Investing as an Expat

drcfhussain

I'm looking for some advice investing as an expat.  I researched how to invest as a beginner on MSE and I concluded that Vanguard's LS80/20 asset best matched my investing ambitions.  I'm a 31 year old lecturer based in China, paying tax in China and want to invest for the long-term (20-30year horizon).  I have a small amount of capital to start with, and plan to contribute monthly to my investment.  After researching DIFM vs. DIY, Nutmeg and similar platforms, and reading other threads on here about fees, I concluded that Vanguard's LS80/20 was the most cost-effective investment option, with the right amount of risk for a longer investment horizon.  Then I hit a snag.  I spoke to Nutmeg's advisors and not being a UK taxpayer was not an issue for them.  Of course, ISAs are out of the question, but I would be eligible for the general investment account.  Alas, this is not the same for Vanguard.  It would appear that I cannot invest through them given my current residence and tax status. 

Any suggestions?

I feel my situation is two questions:
1. The right investment (like Vanguard LS80/20)

2. How to invest in something like that as an expat?

I'm not against revisiting question 1 - there may be something better out there for me.  But unless someone is confident I could find something better suited to my preferences, I'm going to focus on question 2.  As an expat, how can I invest in something like that?

One other thing.  Upon realising my problem, I did some research on investing as an expat.  I found a company called inter-uk (iuk or inter-ukfs).  They can assist, but there will be charges.  I tried to find reviews of the company, but couldn't.  Anyone with experience of them? Should I consider going through a FS for expats service?

ColdIron

Do you have any pension arrangements in place?

Mr.Saver

You almost certainly cannot trade foreign stocks and funds with a Chinese stock broker, they only have China and HK listed stocks and funds
You have two choices, either trade China and HK listed ETFs that tracks the same index as the European or US ETFs, or find a stock broker outside China that accepts Chinese tax residents. However, there's some restrictions on forex and international transactions in China. If you want to use a foreign stock broker, you will need to understand the rules, and make sure you won't break them.
If I were you, I'd research the local funds first, and see if there's any suitable ones before I start to look at oversea brokers.

Mr.Saver

ColdIron said:

Do you have any pension arrangements in place?

The Chinese social security system is different than the UK. They provide a large state pension, so most people don't need a private pension.

colsten

Mr.Saver said:

ColdIron said:

Do you have any pension arrangements in place?

The Chinese social security system is different than the UK. They provide a large state pension, so most people don't need a private pension.

Do / will they pay this if you choose not to retire in China? Do they have fancy rules, like the UK do, under which you e.g. don't get any increases if you retire in a different country?

Mr.Saver

colsten said:

Mr.Saver said:

ColdIron said:

Do you have any pension arrangements in place?

The Chinese social security system is different than the UK. They provide a large state pension, so most people don't need a private pension.

Do / will they pay this if you choose not to retire in China? Do they have fancy rules, like the UK do, under which you e.g. don't get any increases if you retire in a different country?

No, there's no two tiers system for pensioners who remains in China and moved overseas. Probably one of the reason is because the state pension income in China isn't taxed, and the state doesn't deduct social security contributions (such as NICs in the UK) from pension incomes either. So regardless of which country one retires to, it's the same cost for the state to provide the pension. In compression to that, pension income is taxable in the UK, therefore if one moves overseas, the state may lose the tax revenue.

EdGasketTheSecond

Can you open an international broker account like Charles Schwab or Fidelity and buy your fund through one of their accounts?

Mr.Saver

EdGasketTheSecond said:

Can you open an international broker account like Charles Schwab or Fidelity and buy your fund through one of their accounts?

A tax resident in China probably can open an account with them, but they either have a higher entry requirements (such as minimal deposits), or charge for a higher fees. Plus, because those international brokers are based outside China, OP would have to deal with the Chinese restrictions on currency exchanges and international transfers.

drcfhussain

Thanks for your responses.  Regarding pension, I assumed not.  Foreigners in China have very limited access to investment opportunities.  Something simple like alipay/yue'bao can only be invested in if you have a Chinese ID, and that restriction applies to quite a few things.  Due to that and other barriers, I expected it would be easier to simply transfer my savings from China to UK and invest there.  It may be possible to invest in China, but compared to UK based investment, I would have the additional cost of getting a translator (financial, trust etc.) and it makes everything much harder. 

colsten

Mr.Saver said:

colsten said:

Mr.Saver said:

ColdIron said:

Do you have any pension arrangements in place?

The Chinese social security system is different than the UK. They provide a large state pension, so most people don't need a private pension.

Do / will they pay this if you choose not to retire in China? Do they have fancy rules, like the UK do, under which you e.g. don't get any increases if you retire in a different country?

No, there's no two tiers system for pensioners who remains in China and moved overseas. Probably one of the reason is because the state pension income in China isn't taxed, and the state doesn't deduct social security contributions (such as NICs in the UK) from pension incomes either. So regardless of which country one retires to, it's the same cost for the state to provide the pension. In compression to that, pension income is taxable in the UK, therefore if one moves overseas, the state may lose the tax revenue.

I think you misunderstand how the UK state pension system works.

The UK does not deduct social security contributions (NICs) from pension incomes.

Whilst UK state pension is taxable income in the UK, it doesn't mean that anybody in receipt of UK state pension actually does pay tax. Many recipients of UK state pensions have an income of less than the UK Personal Allowance, thus do not pay UK income tax. All UK state pensions are paid gross, without any tax deduction.

The cost of the UK state pension to the UK Treasury is immaterial to the decision whether annual increases are paid to non-resident recipients of the UK state pension.

colsten

Continuing the pensions theme.

OP, you might be able to continue to pay voluntary NI in the UK, thereby increasing your NI years, which might eventually pay you a better UK state pension (you need 35 years at least for the max amount). Check this out: https://www.gov.uk/national-insurance-if-you-go-abroad


UK state pensions will, however, not pay enough for a comfortable retirement, so we're back to the question you started in the first place - - - how to invest in the UK when you work abroad. I am afraid, I don't know the answer, other than than you won't be entitled to invest in tax-efficient vehicles such as ISAs or SIPPs whilst you are abroad. I haven't seen much on MSE about expat investing, and I think you'd best try and find a reputable expat forum for further ideas.