With your bank accounts in order, your tax status established and your awareness raised about your need to find a well-qualified and experienced international independent financial adviser, the next thing for you to consider is saving and investing your excess income or making the most of your existing savings. We will show you how to avoid making the banks rich and instead make yourself the extra income.
As any adviser will explain, holding a certain percentage of your wealth in cash deposits makes sound fiscal sense. It allows you to cover day-to-day expenses and have a small amount in reserve to deal with unforeseen circumstances. An expatriate savings account can help with the management of your cash deposits and is a beneficial tool for a number of specific reasons. But diversification is the key. Never put all your eggs in one basket.
As an expatriate you are maybe in the advantageous position where you’re earning more than you were back home and yet spending less. You may have been relocated abroad and be enjoying a preferential remuneration package as a result, with your employer paying not only your salary but your living costs too. You may be living in a lower cost environment, or perhaps you’re living in a tax-free jurisdiction such as Dubai or Monaco. Statistics show that the average expatriate not only earns more than their peers back home, but they are in a better position to save and invest more of their wealth. Indeed, one of the overriding reasons that many people have when they choose to move abroad to live and work is improving their financial lot. If you’re finding that you have a larger disposable income than you once did, you owe it to yourself, your family and your financial future to protect and grow that excess wealth.
After your cash deposits for emergencies the very first financial vehicle to consider for the protection and enhancement of this greater wealth is an expatriate savings account. By placing a certain percentage of your excess income just that little bit further out of reach, you’re not only preventing it from being easily spent and wasted, you’re highly likely to be able to put it in an account where it will earn a far better rate of return than it will receive in a normal current account.
The offshore and expatriate savings account options that you have are broad and varied, because all institutions want to attract your savings related income. Generally speaking, the longer you’re willing to save for, the better returns and lower charges you will incur.
For those who qualify and on accounts that qualify, it is possible to earn interest on such a savings account tax-free. For those in the EU who are potentially affected by the European Savings Tax Directive (see chapter eight), there are certain account types and structures that can be selected to shield the automatic exchange of information between tax authorities, or tax deduction terms of the directive. To benefit, you need to decide for how long you want to save i.e. what is the purpose and how much you can comfortably afford to save on a regular basis.
As an expatriate, you can then benefit from investing your money regularly into an offshore retirement or savings vehicle for example, instead of your normal low interest savings account. These types of investment assets allow for tax free, or tax deferred growth, which naturally gives your savings an instant boost. What’s more, unlike their onshore counterparts, an offshore pension scheme is far more flexible in terms of the amount you can save, how you save and even how you take the final benefits. Generally speaking, savings and investment vehicles held offshore respect that it is your money to spend as you see fit, whenever and wherever you want to. This leads to greater flexibility.
Because there is such a wide choice of savings vehicles, institutions and jurisdictions for expatriate savers to choose from, rather than going it alone and seeking out the best and highest returning offshore savings account, you might like to bear in mind that the larger and more respected offshore financial advisers have the best relationships with financial institutions. They often have exclusive access to attractive accounts and investment vehicles that you, as their client, can benefit from. This is just another reason why it can make sound and logical financial sense for you to draw on the services of a recommend adviser when structuring your expatriate financial affairs. At Expat Money Guide we can help you find an adviser who’s right for you. Contact [email protected].
Current Expatriate Savers
If you’re already taking advantage of your expatriate status and saving or investing offshore, receiving the best ongoing advice about your investments is also essential. As you are no doubt aware, the fund choices you have made the sectors you are exposed to and the accounts that you hold all need to be reviewed on a regular basis. Markets continually change as can your circumstances, which mean that certain holdings one year might not be the most suitable for your situation 12 or even 3 months down the line. Therefore, you need to be in regular contact with a reputable adviser who knows the international marketplace inside out, and who is well aware of what’s going on in the markets.
A professional and genuinely good adviser should send you regular recommendations of which funds and sectors you should be taking advantage of to get the maximum growth aligned to your individual risk profile, if any. The benefit of using the best advisers and holding vehicles for your investment portfolio is that your holdings will be reviewed, and changes will be recommended to you as and when necessary. I.e., the benefit of receiving good advice simply cannot be emphasised enough. If you have opened accounts on your own or lost touch with the adviser who recommended a particular course of action to you in the past, don’t worry. Professional advisories take on clients such as yourself on a regular basis and are happy to work with you to review, enhance and positively develop your financial situation.
Getting the right advice, applies to you just as much as it applies to an expatriate starting on the road to getting their financial affairs in order. I.e., seek out an adviser who understands your international status and who has access to the entire offshore and onshore marketplace. If in doubt let us know about your personal situation, what you are looking to achieve and we will be happy to point you in the right direction without charge or obligation.