue Moon Phenomenon: China's Unexpected Stagnation China, renowned for its millennia of rich cultural history and traditions, has always been deeply entwined with the movements of the cosmos. Celestial events are not just observed; they are revered, often signifying divine interventions or predictions for the days to come. While the term "Blue Moon" might be foreign to the Chinese lexicon, the current economic trends seen in China mirror this rare turn of events. For decades, China's astonishing economic growth has been a given. It's the dragon that has soared higher each year, astonishing the world with its relentless pace of development. Yet, the present lack of growth is a 'blue moon' event in China's recent economic history. Source: Visual Capitalist Several factors have contributed to this anomaly. A prominent one is China's recent tensions with Japan, which have created economic and political ripples. But, perhaps even more significantly, China's real estate problem has begun casting shadows beyond its borders. These tremors were most pronounced when Evergrande, a real estate behemoth, declared Chapter 15 bankruptcy in the USA. This move essentially shielded its international assets from the clutches of US debt holders, signifying a vulnerability many had not anticipated from such a giant. Moreover, the wounds of the global pandemic and the stalling pace of recovery post-COVID have only exacerbated these concerns. These uncertainties have made us wary of China's broader market landscape. However, every cloud has a silver lining. China's technology sector, brimming with innovation and ambition, seems to be that shining beacon amidst these cloudy times. Interestingly, while many view the potential governmental division of major tech companies with apprehension, we see opportunity. This restructuring could decentralize power, minimizing monopolistic control by large entities and fostering an environment where growth and innovation can thrive. Just as the blue moon shines brightly amidst the regular phases of the moon, we are optimistic that China's technological prowess will shine, offering avenues of growth even in these challenging times. Navigating Interest Rate Dynamics: A Tale of Two Nations In the complex landscape of global financial markets, interest rates serve as one of the most potent tools for central banks to influence economic growth, inflation, and currency values. The strategic management of these rates can catalyse prosperity, while missteps can precipitate economic stagnation or even crises. Recently, the divergent paths of interest rate policies in the UK and China offer a fascinating study in contrast. United Kingdom: The Interest Rate Challenge Post-Brexit and amidst the ongoing repercussions of the pandemic, the UK has faced an uphill battle in stabilizing its economy. Historically, double-digit interest rates in the UK have been tools to combat high inflation and stabilize the pound. Still, the ramifications of these high rates are evident in the current housing market. Rent and mortgage costs have surged at unprecedented levels, pushing the dream of homeownership further out of reach for many. While the Bank of England, with the newly appointed consultant Ben S. Bernanke, harbours ambitions of trimming the inflation rates down to 2%, the pathway there is fraught with challenges. The twin pressures of ensuring economic growth while managing inflation expectations demand a delicate balancing act. Reducing rates too swiftly might overstimulate the economy, risking runaway inflation. Conversely, maintaining high rates can stymie growth and burden borrowers. China: The Deflationary Spectre Conversely, China's economic conundrum centres on an entirely different concern: the looming shadow of deflation. Traditionally an economic powerhouse, China's recent slowdown in consumer spending has raised eyebrows. A populace hesitant to part with their yuan means less consumption, which, in turn, can lead to falling prices or deflation. This spiral can deter businesses from investing due to anticipated lower returns in the future, leading to reduced economic activity and potential job losses. To counteract this, Beijing may opt to reduce interest rates to make borrowing cheaper, aiming to stimulate spending and investment. However, this isn't a guaranteed remedy. The psychological factors driving consumer restraint, including concerns over the property market and broader economic uncertainties, may not be quickly allayed by rate adjustments alone. An Overview of the Current Fixed Income Landscape The intricacies of the global fixed-income market often function as a barometer for the broader economic climate, reflecting nuances that might not be immediately discernible in more volatile asset classes such as equities. The current state of these markets presents a mix of challenges and opportunities. Inversion and Its Implications Traditionally, a yield curve inverts when short-term bonds yield more than their long-term counterparts. This inversion can be seen as a warning sign, indicating a potential economic slowdown or even recession. However, from an investor's vantage point, this scenario can also present opportunities, especially in an environment where higher rates are prevalent. For investors, the silver lining in this situation is the newfound ability to purchase bonds in domestic currencies at more attractive yields than before. As central banks in various regions navigate the complexities of their respective economies, the subsequent adjustments in interest rate policies create pockets of value in the fixed-income world. Strategic Positioning With the current landscape in view, certain maturity periods are emerging as sweet spots for bond investors: US & UK Bonds: A 6-month maturity