As a Brit living abroad, managing your finances presents unique opportunities and considerations.
Thanks to higher income coupled with lower living costs, you may even find you can save more than you ever managed in the UK.
Whether you’re saving for something in the future or taking a long-term view to planning for your retirement, investing as an expat can be a great opportunity to grow and protect your wealth.
So, here are 10 practical tips to help ensure you make the best decisions for securing your wealth and enjoying the lifestyle you and your family deserve.
1. Have a plan
A sound financial plan can help you unlock wealth potential. Planning for near- and long-term goals can give you peace of mind and reassurance that your finances are on course to meet your goals and objectives.
Whatever you want to achieve in life, be it a trip of a lifetime, saving for school or university fees, or a comfortable retirement in years to come, having a plan will help you achieve your dreams.
2. Secure your cash savings
To avoid any adverse effects of currency fluctuation and exchange rates, make sure you have a savings account in your most frequently used currency. If you travel a lot or live in several places, consider saving in a range of currencies.
As well as being easily accessible, savings accounts offer a secure place to store your capital while earning a fixed interest rate.
3. Avoid holding too much of your wealth in cash
If you hold too much of your wealth in cash, you are unlikely to be able to keep pace with inflation. This will reduce your purchasing power and it will be more difficult for you to achieve your goals.
Although governments in most developed countries aim to keep inflation between 2% and 3%, the increase of cash injected into markets to stimulate economies in response to the pandemic has seen a rise in inflation.
However, despite the risk of inflation, it’s usually necessary to keep at least some of your savings in an easy access account so you can easily deposit and withdraw your cash at any time.
4. Keep an emergency fund on hand
You should hold at least three months’ living costs in an emergency fund to cover any unexpected expenses.
The amount you should hold will depend on your specific circumstances. In general, it is wise to hold enough cash to cover living expenses for between three and six months.
5. Consider what to do with existing assets
If you're living abroad and think you're likely to remain outside the UK, you may want to transfer some or all of your UK assets. With different tax regimes to consider, it’s essential that you manage the movement and disposal of assets with care.
As a British expat, you face an array of complicated tax rules and requirements. If you have existing ISAs and other investments, it is wise to explore potential options that could be more tax-efficient in both the short and longer term.
Again, you also need to remember to consider fluctuations in the exchange rate. Moving your assets at the wrong time could erode your wealth and harm your long-term plans.
We can help ensure you don’t fall foul of the more complex investment rules or end up paying unnecessary tax.
6. Understand your investment options
As an expat, understanding all the investment options available can be complex and confusing, which is why it’s crucial that you take independent advice from a qualified adviser.
Depending on where you live, you could be liable to pay tax on worldwide income and gains. This could mean that even assets outside your country of residence, such as UK pensions, ISAs, and investment accounts, are assessed and liable for tax where you now live.
Expat investment options can take many guises but are broadly broken down into two categories: onshore or offshore. Due to the tax benefits, expats often find offshore investments more favourable.
7. Save for your retirement
You may already contribute to a pension but, as an expat, you may find you have lots of small pots dotted around different countries, which isn’t ideal.
We can help you figure out the best approach to consolidating your pensions and ensure that your retirement savings are invested according to your objectives and tolerance for risk.
If you have more than one UK pension, you can consolidate them into a single pension arrangement with a self-invested personal pension (SIPP). This could mean less admin and could reduce the fees you’re paying.
Read more: Pros and cons of combining your pension pots. Is it the best move for you?
8. Invest with a long-term view
When you invest, you should always take a long-term approach, and ideally you should expect to tie up your funds for five years or more. The longer you invest, the more compound growth you are likely to enjoy.
9. Find the right support
Reviewing your financial plan when you settle in a new country can help you minimise taxation and make the most of tax-efficient opportunities in your new home.
Living overseas can make investment management more complicated, and it’s easy to get tied into sneaky commission-based situations when trying to find some support.
We can help you make the most of your investment options and guide you towards suitable tax-efficient savings arrangements. We’ll also make sure that your investments align with your financial objectives, long-term goals, and match your appetite for risk.
10. Get in touch
With so much to take into consideration, getting the right advice is crucial to ensure you don’t fall foul of the more complex investment rules or end up paying unnecessary tax.
We specialise in working with British expats and have the knowledge and expertise to ensure your worldwide assets and capital grow as tax-efficiently as possible.
If you’d like help to take advantage of the opportunities and avoid the threats, get in touch. Email enquiries@alexanderpeter.com or call us on +44 1689 493455.
Please note: The content of this newsletter is offered only for general informational and educational purposes. It is not offered as and does not constitute financial advice.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.
