When Expatra first began publishing online in 2004 we did so in part to direct expatriates’ attention to the fact that they could potentially get more by going offshore. The international financial marketplace was a landscape seldom explored by expats back then…
Thankfully the Internet has made it so much easier to raise awareness of the benefits available to many international citizens of saving, investing and banking offshore…to the point where now it is actually assumed that you will always get more offshore! However, is it true that expat savers can always get better interest rates offshore?
The fact of the matter is, you actually have to hunt hard for decent rates of return offshore, and if you just plump for the main banks and their headline rates, you’ll soon see that some of the best deals are actually onshore. In other words, it literally pays you to shop around onshore and off to determine where you would be better off saving and investing…and it always makes sense to take financial advice and to consider diversification.
At the moment, with an interest rate rise pending and likely by the end of the year according to economists who are basing their predictions on the findings of the Bank of England’s inflation report, possibly the best deals available to savers are relatively short-term, fixed accounts.
So, if you want to move your money into something paying a bit more than the ‘almost nothing’ you get with a current bank account, how about opting to save for just two years? If you look offshore the best deal you can get will return you 3.7% (with Nationwide) – however onshore you can get 4% with the Principality – proving that offshore is not always best, particularly at first glance.
Savers who prefer a lower risk level of exposure for their money have to spend a lot of time chasing interest rates and weighing up whether it’s better to fix for longer and gamble on inflation, or tie in for the short-term and have to juggle money and accounts on a more regular basis.
It’s frustrating trying to get a better return on your hard earned wealth…which is why it can literally pay to utilise the services of a reputable offshore financial advisory to help you.
There are so many considerations that you have to keep in mind – such as the fact that most financial institutions seem to be owned by Santander nowadays (!), so how might that affect you in terms of depositors’ compensation schemes and needing to divide money between jurisdictions. Then there’s the question of diversification – which often comes down quite heavily to a person’s attitude to risk – which in turn can be affected by their age and stage in life. For example, someone fast approaching retirement may be loathe to expose any aspect of their portfolio to any element of risk.
On top of all of these considerations there is the interest rate one outlined in detail above – coupled with aspects such as taxation and an individual’s requirement or otherwise to draw an income from their investments or reinvest profits…
Working with a qualified, experienced and independent adviser can be advantageous for anyone who wants to ensure their financial portfolio is structured to suit their needs fully. Such an adviser will assess an individual’s attitude to risk, their need for diversification, their tax position and stage in life, their need for an income etc., – additionally, such an adviser who works with expats will factor in the offshore advantages potentially available to the individual.
Having highlighted that you don’t always get the best headline rates of interest offshore, it’s important to also mention the fact that actually…the larger financial advisories often have access to preferential rates and terms of service for their expatriate client-base. This is because of the volumes of business they put through multiple institutions, and the fact that it literally pays the institutions to pass on better rates of return etc., to ensure they remain a favourable option for the larger advisories’ clients…it’s one of those ‘win win’ situations.
In terms of selecting an advisory to work with you need to know that where they are based has a bearing on the regulation they are required to abide by and which will ultimately protect you and the advice you’re given. What’s more you need to ensure your advisory is independent – i.e., make sure they can give advice about the entire financial marketplace, not just one institution’s offerings.
Check an adviser’s experience and professional qualifications, consider taking recommendations from trusted friends if you don’t already have an adviser in mind, and ensure you spend time every 6 months with your adviser going over your assets and holdings and ensuring that your entire portfolio is structured in the best way possible.