seems optimal. Given the economic uncertainties and central bank policies in both these regions, this duration strikes a balance between capturing higher yields and managing the risk of potential rate changes. European Bonds: A shorter 3-month maturity is favourable. Europe's unique economic challenges and the monetary policies of the European Central Bank (ECB) make this duration an attractive proposition for investors seeking yield while minimizing exposure to interest rate volatility. In the current climate, it's prudent for us to keep our bond duration relatively low, reflecting a cautious approach to manage interest rate risk. However, the market is ever-evolving. As the yield curve potentially begins to normalize and move away from its inverted state, opportunities to extend bond maturities and lock in longer-term rates will emerge. This will provide the opportunity for stable, attractive yields while also hedging against future uncertainties. We will be discussing this and more in our upcoming Q3 economic update on 4th of October 2023. You can sign up to the webinar here. On a lighter note, as the summer days shorten and we transition into the autumn months, we hope that you've enjoyed a season of joy, relaxation, and warmth. Though financial markets have remained relatively uneventful this summer, history tells us that September can be a turbulent month. But regardless of what the markets have in store, we remain committed to guiding and advising you with the utmost dedication. Wishing you clear skies and smooth journeys, both in life and investments. Best regards, Brian Dunhill DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

"Don't let your mouth write no check that your tail can't cash." - Bo Diddley, blues legend The importance of financial planning for expats whose finances are complicated by debt can’t be overstated. Types of debt many expats often incur include student loans, credit card debt, and bank loans. Managing and paying off debt is essential though, as not doing so can jeopardize your ability to achieve your long-term financial ambitions. In this article, we’ll outline some strategies to help you manage your debts. Specifically, in this article, you’ll learn about: • Strategies for repaying student loans • Budgeting and planning your outgoings • Prioritizing repayments and restructuring debts • Whether to pay down debt or invest Strategies for repaying student loans Most people borrow money to pay for college. When it comes to repaying your student loans, the first step is to collate all the information about your loans, including how much you owe to which lenders, along with the repayment terms. Then, find out about the different repayment options. There are numerous student loan repayment options available, and you should explore which best suits you with your financial advisor. You should also consider consolidating or refinancing your loans, as this could mean paying a lower interest rate and repaying the principal sooner. If there’s a grace period before you have to start making repayments anyway, you could consider making advance payments on your loans during the grace period, as repaying some of the principal early means less interest will accrue, reducing the amount you’ll have to repay overall. It will, of course, help to make overpayments if you can. These could be regular small overpayments or substantial payments when you receive a tax refund or if you inherit money, for example, which will pay down the principal more rapidly and shorten the loan’s overall duration if you can. Late payments can impact your credit score, so avoid paying late fees and credit score issues by setting up your loan payments to be automatically withdrawn from your account each month. Finally, there may be a forgiveness program available. Expats can, in theory, access Biden’s Student Loan Forgiveness Plan if or when it’s eventually approved. As another example, the Public Service Loan Forgiveness (PSLF) program is intended to provide student debt relief to those working in the public sector. Budgeting and planning your outgoings The last thing you want is for debts to overwhelm you. An experienced expat financial advisor will help you map out your financial flow and identify potential issues. To give your advisor the whole picture, you’ll need to provide all pertinent documents relating to your financial circumstances, such as: • Recent tax returns • Bank statements • Credit card bills • Loan installment statements • Pay stubs • Loan contracts • Anything else that can affect your financial condition The aim is to allow your advisor to help you budget your outgoings effectively as part of a longer-term plan to manage and repay your debts. This usually entails cutting back on any unnecessary spending so that extra money can be found to pay off your debts. Prioritizing repayments and restructuring debts It makes sense to prioritize repaying debts with the highest interest rates, which are most often credit card debts, and most advisors will create a repayment plan based on this strategy. This way, interest added to debts is reduced quickest, although you mustn’t miss minimum repayments on other loans to achieve this. Debt restructuring meanwhile is a strategy used by individuals (and also businesses) to avoid defaulting on debts, as defaulting has a negative impact on your credit score and your ability to borrow in the future. Debt restructuring is often used when a debtor is in financial trouble, perhaps because unrelated circumstances have made it difficult to fulfill their repayment commitments in their current form or terms. It entails looking for a lower market interest rate and extending the time in which the loan amount is to be repaid. As an example, if you have equity