If you’ve been investing money regularly in the stock market over the past 1, 3, 5, 10, 15 or more years, you’ve made a decent profit.

If you had started with $1000 and added $1000 a month into global stocks, here’s what it should look like over different time periods.

Starting with $1000 and adding $1000 a month into Global Stocks

Time Periods Ending July 31, 2016

Years To Grow	20	10	5	3	1
Total Contribution	$241,000	$121,000	$61,000	$37,000	$13,000
End Value	$593,712	$193,719	$78,425	$41,162	$14,753
Profit	$352,712	$72,719	$17,425	$4,162	$1,753

Source:  Portfoliovisualizer.com, starting with $1000 and adding $1000 every month into Vanguard’s Global Stock Market Index (VT).  Edited:  September 14, 2016.  Amounts invested were initially understated by $1000 in each scenario.  

Let me explain the table. 

If you had started with $1000 and invested $1000 per month over the past year in a global stock index, you would have invested a total of $13,000.  By July 31, 2016, it would have grown to $14,753.  Let me explain what I mean by “global stocks.”  This doesn’t represent a single country’s stock market performance.  It represents a cap-weighted average of virtually every country’s stock market over these durations.  The good.  The bad.  The downright ugly.

If you had done the same thing over the past 20 years, you would have added $241,000.  By July 31, 2016, the money would have grown to $593,712.

You’re saying you didn’t make that kind of money?

What?  Over the past 1, 3, 5 or 10 years, you didn’t make a profit?

If that’s the case, there’s likely one explanation.

You invested in an insurance linked offshore pension. 

In 2016 I spoke at the International School of Lausanne, in Switzerland.  As usual, I spoke about the horrific fees that most offshore pensions charge.  I met a woman who I’ll call Selena.  She teaches at the school. Like many expats, Selena was sold an offshore pension by a British gentleman (why are they always British and male?) The fees are crushing: roughly 4 percent per year.

The redemption penalties are huge.  If Selena wants to withdraw her money, she’ll practically lose her skirt.  The advisor received huge commissions for selling such a product.  The parent company needs to recoup that money.  That’s why they want to keep Selena’s money.  They need to bleed her slowly, so they can recoup that commission. 

The advisor’s hunger for the commission cost Selena plenty.

“Hello,” said the suavely dressed Brit when they first met. “Let me introduce you to some offshore pension funds.  You’ll make a lot of tax-free money.  Have a look at these performance charts.”

The advisor showed Selena some funds that had spectacular recent returns. 

“We’ll get you into these great funds,” he said.

The advisor set up a monthly purchase plan.  Selena began to purchase these previously hot funds.  Does she have exposure to U.S. stocks?  No.  Does she have exposure to European stocks?  No.

Why doesn’t she have exposure to the world’s two biggest markets?

Neither of those markets had recently done well, so he didn’t bother adding them. 

He needed to impress Selena.  If he had showed her a diversified global portfolio, he might not have made the sale.  That’s how it begins.

Things roll downhill from there.

 Between 2008 and 2016, Selena added money monthly.  Her contributions total $39,951 USD.  But her portfolio is only worth$29,006.  Globally, most of the world’s markets have risen since 2008.  But Selena lost money.  Such is the case with most offshore investment platforms.  Fees are outrageous, yes.  But the portfolios are created by commission hungry knuckleheads.

It would have been tough to lose money since 2008. But Selena’s advisor found a way. 

I wish she were an exception.

More than half of Selena’s portfolio is made up of Chinese stocks.  That’s Freddy Krueger crazy.  Since the Chinese stock market opened to foreigners in 1993, it has barely made money.  But it did spike (briefly) before Selena met her advisor.  It gave him a selling point.  That cost Selena money when Chinese stocks dumped.

The rest of her portfolio was stuffed with gold and Latin American funds.  Each had delivered a decent run, before Selena met the shark. They crashed after that.

Smart investing isn’t about building a non-diversified portfolio stuffed with yesterday’s winners.  In the U.S., if an advisor did that, it would be grounds for a lawsuit that the client would win.  But the expatriate world of offshore pensions is like the crazy wild west. 

Selena’s says that at her previous school, the administration encouraged teachers to invest with this advisor’s firm.  The administration, unfortunately, didn’t know better.

Here’s a screenshot of Selena’s account.

Selena’s Aviva Investment Portfolio

Notice the gold funds.  They’re the first ones listed above.  Next, you’ll see the Latin American Funds.  Finally, notice the First State Regional China Fund.

In the screenshot below, you can see that more than 50 percent of her portfolio is invested in this Chinese fund.

Notice (in the screenshot below) that she has contributed $39,351 since 2008.  You can also see the portfolio’s value:  $29,006.35.

Global stocks went up.  But Selena lost money.

If you’re invested with Aviva, Friends Provident, Zurich International, Generali or any other insurance linked offshore pension, your story is probably similar. 

Now let me tell you something creepy.  If you’ve invested with one of these firms, I can tell you what you own.  No, I can’t read your mind.  But I know when different geographic sectors had their time in the sun.  If you started in 2007, you have a huge emerging market stock component.  You might not own much else. 

If you started in 2010 or 2011, your portfolio will be stuffed with gold. 

If you started this year, your portfolio will be filled with U.S. stock funds.  It could also contain some emerging markets, if you began halfway through the year.  Emerging market stocks have had a strong recent run.  The U.S. has been the best performer for a decade.

Your advisor will ignore Europe and Developed Asia.  Instead, he’ll prefer to wow you with rearview mirror driving.  That kind of practice can cause an ugly crash.

Selena isn’t alone. This expat story is far too familiar.

Don’t invest in an insurance linked offshore pension. Their fees are too high. 

Commission hungry sharks prowl expat waters. These predators have shockingly low morals, knowledge or both.

Learn to build a diversified portfolio of low cost ETFs. 

Or, you could hire an ethical advisor to do the work for you.