Expat Wealth Management

Expats like anyone else need to invest to prepare for the normal opportunities of funding a new family, paying for their children’s education or their retirement.  As for anyone it is important to take advantage of opportunities, but as an expat often it is difficult to find good qualified advice about investing and taxation in an international context.

You may earn in one or more locations under different regulatory regimes and in different currencies and plan to retire in another country with a different currency and rules.  It is therefore vital to make the right decision now if you want to benefit later and there are many factors to consider when investing your funds while overseas:

  • How long will you be overseas and do you plan to return to your home country?  If you are returning at a pre-determined date or if you have to leave unexpectedly this may not be the best time to cash in your investment depending on market conditions at the time and the nature of the investment.          
  • You should also consider the need for an emergency fund in readily accessible funds.  This is true for all expats as you may find yourself unemployed or in other financial difficulties a long way from home.  The political situation in the country can also be a factor and where there is the potential for unrest it is worth ensuring that you can get at sufficient funds to exit the country should the need arise.         
  • What is the regulatory environment like in the country where you plan to invest?  You cannot always assume the same level of regulation as you may be used to at home.        
  • It is always important to diversify your investment risks and if you are reliant on the success of one country for the success of your business or your continuing employment it may be worth taking this into account when planning your overall investment portfolio.  You may want to consider a more international approach to your investment, including Brazil, India, China and other emerging markets.      
  • A qualified specialist is always the best option and as an expat it is important to ensure that they are qualified to cover not just the local issues, but also those additional cross-border issues faced by expats.  What currency is your investment in and when you cash it in will you be converting to a different currency?  You may face an exchange rate risk on top of any investment risk, which could mean that even a good investment in local currency terms proves costly (or, of course, it can work to your advantage).              
  • What is the tax environment in the country where you are investing and what implications are there if you repatriate the funds?  Are you subject to any tax in your home country on any interest or gains?  In the US citizens and Green Card holders are liable to tax on their worldwide income, including investment income.                  
  • Are there any tax advantaged schemes in your home country for those living overseas?   These schemes may be a better option if you plan to return to your home country, but you may again face exchange rate risk between your home country currency and that where you are earning your income.  For example in the UK there is the  Qualifying Recognised Overseas Pension Schemes (QROPS).

These are just a small indication of the factors that may play a part in your decisions on how to best invest any surplus funds earned whilst an expat.  It highlights the need for proper financial advice from suitably qualified advisers.  When selecting an adviser you need to be sure that they have experience and knowledge of all of the main factors that you will face as an expat.  You should not assume that your regular adviser is well placed to understand all of the issues you will face as an expat nor can you assume that an adviser in your new country who specializes in advising local inhabitants will give the best advice to you as an expat.