in your home, it might make sense to take out a second mortgage at a lower interest rate than your other debts to enable you to pay them off. It may be wise to take out life insurance, too, to cover your heirs from having to take on your debts in case you die before you’ve repaid them. Whether to pay down debt or invest If you find yourself with extra cash, you should consider the opportunity cost of either paying off debts or investing. There can be good reasons for doing both, but if you are faced with the choice, there is a simple formula you should aim to follow. The formula is to invest if doing so will allow you to earn a higher return than the interest rate your loans are currently accruing. However, unfortunately, while the formula is simple, working out whether it will apply often isn’t simple, as investments often perform better or worse than expected. The first consideration is always that if you have high-interest debts such as credit card debts, you should repay these before investing, as it’s unlikely that any investment will yield a greater return than the costs you incur each month with these debts. Another reason it’s worth ensuring that your debts are well managed before using excess income to invest is to maintain your credit score, which is crucial if you want to borrow money in the future for something like a mortgage. Otherwise, you’ll have to pay higher interest rates. Your credit score can also have an impact on other facets of your life, such as insurance costs, whether a landlord will let you rent an apartment, and even whether or not an employer will hire you. For this reason alone, paying off your debt before investing can be the right decision. Conversely, if your debts are well-managed or consolidated with a low-interest rate, it can make more sense to start investing your excess income with the aim of realizing a greater gain on your investments than the interest rates you are paying on your debts. In this way, if in the future you sell your investments to pay down your debts, you’d realize a net gain rather than a loss. Ultimately, it will depend on your circumstances, and your financial advisor will guide you through whether to repay debt or invest as part of your wider financial planning. Wrapping up While debts can sometimes seem overwhelming, with good advice, a good plan, and some discipline sticking to the plan, they can more often than not be managed in a way that doesn't inhibit your long-term financial goals. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“The most important thing is to invest. The second most important thing is to buy well.” - Naved Abdali Financial markets can be extremely volatile, with shares, exchange rates, and commodity prices fluctuating dramatically based on just a story in the news. As a result, managing your investments and keeping up with events that could impact them is time-consuming. Some investors turn to index trackers or mutual funds, however many discerning investors turn to a discretionary fund manager to take on the burden of constantly monitoring their portfolio and the many factors that could affect it, applying their experience and expertise to attain your goals. Discretionary fund managers make investment decisions based on their client's wishes, often set out in an agreed Investment Policy Statement (IPS). An IPS is a detailed document that outlines an investors’ preferences, goals, and risk-return tolerance. Because preferences and tolerances are personal and can change over time, the document should be dynamic and adaptable. Trusting someone with managing your investments is a big step, but the benefits can also be significant in terms of protecting and growing your portfolio. In this article, you’ll learn about the following topics: • What is Discretionary Fund Management? • What are the benefits of Discretionary Fund Management • Should you use a discretionary fund manager? What is Discretionary Fund Management? Discretionary investment management refers to an individual or team making asset buying and selling decisions at their discretion on your behalf. For example, a discretionary fund manager usually decides which specific securities to hold in a portfolio. It is a form of investment management in which a wealth manager or financial advisor makes all purchases and sales for you. Their investment decisions, however, are based on a plan that you have agreed together with them. Discretionary accounts are typically actively managed, with the manager regularly buying and selling stocks to maximize stock market gains. While some discretionary managers take a more passive approach, investing in funds for example, this approach is less common. Discretionary fund managers often use a structured group approach. This means that instead of necessarily making individual client-based investment decisions, they select a few assets to invest in across all of their clients. How much they invest in each of those securities is determined by each individual client’s risk tolerance. As long as it is consistent with the client's risk level and financial plans, discretionary fund managers can diversify a portfolio and into any type of investments including stocks, bonds, real estate, and financial derivatives. What are the benefits of Discretionary Fund Management? Discretionary fund management relieves expat investors of the responsibility of making day-to-day investment choices, which can be better made by an expert portfolio manager who is constantly monitoring company information and factors that can cause market fluctuations. Delegating investing to an experienced manager frees your time to focus on other things, with the knowledge that the portfolio is being monitored and handled by an expert in the field. Because discretionary managers usually charge fees based on performance or portfolio value rather than based on transactions, discretionary fund management aligns both your and the investment manager's interests; that is, if the portfolio grows due to successful discretionary management, the advisor is compensated with higher fees. This reduces the advisor's desire to "churn" the account to earn more compensation compared to a transaction-based investment model. In summary, benefits of discretionary fund management include: 1. Ease As an investor, you don’t need do not need to waste time researching or worrying about the performance of your investments. 