What to do with expat savings?

zeros1

Hi everyone,

I feel I should apologise in advance, as it may seem that I haven't done my homework before posting. I have tried to go through the forums here and on other sites to find a suitable answer to my question, but I haven't been able to find anything that fits my situation, or if there was, I couldn't understand it. Doing this has made me realise how desperately financially illiterate I am.

Anyway, my situation is as follows: I live and work overseas and have no plans to return to the UK. I have two sources of income - one from my employment and another from a small business I run, neither of which involve any money passing through the UK.

I have been saving money and by the end of this year I will be able to put down a deposit on a property in an area which is expected to experience a good rate of growth for at least the next ten years. I currently don't pay any rent as I live in accommodation provided by my employer. I am hoping to be able to rent out the property I buy, and continue to live in my current accommodation, while putting money aside to invest in another property.

I don't want to put all of my eggs in one basket, and considering that I don't have a UK (or any) pension, I'm trying to find a suitable option that I will be able to use in future as an alternative to a pension, plus a savings fund for any future children I may have.

As long as I keep saving at the same rate towards the deposit on the property, I can set aside a further £2,000-3,000 per year for these purposes. The thing is, I don't know where to start.

Any advice would be greatly appreciated!

dunroving

You said, " I live and work overseas and have no plans to return to the UK."

My one piece of advice would be to consider a possible return to the UK in your plans, and what might be the implications of doing all your investing overseas. For example, I lived overseas (mostly US) for 23 years, the latter 10 years or so I was a homeowner in the US.

When I returned in 2006, I was hurt by two things. The first was that while US house prices did almost nothing in the 10 years 1996-2006, UK house prices doubled (at least). The second was that while the dollar has been historically at around $1.6 = £1 for most of my time overseas, in 2006 it was $2 = £1.

So, (a) don't assume you'll never come back, (b) look at relative market forces where you live and in the UK, and (c) use (a) and (b) to hedge against a possible move back to the UK.

zeros1

Thanks for your reply and your advice. As I understand, you are suggesting that I invest in rental property in the UK. I will look into the possibilities. Thanks again!

bostonerimus

Where are you living? You could use local pensions if there is a solid system, or are you looking for some sort of "offshore" pension,

dunroving

zeros1 wrote: »

Thanks for your reply and your advice. As I understand, you are suggesting that I invest in rental property in the UK. I will look into the possibilities. Thanks again!

I'm not suggesting you do anything specific, just pointing out the unique situation that expats are in. In fact, I bought a rental property in 2004 as I knew at that point that I'd be moving back to the US. By the time I sold it in about 2008, I had made a loss of £40k! This was just a matter of bad/unlucky timing and a succession of very bad tenants.If I'd bought the same property in 2000, the story probably would have been very different.

It sounds like you have the benefit of being able to plan long-term. You haven't said where you live, but that should factor in your planning. For me, living in the southeast USA, property prices were a big issue (as they don't typically move much in semi-rural small towns). For other expats, maybe those in Australia or New Zealand, the opposite probably was true (property prices increased).

All I'm saying is plan ahead for a possible move back in future. And specifically, probably the biggest potential factors are property prices (where you live and in the UK), and currency exchange rates.