Saving and Investing while overseas?

Nottoobadyet

Hello all,

I am in a bit of a wonky situation, and though I have some ideas on how to handle it I would appreciate any bright ideas.

I am about to leave the UK for a 2 year assignment to a country without a sophisticated banking system. As a non UK resident during this time, I won’t be able to take advantage of my ISA allowances. I will continue to be paid by a UK company into a UK bank account (currently I bank with Natwest).

I am hoping to be able to save during my time away and hope to be in a position to put away about £850 a month or so. I will keep some money in an easy access e-saver for emergencies, but would like to see a higher return on most of it as I’d hope to see it become a flat deposit in 3-4 years time. I am young (23) and willing to peruse a medium risk portfolio since I am also putting money away more conservatively with a pension.

As you can imagine, I am eager to avoid anything that would require regular phone or branch contact, and I am a bit nervous about trading shares myself as occasional lack of internet for a week or three could be disastrous, and quite likely with African bandwidth.

Are managed funds and fixed rate bonds really my only option? I don’t see any regular savers with attractive rates. I’m not expecting to come back to the UK at the end of my assignment, but I doubt that investing it regularly elsewhere would be worth the steep international transfer fees. I am also an Ameircan citizen (though not earning nearly enough to be double taxed), in case that generates any ideas on what I could do.


All thoughts are much appreciated!

Loughton_Monkey

Remember that you can use your full ISA allowance this year. Also, if you are not physically leaving (and becoming non resident for tax purposes) until after 6th April, you can also fill ISA's for 2011/12 as well before you go.

Other than that, if you want 'savings' then any savings account you set up before you go can be used by Interent while you are away. No problems. You can even fill in an R85 [sorry. You're American. You have to fill it out] so that they don't take the 20% tax from the interest.

The only thing to watch there, though, is that typically Internet accounts only pay a 'good' rate for 12 months, after which you need to move it. You will find opening a new account difficult while non resident.

Saving in funds is perfectly OK as well while you are away. Simply open up an account [say with HL] before you go. As long as it is not an ISA, then it's perfectly OK and 'legal'. No tax to pay either since you are never going to make £10K overall return in the next 2 years on what you pay in.

As long as it is set up before you go, you could also invest up to £2,880 [net] into a pension scheme [in funds you choose] and still get the tax relief.

Nottoobadyet

Thanks for taking the time to respond. I'll definitely try to fill this years cash ISA allowance and put as much as possible into next years before I leave, thought it wont be anywhere near the ceiling.

I'll be filling in (out ) the P85 but didnt know about the R85 - top tip, thanks!

Since Loughton has given me some great info on savings, does anyone have ideas on investment vehicles that would be appropriate?

Thanks again!

ggold

This may or may not be helpful, as this has many fixed rate deposits in a number of countries which may include the countries you are staying in.

check out deposits.org

Depending on the Exchange rate and other factors, you may be able to get a local account that pays an even higher yield then what you can get with the UK. Good Luck

rockitup

Just a couple of points to add (from current experience as Non-Res)

You cannot fill in R85 form to receive Gross Interest as a Non-Resident of UK. This form is only for those who reside in UK and earn less than the personal tax-free allowance. I normally claim mine back through the tax return as HMRC do send me one annually but there is also a specific form available on HMRC site, think it is R43 if memory serves me correctly, check out https://www.hmrc.gov.uk/cnr

I also have account with HL for funds and shares but if you tell them you are going overseas then they will most probably restrict you from making any further deposits into your HL vantage account. You will only be able to buy funds from cash held or sale proceeds of funds/shares already in your portfolio. If possible just give them the address of a trusted relative or friend for statements and you can then still deal online.

I know what it is like to lose internet connection frequently, I do spread betting too and had to splash the cash on an iphone to be able to watch my trades, but their 3g connections are nicknamed Jurassic Park for being so slow. Make sure you can place limits and stops if you buy shares or spread bet etc

Voyager2002

Hello from Africa: welcome to the club!

As a general rule of thumb, stock-market based investments are only appropriate for funds that you do not expect to use for at least five years. So it is unlikely that managed funds or whatever would be suitable for you. Under normal circumstances Bonds might be a good idea, but at the moment all the expert comment that I have read suggests that Bonds are over-valued and so their prices are likely to fall. So basically you are stuck with savings accounts.

Moving money between countries does not have to be expensive: check out currency exchange brokers such as Venstar, Custom House (xe.com) and many more. However, I am not sure that it would help you much: just about the only country that, to my knowledge, has reasonably high interest rates is Australia, and I would not want to guess what is going to happen to the Australian dollar.

Oh: you can earn 6.5 per cent by investing in Togo's sovereign debt. The investment is denominated in CFA francs, which is a stable currency linked to the Euro. I have no idea how credit-worthy Togo is, but I am sure that you could find out.