2. Incentivized to grow your portfolio When investment managers are compensated based on performance, they strive to maximize growth for you. 3. Benefiting from professional advice Investment managers are typically professionals with specialist knowledge and insights about financial markets and investing. 4. Scale economies Investors effectively pool their capital and so gain access to economies of scale through lower trading costs and block trades carried out by the fund manager 5. Flexibility Another benefit is that discretionary fund managers can adjust their investments without seeking permission from the investors every time, which should allow them to act quickly if they see a market opportunity. 6. Personalized service Compared to investing in funds, you receive a more personalized service that includes high-quality financial planning and investment management designed to achieve your goals. A discretionary fund manager is analogous to a surgeon in an operating room. Though the surgeon performs the surgical procedure, they are assisted by anesthetists, nurses, and other specialists. Similarly, most discretionary fund managers use researchers and an operations team to assist them, as well as having access to the most up-to-date information, reports, and analysis, just as a surgeon does to ensure a successful operation. Should you use a discretionary fund manager? While the decision of whether to use a discretionary fund manager will always be personal, it should be part of a discussion with your expat financial advisor. The most important consideration is whether doing so will better allow you to achieve your financial goals. Many expats choose to invest part of their portfolio in funds, and part with a discretionary manager, to reduce the risk while also aiming to outperform the indices. This is called a core and satellite strategy. Ultimately however, the more experience you have, the more likely you are to make profitable investment decisions. A good discretionary fund manager will likely have witnessed numerous economic cycles, business developments, and political and policy changes. This experience can have a material impact on your portfolio performance, as they bring their own expert knowledge aligned with access to the data and information to which they have access. Alternatively, many expats consider a robo investor solution, such as DF Direct. Ultimately, the choice is personal. Wrapping up Discretionary investment is a form of investment management that removes you from day-to-day decision-making. Instead, a financial planner or other advisor manages your investments following a predetermined plan. Discretionary fund management fees vary depending on with whom you collaborate and how you allocate your money, but you should assume on paying at least 1% of your portfolio value. You should however hope to benefit by more than this due to the benefit of their expertise. While there are now more affordable investment options, such as robo-advisors, they don’t provide the same experience and ability to react to market and socio-political developments. Before making decisions about investments that could significantly impact your portfolio performance and overall investment objectives, always discuss your ideas with your financial advisor to ensure that you understand all the variables, risks and possibilities. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“My theory of risk is that it is better to take a substantial holding of what one believes in than scatter holdings in fields where one has not the same assurance.” - Allen C. Benello Managing risk is a key consideration when investing, and all investors have their own perceptions and opinions as to how to approach and mitigate it. We’ve already covered some strategies to reduce risk in another article, and explained why higher risk is often equated with higher possible gains, and vice versa. In this article, we’re going to look at diversification, a common portfolio building strategy to reduce risk, and also the opposite strategy, taking a concentrated position, and the pros and cons of both. In this article, specifically, you’ll learn about the following: • What is a concentrated position? • Pros and cons of holding a concentrated position • What is portfolio diversification? • Diversification strategies What is a concentrated position? If a stock or asset makes up the majority or a sizable portion of an investor’s holdings, the stock or asset is said to have a concentrated position. Taking a concentrated position can affect the portfolio's overall returns and performance. Investors take concentrated positions in assets for a variety of reasons, including emotional considerations, stocks given as part of compensation, or due to strong convictions or a particular interest in a specific stock (or other asset). A stock is typically considered concentrated (or ‘overweight’) if it makes up more than 10% of a portfolio. Similarly, a portfolio with a limited variety of securities is considered concentrated, as it does not offer sufficient diversity. The main advantage of taking a concentrated position