A guide to Savings & Investment Options for Expats. How to make the most of your UK Savings & Investments

Transcription

1 How to make the most of your UK Savings & Investments

2 About our service Paragon Wealth Management work with a panel of experts who help find you the best rates in the market, working alongside some the most renowned providers internationally. For example, a product available for those working in a tax free environment that may want to save $1,000 a month, will be different to those with a more substantial lump sum who have just retired to the place of their dreams and require an income from their money to supplement their pension income. The one thing all examples have in common is that they want the best rates available in the market. Expats are many and varied and as such there is no one size fits all solution We can help Those working in a low, or zero tax country, which doesn t tax your income or international assets. E.g The Middle East Those who are living in a country that does not necessarily have low tax. But, for lifestyle reasons have moved there. E.g Mediterranean Europe Those who are earning more, maybe because of being relocated abroad. Perhaps they are working in a higher risk environment. E.g oil and gas workers Those living in a country where the cost of living is that much lower or the currency. This will mean that they have more spending power.

3 About our service Our savings team will assist you in finding The best rates available to you The lowest tax structure available to you in your country of residence Help you design a savings strategy that works for you now and in the future Our savings team will also help you consider The protection and compensation schemes available from the bank or institution selected The effect of currency. Do you continue to save in GBP or perhaps in the country of your residence, maybe EUR or USD? Is a blended approach best?

4 Savings strategy To obtain the best savings rates that the market has to offer, you will need to consider one of two things. Consider tying your money up for a longer period of time. i.e, the rate of interest a bank or financial institution is willing to provide will be greater the longer they have the funds. A 3 year building society bond will provide a better rate of interest than an instant access savings account for instance. Take greater risk on the assets you invest into. It is widely accepted that risk and reward go hand in hand. To be clear, we are not suggesting that you place your money into high risk assets, but rather we want to help you understand that cash is an asset class like any other. The advantage with cash is the net asset value does not move in the same way that stocks and shares do. However, cash is effected by inflation. If inflation is at 2.5%, but the cash return being offered by your bank is 0.5% In real terms you are losing 2.0% per year. Other assets, such as government bonds, may produce a better rate of return than cash, or even produce a rate above inflation, but still be deemed to be safe enough for your attitude to investment risk. To help further, we describe different assets that are available to you and are rated in risk order.

5 Savings strategy Cash Includes instant access accounts, savings accounts, bonds and money market funds. Risk is on the solvency of the financial solvency of the bank or financial institution being invested in as well as the effect of inflation erosion.

6 Savings strategy Fixed Interest and Index-Linked Securities Fixed interest securities, more commonly known as bonds, are loans issued by companies or by governments in order to raise money. Bonds issued by companies are called Corporate Bonds, those issued by the UK government are often called Gilts or UK Government bonds and those issued by the US government are called Treasury Bonds. In effect all bonds are IOUs that promise to pay you a sum on a specified date and pay a fixed rate of interest along the way. Index-linked securities are similar but the payments out are normally increased by a prices index e.g. for UK government index-linked securities, payments out are increased in line with the UK Retail Prices Index. On the whole, investing in Government or Corporate bonds is seen as lower-risk than investing in equities. To date, no UK government has ever failed to pay back money owed to investors. But, with corporate bonds there is a risk that the company may not be able to repay its loan or that it may default on its interest payments.

7 Savings strategy Equity Equities are commonly known as shares. When a you buy a company share, you are investing in a company and, in exchange, receive a share of the ownership of that company. Shares give two potential investment benefits Share prices increase as the value of the company increases Companies pay dividends regular payments made to shareholders based on how well the company is doing. Over the longer-term, equities are considered by many investment experts to offer greater growth potential than many other asset types. But, over the short term, the value of equities can go up and down. Funds investing in equities tend to carry a higher risk of capital loss than funds investing in fixed interest securities, or money market investments. The financial results of other companies the general stock market and economic conditions can all affect a company s share price. Consequently, affecting the value of any fund investing in that company.

8 Savings strategy Using the concept of splitting your money into the following groups will help to build an efficient savings strategy. Short term money Medium term money Longer Term Money Longer term money Security & investor protection One of the most important factors to consider when looking at any savings or investment, is what is the financial strength of the bank or institution you are placing your funds with. Also is there a financial compensation scheme in place similar to that of the UK. Rest assured that along with the headline rate, our team will also clearly highlight the financial security in any recommendation.

9 Potential risks & reward Single country equity funds, international equity funds Adventurous funds, flexible investment funds Balanced funds, property funds, global high yield funds Cautious funds, sterling high yield, global fixed interest, with profits funds Defensive products, sterling fixed interest, corporate bonds, protected funds Cash, deposits, money market funds

10 Get in touch Do you want more information about your savings & investment options? Get in touch today & see how you can make the most of your UK pension, savings & investments Paragon Wealth Management 11 Station Rd, Horsforth, Leeds LS18 5PA