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‘Sokrat’ Investment Group Launches ‘Heir’ Program for VIP Clients

September 4, 2008

In the stream of Trust management, specialists from the ‘Sokrat’ Investment Group have developed the ‘Heir’ investment program especially for VIP clients. This is the first program in Ukraine to offer the opportunity to create an individual securities portfolio for one’s child. Each portfolio – whether it be moderately conservative, balanced, or moderately aggressive – is dependent on the personal goals and preferences of the individual client's investment strategy. The minimum required investment is UAH 100,000, with the possibility of continual replenishment and a recommended investment period of three or more years. One’s individual portfolio is made up of stocks, bonds, securities investment funds, as well as other tools.

By creating portfolio securities, the child acquires his/her own property, and upon the child reaching the age of 18 or the age of majority/legal competency (if that happens to occur at age 18), the funds become at his/her full disposal. Upon reaching 14 years of age and with his/ her parents' consent, a child may enter into a contract to sell securities. At the age of 18, participants are able to continue making investments or else use the funds from the assets sale to pay for their education abroad, buy property, start their own businesses. Securities purchased by a child’s parents through this program, with the exception of certain cases, are not included in any inheritance received from the parents and, as such, are not divided among the various recipients of such inheritance nor may they be divided between spouses should they undergo a divorce.

“The most important investment project for each family is the education of their heirs, who will continue and develop their parents’ business,” commented Alexander Smaliy, the First Deputy Chairman of the JSC ‘Sokrat’ Financial Company. “For decades, parents have invested dozens and even hundreds of thousands of dollars in their children’s future, and the sooner that the process of their child’s financial upbringing begins, the better. For instance, Warren Buffett’s first transaction in the securities market is committed for a term of 11 years. Our program will ensure children’s future well-being and teach them to navigate through the complex world of financial relations”.

Using equity market tools to ensure a child’s future financial well-being is an important step in building his/her financial independence. Parents who have their children participate in the program can teach them to spend their financial means, set priorities, earn and save their capital. Through involvement in the investment process, children gain the opportunity to personally participate in shaping their finances and future, in addition to assisting in their family’s financial stability and the development of entrepreneurial skills.

The effectiveness of using stock market instruments, compared to traditional savings models (bank deposits and insurance programs), have been confirmed by world practice over many years. The stock market is more dynamic, allowing professional managers to earn a higher level of income in the medium and long term. The history of statistics for stock indices in most countries show that growth periods on world financial markets outnumber those periods characterized by decline. A long-term investment strategy allows one to even take into account the possible risks associated with saving and increasing capital.

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