as an investment strategy is that if the single asset increases substantially in value, the investor benefits. Conversely, it’s also considered a high risk strategy because if the single asset experiences volatility, the whole portfolio suffers. We will explore more pros and cons of taking a concentrated position in the next section. Pros and cons of holding a concentrated position Holding a concentrated position can be a double-edged sword, with both merits and downsides. Pro of holding a concentrated position There are cost savings associated with concentrated positions, as diversified portfolios tend to mean more regular trading. Furthermore, concentrated positions are often accumulated over the long term, and sales can be staggered to minimize capital gains taxes. Often, if an investor decides to have a concentrated position, it should be a result of intensive research on the market, the sector and the company, in addition to constant monitoring to check if the investment thesis still holds. In other words, if an investor is very familiar with a company and really “knows what he/she is doing”, this could be an opportunity to achieve greater growth. Cons of a concentrated position A concentrated position however can suffer from unexpected downturns and volatility much more so than a diversified portfolio. In a taxable brokerage account, selling concentrated positions built up over time can also trigger a large capital gains tax bill without expert advice and planning. What is portfolio diversification? Portfolio diversification is considered the opposite of holding concentrated positions. It means holding a range of small quantities of different types of assets, such as stocks from different industries and geographical areas, bonds, treasury bills, cash, sometimes real estate, and more. A diversified portfolio combines multiple asset classes and investment vehicles to reduce exposure to risk in any one area or sector. Studies and simulations have demonstrated that the highest cost-effective level of risk reduction is achieved by maintaining a well-diversified portfolio of 25 to 30 different stocks. Diversification reduces exposure to the ups and downs of companies, sectors, and markets by disseminating the risk in your portfolio. Holding assets that perform inversely to stocks also allows those assets to be sold, and stocks to be progressively purchased during market (or sector, or company) downturns. Because not all investments perform poorly at the same time, a broad portfolio is considered more stable than one that is concentrated. Diversification strategies Many of the strategies summarized below can be combined to increase the degree of diversification within a portfolio. Many different asset classes are available when investing, including equities, investments with a fixed income, cash and its substitutes, tangible assets, such as real estate, and commodities. You can build a diversified portfolio by including assets from various asset classes, because the risk and return characteristics of these asset classes normally vary. Typically, diversified investment portfolios include at least two asset groups. Another diversification strategy is bond maturity duration. In general, the risk of price swings brought on by alterations in market interest rates increases with bond maturities. Although short-term bonds often have lower interest rates, they are also less susceptible to the unpredictability of future yield curves. As a result, more risk-averse investors can think about acquiring longer-term bonds, which often pay higher interest rates. Purchasing a mix of both balances the benefits and downsides of each. Another strategy is to blend intangible assets like stocks and bonds with tangible assets such as real estate, farmland, hard assets like art or jewelry, and commodities. These capital investments have different characteristics compared with intangible or digital assets, since they can often be used, rented out, or developed, for example. Geographical diversification is another diversification strategy that many investors utilize. This strategy is particularly suited to expats, as they may find it easier to invest in both the US and in their country of residence. Or, you might invest in developed, developing and emerging regions. Always seek advice though to ensure you understand the risks involved. Wrapping up Investment decisions should always be underpinned by your risk tolerance and investment goals. While most investors look to diversify to reduce risk, there are circumstances where holding a concentrated position is a good strategy, and other times when it’s inevitable (such as when you’ve accumulated shares in a company you own or work for). If so, your expat financial advisor can let you know how best to move forward. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“Time in the market beats timing the market.” - Ken Fisher Not even the most seasoned experts can predict stock movements. As a result, there is always a risk of buying too soon and seeing a stock price fall, or not buying soon enough and missing out on the best returns. Dollar-cost averaging is a strategy that lets you balance out potential volatility and which has been historically proven to be effective. In this article you’ll learn about the following topics: • What is dollar-cost averaging? • What are the advantages of dollar-cost averaging? • What are the disadvantages of dollar-cost averaging? • An example of dollar-cost averaging • Who should use dollar-cost averaging What is dollar-cost averaging? If we could all buy stocks or other investments when the market is down and sell them when it is strong, investing would be easy. Unfortunately, attempts to "time the market" are more often than not unsuccessful, as