Savings Advice For On Ex-Pat

Daelim

Hi! So glad I found these forums as I am in need of some financial advice in terms of savings! To paint the picture...

My wife to be and I currently live abroad and are in the lucky position of being able to save around £1500 of our income each month. For the time being this money is being sent to a current account with Natwest for the remainder of this year in order to pay for our wedding in February 2012.

However, after that we will be looking to keep saving that £1500 a month over the course of 5 -7 years with a view to paying for a house in cash as opposed to going down the route of getting a mortgage.

I am wondering what is best for this £1500 a month? What would you do with it to make it work as hard as possible for you? Is a savings account at 3% interest the best way? Should we open an offshore account? Invest it?

We really don't have a clue what to do and ideally all we want from this is to keep up with inflation so our cash has the same purchasing power in five years as it will have now...

So, what would you do if you were in our situation?

slinga

Just some questions for you to consider:
Where do you intend settling or will you be an ex pat for an extended period?
Does the country in which you currently reside have local banks which are sound and pay higher interest rates than 3%
Is there a big currency risk from keeping your money offshore from where you intend to eventually live.
And finally do you want to save, invest or gamble.

atush

If you are being paid in GBP and want to keep it in GBP then I would consider setting up an investment trust savings plan. This will give you exposure to equities as well as other asset classes.

but you will need tax advice to make sure you liquidate your assets before the house purchace in the most tax efficient manor.

Daelim

slinga wrote: »

Just some questions for you to consider:
Where do you intend settling or will you be an ex pat for an extended period?
Does the country in which you currently reside have local banks which are sound and pay higher interest rates than 3%
Is there a big currency risk from keeping your money offshore from where you intend to eventually live.
And finally do you want to save, invest or gamble.

Hi there,

We intend to move back to the UK to settle once we reach our savings goal.

I'm not sure but I don't think so and don't think I'd be comfortable with it all here to be honest.

I don't know... as I said we are going to settle in the UK eventually so is there a risk to sending savings offshore?

Thanks for your help so far

Daelim

atush wrote: »

If you are being paid in GBP and want to keep it in GBP then I would consider setting up an investment trust savings plan. This will give you exposure to equities as well as other asset classes.

but you will need tax advice to make sure you liquidate your assets before the house purchace in the most tax efficient manor.

Hi

We are not paid in GBP.

How do you mean liquidate our assets? If we have savings of £100,000 in a savings account or wherever else, when we take those savings out are we liable to taxation on them when we go to spend them in the UK?

Thanks!

Daelim

Bump in search of anyone who can help

dtsazza

Daelim wrote: »

How do you mean liquidate our assets? If we have savings of £100,000 in a savings account or wherever else, when we take those savings out are we liable to taxation on them when we go to spend them in the UK?

There would be no tax to withdraw your savings. If this is an "ordinary" savings account (as opposed to an ISA for example), then you will have been taxed on the interest you earn, as it was added to your account. This is all the tax you pay on savings.

(Of course, you are likely to be taxed when you actually spend it in the UK, in the form of VAT. But that's the case regardless of how you obtained the money used, so it's not really relevant to your question.)

Voyager2002

It would be useful if you posted which country you work in; in which currency you receive your salaries; and whether you are resident in the UK for tax purposes.

For example, saving in an ISA allows you to receive interest without paying tax, but ISAs are only available to people who are resident in the UK.

Personally, I would put some or all of these funds into stock market based investments, although of course that involves some risk of the value of the investment falling. Look at Mutual Funds and Investment Trusts, where your money is spread over the shares of hundreds of different companies, so that if one company does badly the loss is likely to be balanced by another company doing well.

If at all possible, see an Independent Financial Adviser or at least learn about your options by using resources such as the multi-media presentation on the Fidelity web-site.

slinga

Standard Chartered is a British bank which is active in many overseas countries. Solid bank imo. Maybe a better interest rate than local banks or certainly unlikely to go bust.

Also Lloyds TSB has a presence in many overseas countries mainly for investment rather than retail banking.

You might also google FPIL, Friends Provident International Limited and see if they have an office in the country you reside or one close by.
We've had some investments, Unit Trusts, with them for about 18 years.
Their HO is in the Isle of Man.
If you can, go along and discuss UT investment with them.

rockitup

If you are willing to take the risk with equity investment, then I too would go for monthly purchases into a few Investment trust savings schemes, spreading your money into International, UK and Emerging Markets trusts or whichever set-up you decide on.

You may not be able to invest in the whole range of Investment Trusts if you give an address outside of the UK but some will allow you to.

If you do decide to go down any investment route and you are fortunate enough to end up with a decent profit, it is normally worth cashing in your investment while still an Expat, IF the country where you are working and living has lower capital gains tax rates than UK (Don't forget that UK has an annual CGT free allowance) Some countries do not tax you on Capital gains made on investments outside of their borders.

May be worth looking at the Double Tax Treaty between UK and your country where you are resident (if one exists) Search for this on HMRC site.