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How Can Expat Savers Beat Inflation and Low Interest Rates?

In the UK it’s a very well documented fact that bank interest rates remain ridiculously low, and that inflation is eroding anyone’s saved wealth.  Economists and journalists keep assuring the population that interest rates ‘have’ to increase soon, however there is an underlying belief that low interest rates are critical to get Britain back from the brink of bankruptcy.

The sensible minority who continue to save and who have a certain amount put by already to protect their financial future are being hit the hardest – and there really is no incentive for anyone else to stop spending and start saving.  Elsewhere in the world expats are facing similarly complex and unfortunate scenarios when it comes to the careful investment of their wealth.

Offshore interest rates can be even worse than onshore offerings in some cases, and some expats such as retired Britons abroad are struggling to live on investment income because it’s being eroded by poor currency conversion rates.  So how can expat savers and investors beat inflation, low interest rates, currency conversion problems and their general money woes…well, they need to have a proper financial plan in place and here’s how relatively simple and straightforward that can be to achieve: –

Building a Balanced Portfolio – It’s Not as Complex as You Might Think

The real secret to being able to relax when a given commodity is crashing or a certain currency is soaring is to diversify how and where your wealth is invested.

A financial adviser will be able to explain all your options to you based on your personal situation, but for general discussion purposes here’s what you could expect from a balanced portfolio…

A certain percentage of your wealth needs to be relatively liquid and close at hand – therefore it’s likely that you would be advised to have an amount in cash assets on deposit in the likes of a bank account and various term savings structures for example.

Certainly such structures are hardly exciting or high returning, but expats may find that if they work with the larger financial advisories they will have access to better rates of return than the advertised headline rates from the main banks.

This is because such advisories are given benefits to pass on to their client-base by the financial institutions in order to incentivise them to keep putting clients their way.  It’s a win-win relationship really.  However, yes, the bottom line is that instantly accessible cash seldom attracts the best rates of return…

Which is why only a small percentage of your overall wealth pot should be invested in this way.  The rest of your money should be divided up and diversified in order for you to have the best possible chance of wealth advancement.

A financial adviser will work with you to assess your attitude to risk, they will also factor in aspects such as your age, length of time until retirement, whether you have dependents, what your short, medium and long-term financial goals are, and they will also look at your tax status.

Armed with all of this information they will be able to help you decide how and where you’re best advised to invest.  You may feel you want to invest in certain immovable objects as well to really ensure the broadest diversification possible.  So you could include property or even art in your portfolio.

Diversification should be seen as positive, challenging and even fun – and if you do utilise the services of a professional adviser you may discover ways to invest and diversify that you had never thought of.

There are certain structures and solutions that can make this easier too – such as portfolio bonds for example.  Additionally, there may be solutions that you weren’t aware of before you expatriated as they are only available or of use to expats – such as QROPS for example.

A Financial Plan is Essential – And Easy to Draw Up

You can do an awful lot to help yourself get ahead in the financial race by spending time thinking about your aspirations and fiscal goals.  You can either do this with or without a financial adviser’s help – but ultimately when you’ve drawn up your ideals you can work with your adviser to find the best and the right way forward towards you achieving your ambitions.

Until you actually document what you want to achieve and ideally by when, how can you know how best to structure your financial affairs?  If you have massive plans and a strong stomach for risk it could be advantageous for you to take a less cautious approach to money management – conversely, if you’re approaching retirement and you have a very low appetite for risk, bonds and products with guaranteed returns could be suitable for you.

We do bang on about using an adviser throughout much of our published content on Expatra – and it’s not because we’re financial advisers trying to win you over – it’s because the offshore and international financial landscape is complex, challenging and extremely broad.  Additionally, expats often have a complex tax position as well as a requirement to consider their future tax resident status, and so it can make sense for many expats to work with the guidance of an expert.

This article – and this entire website – does not constitute advice because correct advice can only be sought on a personal, case-by-case basis.  Therefore, if you want to get ahead and beat inflation, beat unfavourable currency and commodity movements and build a strong fiscal future for yourself and your family, it makes sense to take qualified, professional and independent financial advice sooner rather than later.

With a plan developed and solutions identified to enable you to meet your fiscal aspirations, the sooner you can start on the road to strong financial development…

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