70,000 GBP. How to invest while living abroad?

[Deleted User]

I currently work and live outside of the uk but have 70,000 in my bank, making pretty much zero interest. I am 35. I could afford to buy a cheap two bedroom house to rent out with that (I’m from the North!) but think the cost of flights, repairs, agents, bad tenants and risk of not being able to sell on makes this a probably bad idea. Would you more experienced people agree/disagree?

I have no pension savings but have started investing in mutual funds through a stocks and shares ISA. I would like to start putting more into this but am looking for advice on what the best thing to do would be with the larger chunk of money. Would starting a pension be the best way, fixed rate bonds? Is reinvesting annual interest on fixed rate bonds a good idea?

Any advice on how I can stop this money losing value would be very much appreciated.

Mrs_Z

I guess it depends on your goals and when you are likely to need the money.
I would probably look to split the money; 1) invest some in S&S ISA - IF this is allowed given that you are not currently residing in UK, 2) have some in cash (regular saver type) and 3) also start a small pension. You don't say if you intend to return to UK, if you do, you may need the money to purchase a residential property for yourself so i'd be hesitant to lock it all away into a pension as this you can't access until 55yrs. Or is marriage/kids likely to be in the picture in future?

bowlhead99

Oilpainting wrote: »

I have no pension savings but have started investing in mutual funds through a stocks and shares ISA. I would like to start putting more into this

You will find that hard to do as you are living and working outside the UK and are presumably not a UK taxpayer. For most people living and working outside the UK they would become tax resident in the country where they are working, rather than wanting to carry on paying UK income tax on their worldwide income.

Only UK taxpayers are allowed to put more money into their S&S ISA. Unless it is money that's already inside a cash ISA wrapper and isn't going to be a 'new subscription'.

Perhaps you are only outside the UK for a short period and have decided to keep your UK tax residence, but that's relatively uncommon, and you've said you're 'living abroad' rather than 'staying abroad on a job for a bit'.

Would starting a pension be the best way, fixed rate bonds?

Starting a UK pension is only an option if you are tax resident in the UK, which you may not be. Investing in a pension gets you UK tax relief on your salary and you pay no UK tax on the income or gains from the investments until you withdraw them together with the capital value once you reach your late 50s or beyond, paying tax on it then instead.

But that is a drastically different option than buying a fixed rate bond for a couple of years. The tax effect is different but more importantly you can have the money back from a fixed rate bond whenever it matures, whereas you can't have money out of a pension until you're age 55+ (may be later than that, if law changes before you get there).

Is reinvesting annual interest on fixed rate bonds a good idea?

Depends if you want to spend the money or re-invest it again. Over the long term you will not make as much money by continually investing in cash deposit bonds as you would make by investing in investment funds that hold equities and other financial instruments.

But in the short term, unlike investment funds, fixed rate bonds don't carry investment risk. Unless you mean 'bond' in the sense of a loan to a company or business rather than a FSCS-protected deposit with a bank. If you mean a loan to an individual private company then you do have 100% loss potential.

Any advice on how I can stop this money losing value would be very much appreciated.

Inflation will do whatever it wants to do, so you can't stop money losing value, other than trying to make it grow faster by depositing it at a higher-than-inflation rate in a bank (which you won't be able to do on the full £70k) or taking investment risk by buying investment funds (inside or outside a pension or ISA wrapper) or starting up a business (e.g. property rental).

As the options you are considering are radically different (locking money away into a pension until your late 50s, investing in stocks and shares investment funds, starting up a property rentals business in a country in which you don't live, buying a fixed rate bond) and we don't really know your personal situation (age, time you want to be able to acccess the money, your tax residency, your real goals or preferences or objectives other than 'stop money losing value') ; it is pretty much impossible to give you useful guidance.

You live and work outside the UK so presumably your spending is in a foreign currency (unless you are somewhere like Isle of Man, Jersey, Guernsey)? If so it will be impossible to stop the £70,000 'losing value' in comparison to your spending needs because it is not cheap to avoid changes in currency exchange rates which will change your spending power.

If that's the case, you might consider moving a portion of the money to the country you live in to build some savings or investments there. Obviously depends on where you are living as there are risks with moving cash to other countries where it can be harder to later get the money out or the local country might not have the same advanced financial services sector and consumer protection.

Gabeatv

A pension is always a sensible option, the earlier you start investing in one the better. However, putting it a saving account with interest rates as they are at the moment if hardly worthwhile.

I agree with bowlhead99 about making your money grow faster - are you in a country where you could look at investing in a business, or even setting up an online venture of your own? It's something I've considered doing - there are some very business friendly countries out there.
It's something really worth looking at.
WorldFirst have just put together a post including top ten rankings for places to do business, including things like ease of starting a business. You should check it out.
Best of luck to you

bostonerimus

Where are you living and how long do you intend to be there?

xylophone

https://adviser.royallondon.com/technical-central/pensions/overseas/contributions-to-registered-schemes-for-overseas-individuals/


Relevant UK individuals, who have relevant UK earnings of £3,600 or more, can receive tax relief on contributions up to 100% of their earnings with a tax charge on any contributions above the annual allowance.

Relevant UK individuals who have either no relevant UK earnings or relevant UK earnings of £3,600 or less will receive tax relief on contributions up to £3,600 each tax year only. Non-relevant UK individuals who do not have relevant UK earnings will receive no tax relief on their contributions. The ability to contribute for non UK individuals will also depend on the pension provider allowing this.

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad-or-die

bostonerimus

Cross border investing, and in particular pensions, is notoriously complex. To avoid tax issues it;s often easiest to invest locally, but with pensions you also have to consider what your situation might be in a few decades. A general understanding of your local tax laws, those of the UK and how they interact through the relevant tax treaties will be helpful in your planning.You might find it difficult to invest in a tax deferred way, but you should be able to open regular savings and brokerage accounts locally.

Thrugelmir

Gabeatv wrote: »

A pension is always a sensible option, the earlier you start investing in one the better. However, putting it a saving account with interest rates as they are at the moment if hardly worthwhile.

I agree with bowlhead99 about making your money grow faster - are you in a country where you could look at investing in a business, or even setting up an online venture of your own? It's something I've considered doing - there are some very business friendly countries out there.
It's something really worth looking at.
WorldFirst have just put together a post including top ten rankings for places to do business, including things like ease of starting a business. You should check it out.
Best of luck to you

New poster drags up a post from 1st January. :whistle:

capital0ne

60% Global ETF / 20% BONDS / 20% Global Property ETF