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Ten Expat Investment Advice Tips


We should continue to do the same even after retirement because retirement planning is a must for expats. – PowerPoint PPT presentation

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Title: Ten Expat Investment Advice Tips

Ten Expat Investment Advice Tips
Investing as an expat comes with a multitude of
complications and tax considerations. A
profitable investment portfolio is certainly
achievable, building capital growth over the long
term with a stable, risk-averse approach.   If
youre an expat living overseas or planning for
retirement abroad, then now is the optimal time
to start strategizing ways to leverage funds
earning low interest in a conventional savings
account.   While every investment method is
tailored to your aspirations, finances, and
plans, let us share some tips to avoid typical
expat investment mistakes.
1. Focus on Contingency Planning as a First Step
  • The first question to ask is how much you can
    afford to invest. That requires a deep dive look
    into your aspirations, plans and outgoings, such
  • Emergency funds you wish to retain in liquid
  • A risk profile assessment to explore the
    relationship between risk and reward.
  • Expected expenses, such as property transactions
    or family events.
  • Planned withdrawal dates to establish an
    investment timeframe.
  • Retirement plans when you anticipate retiring,
    where, and your required budget.
  • A contingency plan is a fundamental building
    block to a successful investment portfolio since
    you mitigate the potential financial hazards
    associated with over-investing or accepting too
    high a risk exposure.

2. Access Expat Investment Advice for Asset
Deciding on your investment assets is the
following step.   Our recommendation, generally,
is to focus on diversification, coherent with
your investment goals and expected returns, with
numerous options
  • Multi-asset funds are popular since they offer
    access to all assets across the major classes
    within one fund. The fund is designed to generate
    capital growth with protection from market
  • Equity shares in high-growth industries can pay
    outstanding dividends, far above average rates
    and offer the option of dividend reinvestment.
  • Fixed-interest bonds are often incorporated as a
    long-term retirement strategy, with stable
    returns over static periods.
  • Commodities, like gold, are a further option, but
    there are multiple potential assets, including
    soft commodities such as agricultural produce.
  • Property individual property assets, collective
    funds or shares related to property businesses
    can all be held within a portfolio bond, often as
    a long-term investment that relies on steady
    sector growth.
  • Every investment carries a risk element, even if
    the exposure is minimal.
  • Diversification means spreading that risk across
    different asset classes, sectors, funds, and even
    countries to ensure that any economic downturns
    or changes wont impact your entire portfolio.
  • Discover more about the risk assessment process
    through our earlier publication, How to Risk
    Assess Your Wealth Management Strategy.

