Sunday, August 20, 2017

Expat basics: offshore investments and tax

Expats generally enjoy a wider range of lifestyles and jobs compared to those back home. The rewards are a combination of new adventures, personal growth and higher financial spoils. But there are also challenges in investing accumulated wealth and dealing with unfamiliar tax regimes.

Being a modern expatriate is very different from yesteryear. Back then it was common to work for one company in one country your entire expat career. You would have likely been the top man in a corporation with few, if any, expat colleagues.

Setting up a substantial home there would have been an entourage of domestic staff assisting you, plus a further group of corporate staff supporting you to run the operation in the country where you were based.

Today is different with the world being so small and connected. Expats tend to be employed across all levels and have access to communications and travel, which is why the world is apparently shrinking.

By contrast there now seems to be three basic types of expat. The first is a professional traveller. This type works for a multi-national corporation and is shifted from location to location every three to five years. This type is professional, adaptable and happy to work nearly anywhere.

The second type of expat is one who has decided to put down roots in one favourable location. The third type is the retiree who has been working abroad a long time or spend large stretches of time travelling overseas and decides to spend their twilight years away from home.

Most expats enjoy access to a higher disposable income than their counterparts back home, which allows them to accumulate more assets and a larger nest egg faster. They also probably have access to more investment options than at home.

With higher asset values there are a number of different types of investment vehicle specially designed to help protect your wealth, as well as taking advantage of various global markets to ensure you make good use of the power of your assets.

These range from equities in almost any market in the world, more than 18,000 funds available worldwide, meaning choice is almost a problem. Exchange Traded Funds (ETF’s) are also becoming popular with the number and variety growing daily.

Some funds have a minimum investment of US$50,000, with others more than $1 million, which could limit choices available. You will also suffer bid/offer spread charges ranging from 3-7 percent. This charge is the price difference between buying and selling and is rather like changing money at the bank.