investors can often make erroneous purchases and sales in doing so. Dollar-cost averaging involves gradually purchasing stocks over time by investing the same amount at regular intervals, such as every month, regardless of market fluctuations. Individual investors often sell shares when equities fall due to fear of losses; conversely, they often jump back in when the stock market is booming, for fear of missing out. Over time, this erodes portfolio returns, as individual investors are often buying high and selling low driven by euphoria and panic, respectively. Dollar-cost averaging assists in freeing the investment process from subjective opinions and emotions and feeling the need to time the market. When investing using dollar-cost averaging, you purchase more security shares when the price is low and fewer shares when the price is high. Over time, this process results in you paying a lower average price per share overall. Dollar-cost averaging may be effective for Bitcoin investors, too. It was recently reported that two of the world's largest crypto investors are dollar-cost averaging into Bitcoin. President Nayib Bukele of El Salvador and renowned crypto tycoon Justin Sun purchase one Bitcoin every day, regardless of the state of the market. What are the advantages of dollar-cost averaging? As markets fall, by employing the dollar-cost averaging approach, you will buy assets at a lower cost ready for future gains, as markets rise that will raise your portfolio's worth over time. It's challenging to predict fluctuations, given the many factors that can affect a stock’s price, many of which can’t be predicted at all. The dollar-cost averaging method balances out the cost of purchases, irrespective of stock and market fluctuations, which is to the investor's advantage over the medium to long term. Dollar-cost averaging also encourages Investors to concentrate their efforts on the long term and ignore the noise and hype of daily reports about the stock market's short-term performance. What are the disadvantages of dollar-cost averaging? Dollar-cost averaging also has flaws, like any other investment technique. The market's propensity to rise over time is a drawback of dollar-cost averaging, as this suggests that investing a substantial sum upfront is likely to perform better than investing smaller sums gradually, depending on the timing of the upfront lump sum investment of course. Another disadvantage of dollar-cost averaging is that it can mean higher fees, as you’re buying smaller amounts of assets more often. Dollar-cost averaging also prevents you from realizing larger returns if you enter and leave markets with larger investments at favorable moments, whether by investment skill or by luck. However, few investors can point to a consistently good track record in this respect, so you also risk bigger losses. An example of dollar-cost averaging Jim has $600 to invest, and he decides to invest it as $100 a month for six months to purchase shares in a particular index-tracking mutual fund each month. The equities are traded for $10 per share throughout the first month, so Jim purchases a total of 10 shares in the first month. In the following 2 months, the share price falls to $5, and Jim can buy 20 shares each month, so he has 50 shares after 3 months. In the fourth month, the share price reverts to $10, and in the fifth and sixth month it rises to $20. At the end of six months therefore, Jim has 70 shares, and a total portfolio value of $1,400 on a $600 investment, despite the fluctuations in the fund price. This is thanks to the fact that he was able to buy more shares when the price dropped, making more profit when it rose again. On the other hand, If he had bought $600 of stocks at the start, he would have $1,200 total value. This demonstrates the advantage of dollar-cost averaging long term. If he had waited until the price dropped and spent the whole $600 the second month, he would have had a much higher return of $2,400, however that would have relied on timing the market, which it is very rare to get right. Who should use dollar-cost averaging? Expat investors can use dollar-cost averaging to buy stocks, or mutual or index funds, or other assets such as bonds. It is a strategy that allows you to avoid the stress and hassle of worrying about market timing and volatility,allowing an investor to accumulate wealth over different points in the economic cycle and build a robust portfolio over time. If your investment goals have a shorter time horizon however, it may not be the best strategy, and it’s also possible that you can miss out on significant gains compared to buying more when prices are temporarily depressed. If you are a risk-averse investor, or worry about market volatility, and you have a long-term approach to investing, using dollar-cost averaging as an investment strategy is definitely worth considering. Wrapping up #Don’t forget that expats investing abroad can incur additional US tax and reporting requirements, and particularly relating to non-US mutual funds. When considering dollar-cost averaging or other investment strategies, always discuss your ideas and plans with your expat financial advisor, who will be able to guide you through the risks, benefits and implications so that you can make a truly informed decision. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

