Investing as an Expat

dean350

I second the Andrew Hallam material - its really useful for expat investors. OP simply needs to open an account with one of the well known global stockbrokers such as Interactive Brokers or Swissquote. He should also set up an international bank account with HSBC or Barclays and get money into that. He should convert the yuan to the currency into which he will eventually retire or into USD and then invest in that currency. You can replicate LS funds by putting 80% of this into a global stock ETF and the other 20% into a global bond ETF. I also second staying well away from wealth advisors. There is enough information on the internet to allow you to advise yourself. He will have to check whether China will want to tax him on his gains and dividends.

Neruda

drcfhussain said:

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?

Some comments/suggestions:

I faced a similar problem about ten years ago. I made contact with Fidelity in Hong Kong and they indicated that they would be pleased to open a stocks and shares account for me so long as I visited their office in person. That was not an option for me at the time, but since you are currently in China a trip to Hong Kong might be easy for you, and could be the key to finding investment opportunities.

I resolved my problem by opening an account with a Luxemburg-based investment house called Internaxx. Charges were higher than I would have liked (and in fact are even higher now) but they provided the investment options that I needed.

On your choice of investments, while Vanguard is very popular on this board the stock component of their products is heavily weighted towards the UK, which might not be right for you. A global tracker from the HSBC GIF series might be a better option for you, complemented by an appropriate Bond tracker. Having said that, since Nutmeg have already agreed to open an account for you, that might be your simplest and most economical solution, depending on how quickly and easily you can exchange RMB in China for sterling in the UK.

Finally, I am curious about how you managed to be appointed as a lecturer (university?) without speaking Chinese. If you post something about your work and experiences on the Employment board I would be grateful.

Sebo027

zurpher said:

Sebo027 said:

I have been reading into investing as an expat a lot recently and I have drawn the following:

• Most, not all UK investment platforms will not allow non-tax resident UK nationals to open an account. 

https://andrewhallam.com/
https://www.deadsimplesaving.com/blog/tag/expats/

@Sebo027 and all: I am a British expat in Germany. I am now selling my home in the UK. It seems that it would be difficult to invest the money in the UK and I would also have to declare it to the German tax authorities. Is the most sensible option then to move the money to Germany? What other options are out there?

@zur@zurpher

I would suggest thinking about it as "investing your money through the platforms in the UK." The platform / country is the vehicle for getting your money into the investment product. What you need to decide is what is the most beneficial for you based on your near/long term residency and investment period.  

For a general frame work and themes, try to read these two books:

• "Millionaire Expat" by Andrew Hallam. It's a bit repetitive but gives you the general idea of how to approach investing as an expat:

https://www.amazon.co.uk/Millionaire-Expat-Wealth-Living-Overseas/dp/1119411890

• I would also recommend "Smarter Investing" by Tim Hale - I found it gives a great grounding / entry to the world of investing and encourages passive investing:

https://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/ref=asc_df_0273785370/?tag=googshopuk-21&linkCode=df0&hvadid=310816411121&hvpos=&hvnetw=g&hvrand=11474429595523678199&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9046990&hvtargid=pla-464918418919&psc=1&th=1&psc=1

As for your particular situation, there are a few things to consider and much of it will be very specific to your plans for the future. What comes to mind:

You should understand the tax regime in the countries:

• Where your money is held;
• The countries you are residing in / spending much of your time;
• The countries you plan to retire - difficult without a crystal ball, I know.

You need to understand your tax residency status. You can be tax resident in Germany and the UK at the same time depending on what triggers tax residency. For example, if you are not tax resident in the UK but are tax resident in Germany, you pay income tax in Germany but none in the UK. 

Once you sell your house in the UK you will pay UK CGT whether or not you are tax resident in the UK. I am not sure if the sale will be subject to German taxes but you should check that out.  

You might still be able to invest through a UK broker, like Hargreaves Lansdown, as they offer investment accounts for anyone residing in the EEA (European Economic Area). Others may be available and fees and access to the investment products you want should be considered. 

I'm not sure whether it's important for you to invest in EUR or GBP but again, where you plan to be longer term may guide that decision. 

