Colgate vs Bitcoin: Reasons to invest in the goliaths

*This content is brought to you by CybiWealth 

By Scott Cooper

Amidst rapidly changing economic conditions, trends and technology, South African investors seeking to grow their wealth should be wary of attempting to identify the next Bitcoin or Apple. Instead, choosing to invest in well-established, multinational brands with proven track records is a far better predictor of future investment success, says Scott Cooper, Chief Executive Officer of CybiWealth.

Scott Cooper, CEO, CybiWealth
Scott Cooper, CEO, CybiWealth

CybiWealth is a low-cost digital platform that enables investors to purchase shares in an offshore investment portfolio of 20 select, high-quality multinational companies including Colgate, Coca-Cola, Unilever, Johnson and Johnson, L’Oréal and Nestlé.

Cooper states that the immediate benefits of choosing to invest in global companies versus tech start-ups lies in their pre-established positions as market leaders, with global distribution networks and a history of reliable capital growth.

“Consider, for instance, that 15 years ago it would have been extremely difficult to predict that Apple would be where it is today. There were perhaps ten other companies that were similar to Apple that simply didn’t succeed in the same way that Apple has. So, when looking at start-ups, you may choose the next market leader, but there’s also a strong possibility of getting it wrong.”

Likewise, he points to the example of Bitcoin, which has plunged some 70% since reaching record highs in December 2017.

“If you look at Bitcoin, it’s also impossible to say what the price will be in five or ten years. The price is extremely volatile, and the downside of that volatility is that there’s just no way to know where your investment will be in the future,” he notes.

“By comparison, it’s much easier to predict where companies such as Coca-Cola or Johnson and Johnson will be in five, ten or even 25 years from now. We may miss out on picking the ultimate winner of the self-driving race, but the companies in the CybiWealth portfolio have all withstood the test of time.”

He further adds that CybiWealth’s selection of global companies, which sell hundreds or thousands of market-leading products in hundreds of countries, are far more resilient to changing economic conditions than companies that are limited to one specific region or type of product.

“Investing in poor economic cycles can seem daunting, but it’s important to remember that consumers usually don’t change their basic buying habits during an economic downturn. So if you take a well-established company with a strong balance sheet like Colgate, which sells around 50% of the world’s toothpaste, we expect it to continue to grow and pay dividends even if we enter a bad economic cycle.”

“People may look at the types of companies that CybiWealth is investing in and think they’re stodgy or boring, but we like the diversification that multinationals bring to the table, and the fact is that these companies have done very well over time.”

While the minimum initial investment amount in the CybiWealth portfolio is £500, there is no minimum value on additional investments. Furthermore, all companies included within the portfolio are reliable dividend-payers, and dividends are automatically allocated to each individual’s account and reinvested towards the purchase of additional shares.

“We do, however, try to reconnect investors with their investments by making them direct shareholders in companies. Unlike a unit trust portfolio, our investors are directly buying a portion of businesses with well-known and recognisable brands, and they are also provided with company news and dividend notifications,” notes Cooper.

CybiWealth charges an annual management fee of 0.75% and brokerage fees of just 0.25% on investments. Payments can be made via electronic funds transfer (EFT), or debit or credit card.

The CybiWealth portfolio is managed by FIM Capital, a professional wealth management team based in the Isle of Man that is authorised and regulated by the Financial Conduct Authority, and is distributed in South Africa by Marriott Asset Management, an authorised Financial Services Provider.

  • CybiWealth is an online investment platform that facilitates the simple, easy and cost-effective investment in direct shareholdings in a high-quality offshore share portfolio. Portfolio management and regulatory compliance is provided by FIM Capital in the Isle of Man (licensed by the Isle of Man Financial Services Authority and authorised and regulated by the Financial Conduct Authority).  Marriott Asset Management has a contractual agreement with FIM Capital to distribute CybiWealth in South Africa. Visit the website www.cybiwealth.com for more information.