“The individual investor should act consistently as an investor and not as a speculator” - Benjamin Graham As an expat investor, there are different strategic approaches to investing. Core and Satellite is an investment strategy that aims to strike a balance between reducing risk and maximising gains when building a portfolio. Specifically, in this article, you’ll learn about the following topics: • What is a Core and Satellite investment strategy? • What are the benefits of Core and Satellite? • Types of core investments • Balance of Core and Satellite • US tax matters What is a Core and Satellite investment strategy? The Core and Satellite investment approach involves splitting your investments in two portions: (i) a larger portion called Core, which is the foundation of your investments, typically being a safer portion of your portfolio whose performance will track markets in general. Usually the Core is made up of low-cost passive investments, such as index funds and ETFs. (ii) a smaller portion called Satellite, which are targeted investments to complement the Core, commonly being a riskier part of the portfolio with potential to achieve higher gains. Usually the Satellite is made up of thematic investments, individual stocks and actively managed funds. What are the benefits of Core and Satellite? Core and Satellite is a tried and tested investment approach, and it is always popular due to its several integral benefits: • Reduced costs and potential to achieve tax savings. There are two ways that savings are made with a Core and Satellite investment approach. The first is because the core part of the portfolio isn’t actively managed, thus reducing transaction and management fees. Secondly, because the core part doesn’t involve actively managed regular buying and selling, there’s potential to achieve savings on taxes relating to gains, which are taxed as income if bought and sold in the same year, or as a capital gain if the investment was held for over a year before being sold. • Potential to outperform benchmarks. The Satellite holdings, which are more focused and can be actively managed or targeted towards specific themes, have the potential to outperform the broader market. Investors can capitalize on investment opportunities they believe in or benefit from active management expertise in specific areas while still capturing the market's overall performance through the core portfolio. • Risk mitigation. Conversely, the core reduced the overall risk of the portfolio compared to a totally actively-managed investment approach. • Portfolio diversification. Core-and-satellite allows for natural diversification, as the core part of the portfolio typically covers a range of equities, rather than a small handful of individual stocks. Types of Core investments Core investments are meant to be defensive, so they are placed in a fund that contains a broad range of equities so that the performance tracks overall market performance. These are typically index funds. What is an index fund? Index funds track a particular index, such as the S&P 500. They normally contain a large number of the most important stocks in the index to ensure that the fund’s performance is closely correlated with that of the index. They have little turnover of stocks, so once set up they don’t need to be actively managed, keeping fees very low. There are two types of index funds: exchange-traded funds (ETFs) and mutual funds. Mutual funds pool the investors’ funds and an investor can usually trade in or out on a daily basis, while exchange traded funds (ETFs) can be bought and sold throughout the trading day, just like stocks. Expats should bear in mind however that investing in non-US (i.e. foreign) mutual funds is a considerable risk as a US taxpayer, and is normally inadvisable (see the note on PFICs below for more information about this). Expats can invest in US mutual funds without flirting with the same complex tax and reporting implications, though. Balance of Core and Satellite The satellite portion of a core-and-satellite portfolio constitutes the smaller part of the portfolio. Many investment managers work on an 80% core and 20% satellite basis, however the optimal mix ultimately depends on your goals, your time horizon, as well as your risk tolerance. So if you are looking to build rapid gains, and you are prepared to tolerate a higher risk, you could decide to have up to 40% of your portfolio in satellite investments, which carry a higher risk but also potentially higher rewards. Remember though that the point of the core is to provide stability and reduce costs and potential losses if the satellite investments perform poorly, so you shouldn’t reduce the size of the core proportion of your portfolio by too much. Within the satellite portion of your portfolio, you can also reduce risk by ensuring that you have several satellite investments rather than just one. US tax matters Don’t forget that investing abroad as a US expat can have US tax reporting implications. The three most common reporting forms to be aware of relating to investments are: • FBAR filing. As a US expat, if you have over $10,000 in total in any and all foreign financial accounts, including bank and investment accounts, at any time during a year, then you have to file Form 114 to FinCEN to report all of your foreign accounts. Your expat tax accountant can help you with this. • FATCA filing. Similarly, if the value of your financial assets (including cash and investments) in accounts registered abroad is over $200,000 at the end of the year, or over $300,000 at any time during a year, then you have to file Form 8398 to the IRS along with your federal tax return. • PFICs. The IRS deems non-US registered mutual funds to be a Passive Foreign Investment Company, or PFIC. Having investments in a PFIC means burdensome US reporting requirements, and there’s often a tax implication, too. Winding up Core and Satellite is a tried and tested strategy, however you should always consult with your expat financial advisor to ensure that your investments are set up in a way that will meet your needs and goals. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.