Gary Timmins
of The Spectrum IFA Group - International Investment
 Investments for Expats, Offshore or Internationally
Investments for Expats are often quoted as being offshore or international. In reality, the advice that you need is that there are some basics which apply wherever you are investing. Whether you are seeking to assure your own long term financial security, looking for extra income from your investments or simply trying to improve the return on your investments, it is important to make the right investment choices and to use the correct structure. We will help you select a strategy depending on your timeframe, choice of currency and attitude to risk. Guidance on Investing is a large part of what we do and by using the taxation rules that apply to insurances we make it very tax efficient. Withholding tax on offshore bank accounts and the tax crackdowns on avoidance makes this simple, legal method of investing even more relevant.
The financial plans we recommend are often inside a "wrapper" that is cross border, can give tax savings and still be linked to a range of investment assets. From guaranteed and fixed interest securities through property, equities from well developed or emerging markets, to specialist and alternative investments, we can help you plan realistically and sensibly for your future. Often it is possible to have a mix of investments.
We can recommend actively managed strategies undertaken by investment professionals to ensure you make the most of opportunities available. Or, if more appropriate we can recommend funds that secure your capital.
It is important to emphasise that we are independent. Our Group is not owned by any one large bank and we do not use third party funds in which we have an interest. This means we have access to and can choose from over 11,000 different investments. If economic circumstances change it is possible to switch to a different investment, often without charge and without a tax liability. If you build up a nest egg whilst working and subsequently retire, again it is possible to re-align your investments to your new circumstances.
With your investment planning we also take into account your tax situation. Often it is possible to keep your investment taxation to a minimum in Spain by using an agreed, EU compliant structure. Whilst we are able to assist with offshore investments it is often not necessary in modern Spain. Where appropriate we will also discuss Inheritance tax with you and ways to minimise the tax on your investments. Equally in the UK we can structure your investments to make use of tax advantageous plans; even providing 20 year tax deferred investments where income can be drawn at up to 5% of the capital invested.
 Some investment rules to try and adhere to:
You need to make the most of your financial affairs but often it is difficult to find good advice about investing and taxation. This guide has been produced to help you through the jargon, choices and complexities of investments made internationally (what used to be sometimes called Offshore Investments) by giving you the basics to investing whilst you are living in Spain or the UK.
• Don’t put all your eggs in one basket. Yes, seems obvious but this includes the less obvious. Investing all your money into a business in Spain or the UK is not wise. Nor is the other extreme of leaving all your money in the bank on deposit (even if it is in different accounts). The bank account situation is an example we see often in both Spain and the UK. Yet bank deposits often don’t keep up with inflation. And as we head for times of very low interest rates this approach can cause major erosion in personal wealth and lifestyle. You need to get a balance between risk and reward.
• Keep an emergency fund. The unexpected does happen. Particularly, the need to dash home to deal with family emergencies. We recommend 4 to 6 months of living costs kept as an emergency fund.
• Generally try to invest in the currency that you will spend the money in. If you are going to live in Spain and spend your money here, invest in Euros. This removes all your currency risk. Leaving it in Sterling and hoping the exchange rate will improve is dangerous.
• Remember the “Rome” principal. Rome wasn’t built in a day. Investments other than bank accounts or guaranteed funds often need 2 to 5 years to be given the chance to grow.
• Tapas Bar (and UK pub) investment offers are generally damaging to your wealth. Even when a “tip” of a sure fire investment is given with genuine good intentions, the result is generally disastrous. After 22 years I have seen and heard many of these tips, from oil tankers with sails, through guaranteed property schemes, discoveries of Oil/Gold/Platinum/Pirates Treasure to the most amazing internet and web based companies that are about to revolutionise the World. I am still waiting however, for the offer of a chance to buy into Richard Branson’s new space travel company (NOTE, there is an element of truth to most of the Tips you will receive. Richard Branson is considering space travel).
• Choosing your investments on the basis of last year’s charts and performance is not sensible although even some advisers do this. If you were not in that fund or market what does it matter to you? You need to look forward. What is the outlook for the coming year? What are the prospects for that asset class? By asset class we mean Shares, Government bonds, Corporate Bonds, Gold, Oil, Interest Rates or even Currencies.
• Remember the world is changing. The prospects for countries that we have not previously considered investing in are now much better than the traditional places to invest. Europe and America will still form part of your portfolio but don’t ignore China, India, Brazil, Thailand, Malaysia, Australia, etc. Goldman Sachs have just concluded that China will be the Number 2 in the world economy in just 12 years. Nowadays there are funds investing in all of these areas and it is very simple and straightforward.
• Tax will be a feature of your investments. You do NOT need to try and beat the system any more. With tax rates on offshore bank accounts rising to 35% (this will be withheld before you get your interest so you will have no choice) investing in Spain or the UK is now tax effective. The tax on savings is now 18% in Spain but with a little careful planning it is possible, using legal and compliant structures, to pay as little as 3%.
For information click link below:
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