3. Be Aware of Your Ongoing Fund Management Costs
Working with an unknown overseas adviser can be
risky, particularly if you arent comfortable
with your knowledge about the regulatory
environment or enforcement in a new
location.   Countless unethical businesses are
not appropriately qualified to offer financial
advice and charge extremely steep fees. Any expat
investment product sold as low-cost or fee-free
tends to have a pitfall attached, normally in the
form of additional management charges.   We would
advise any investor living abroad to be mindful
of the commissions payable, insurance premiums or
other charges rolled into an investment product,
especially if that product is marketed at costs
that seem unusually competitive.
4. Take Note of Underlying Currency Exposures
If you invest in products and funds across
borders, currency exchange rates will come into
play.   One of the best ways to stay on top of
the potential risks of a fluctuating currency is
to avoid investing solely based on FX
performance. Stocks and bonds tend to appreciate,
although the speed of growth depends heavily on
the nature of the product, the amount invested,
and the markets. Currency valuations are very
difficult to predict with any certainty, so
opting for long-term stable growth is often
preferable.   If you plan to retire in Europe,
for example, building an investment portfolio
centered around Euro assets will stand you in
good stead. This focus incorporates an element of
insulation against any potential downturns in the
currency since this will have a minimal impact on
your economic circumstances.
5. Set Realistic Investment Return Targets
As a rough indication, the average return rates
for cash savings sit at around 0.7 per cent in
real terms, which is a minimal amount to earn
against your wealth. The offset is the lack of
short-term volatility, although inflation may
outpace interest, reducing your overall savings a
little at a time.   Other assets can return
compound annual growth of anywhere from 3 to 12
or more, but continued gains rely on
reinvestment.   Setting your targets correctly
means evaluating how much you expect to earn and
constructing a plan to achieve those goals
without tipping over your maximum exposure
threshold. Its wise to speak with your wealth
manager to set reasonable goals, before making
any decisions.
6. Review Your Investment Funds Regularly
Regular portfolio reviews are never something you
should leave to chance, even if youve been
investing for many years.   A lack of regular
attention can mean missed opportunities,
unidentified dips, lower than expected returns,
and a loss of cohesion between your diversified
assets. Consulting an accredited wealth
management adviser will ensure your funds are
reviewed periodically and swift action is taken
when necessary.   If you receive portfolio
performance reports but arent clear on whether
your returns meet your goals, please visit our
guide to Translating Your Investment Portfolio
7. Dont be Unnerved by Regulatory Complications
There are, of course, many different rules, tax
regimes and regulations to consider but
avoiding any investment to protect your wealth is
rarely a good financial strategy. As an expat,
the intricacies of establishing your domiciliary
and residential status can make the
decision-making process more complex.   Still, an
experienced adviser can quickly cut through the
noise to give you clear options.   Compliance can
be daunting, but retaining cash savings will
typically not provide anything close to the
possible investment returns.
8. Be Mindful of Your Expat Tax Obligations
As weve mentioned, taxes will impact your
investment choices. You need to adhere to rules
about disclosing offshore assets, particularly if
you remain liable for HMRC returns.   Most
countries partake in information sharing
agreements such as the Common Reporting Standard,
so failing to declare returns can carry severe
consequences.   Like many of the investment tips
covered here, the best way to protect yourself
from potentially unintentional non-disclosures is
to work with a wealth manager with an in-depth
understanding of the cross-border reporting
9. Seek Expat Investment Advice for Overseas
Pension Plans
  • Pension planning, as an integral element of your
    financial strategy, is a broad topic, and much
    depends on
  • The type(s) of pension you hold, and in which
  • Where you live or plan to relocate.
  • Taxes payable on pension income in your country
    of residence.
  • The value of your pension assets.
  • How soon you wish to retire, or whether you are
    already drawing a pension.
  • The rules around lump-sum withdrawals from your
  • Keeping your pension schemes at the forefront is
    important since you may find that you receive
    highly favorable tax treatments, again depending
    on the plan you have and how much it is worth.
  • Conversely, aspects such as the Overseas Transfer
    Charge may mean that an alternative solution is
    strongly preferable to avoid losing a large
    proportion of your savings to taxes.

10. Use a Respected Financial Adviser
Finally, the most reliable way to avoid
investment mistakes as an expat is to ensure you
have guidance from a trusted adviser with
experience in the local rules and tax
implications in your country of residence. Even
the most competent financial adviser based in
your home country may not be equipped to deal
with overseas tax returns, declarations or
property levies.
  • There are many considerations, depending on your
    residency or citizenship status, country of
    origin and place of residence, such as
  • Applicable income tax treaties.
  • Possible overseas tax credits.
  • Special reporting requirements.
  • Chase Buchanans guide, The Post-Brexit Financial
    Advice Crisis, highlights this issue, explaining
    how British nationals resident in Europe have
    experienced huge disruption.
  • Our consultants have years of experience
    supporting a broad range of expat clients
    worldwide, with offices in global locations,
    providing on-the-ground knowledge and up to date
    compliance guidance at every step of the way.
    Please get in touch for more guidance on
    constructing a future proof investment plan or
    bespoke expat investment advice from the
    international experts.

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