As for "moving your money to Germany" - you could move the money and invest with a broker that caters to German residents or you can invest your money with a broker that caters to international expats and frequent movers. Degiro is quite popular with Europeans. As usual you should do your own research on fees, terms and conditions and investment products available. 

There are a few options for the "long term expat":

• Saxo Bank
  
• Internaxx/Swissquote
• Interactive Brokers 

https://brokerchooser.com/compare-brokerage

I reside out-with the EEA. I have invested money in Saxo Bank. So far as the UK is concerned, capital gains tax on invested money is only triggered when I sell the investment. The country I reside in presently will not tax my investments. If I sell while UK non-tax resident, the money will not be subject to UK CGT. It's been a while since i looked into this but I think it might also be possible to receive apportioned tax relief based on years spent non-resident.

Lastly, investing with tax liability is still better than not investing. 

Words of warning:

This not not applicable to your situation but gives you an idea of the variation in tax liability across countries. I have a friend who invested in an offshore bond in Jersey in what is called a fixed term savings plan. The fees are very high, but he opted for this option to minimize his future tax liability on his investment when he returned to the UK. To cut a long story short he ended up moving to America where he plans to retire. The money in his offshore bond is taxable by the US, so when he told not only did he pay taxes anyway, the performance of his investment had suffered due to extremely high fee's associated with the product. Over the ten years had that money invested, he would have made more money using a low cost Vanguard index tracker. Watch out for "wealth management consultants" in the expat space.

Hope this helps.

ellabstephens

Hello,

It is really interesting reading peoples different investing scenarios below.  

I am British currently living in France with French residency status.   I pay UK tax which is declared in France annually.   We recently sold a hold in France and have a fairly considerable amount of money in euros to invest.   I have read Andrew Hallam's book Millionaire Expat and feel that using the Couch Potato investment method with Vanguard would suit me.   However, I am already unstuck with which account to open with Vanguard!!   I am not sure if I should be opening the "Stocks and Shares ISA" or the "General Account".

To complicate things slightly more, I am uncertain as to how long I will be investing this money.   We will be returning to the UK in about two years to build a house there.   For this we need funds which will either be these funds or we may sell another property in France to fund this build.  Ideally the investment option I select would suit both options but I am fairly certain this is asking rather too much!

Any advice on this matter would be hugely appreciated.   

I am 43 with a husband and two young children.

In addition, I also need advice on a previous pension scheme I paid into with Legal and General.   I am wondering if it is possible or if it is even sensible to look at moving this pension to Vanguard as well.

Any advice on either of these subjects is greatly appreciated.

I am looking forward to getting this set up soon and get this money working for me!

Many thanks!

dunstonh

I am British currently living in France with French residency status. 

That makes you an EU resident and post Brexit, UK firms are not able to offer financial services to EU residents unless the firm has an office in your country of residence (i.e. France in this case) and appropriate permissions of that country regulator.

 However, I am already unstuck with which account to open with Vanguard!!   

You would need to consider Vanguard's French product offerings.

 I am not sure if I should be opening the "Stocks and Shares ISA" or the "General Account".

Neither as Vanguard will not offer them to you as an EU resident.  Plus, you don't qualify for the UK Tax wrapper, ISA.  Do remember that UK tax wrappers are subject to HMRC rules.    French rules will be different.

To complicate things slightly more, I am uncertain as to how long I will be investing this money.   We will be returning to the UK in about two years to build a house there.   For this we need funds which will either be these funds or we may sell another property in France to fund this build.  Ideally the investment option I select would suit both options but I am fairly certain this is asking rather too much!

Two years is not long enough to invest unless you are a very high risk investor and can afford to put off plans if the values of the investments is lower in two years time.

In addition, I also need advice on a previous pension scheme I paid into with Legal and General.   I am wondering if it is possible or if it is even sensible to look at moving this pension to Vanguard as well.

Again, as an EU resident, they cannot.

Bostonerimus1

If you are resident in France, why are you paying UK tax? There are certainly some circumstances where you might have a UK tax bill, but you don't mention any reasons why you would have to pay UK tax.

You might look into paying voluntary national Insurance, but as a French resident you should primarily be looking to invest within the French system.