Expat wealth management can present many opportunities, but also some unique considerations. No matter where you are on your life journey, looking at how you are managing your wealth can offer valuable returns.
Living and working abroad is an exciting chapter in anyone’s life. It also brings with it many changes and considerations, including how you manage your wealth. You may be good at adapting to a different environment, but your wealth and financial planning may need to adapt as well.
A change in location will often have an impact, especially if you have financial commitments, assets or sources of income in more than one jurisdiction. This is likely to mean dealing with different currencies on a regular basis and managing tax obligations that could cross borders.
These considerations will play a major role in how you realise your financial ambitions and plans you make. Equally, leaving the legacy you want could be affected by the differences in inheritance rules which vary from country to country.
Further guidance on financing education, arranging protection, retirement planning and looking after your legacy can be found in Expat wealth – destinations
In this article, you’ll find a 5-step action plan to help navigate your journey, while other articles provide more detail on Growing your wealth and Managing your risk.
Growing your wealth and managing risk
The trade-off between risk and reward is a key question for anyone managing wealth, balancing the desire for investments that could potentially offer higher returns with your personal appetite for risk.
“You may be good at adapting to a different environment, but your wealth and financial planning may need to adapt as well.”
For internationally minded individuals who want to invest in funds exposed to less traditional markets, this can be an especially relevant consideration. Meanwhile, all expats will need to consider other issues, such as how to manage the impact and risk of currency fluctuations.
Discover more about growing your wealth and the associated risks in the related articles in this guide.
Tax and wealth
Tax planning can be complicated, often even more so for expats, as tax laws differ from country to country. A key example is the need to ensure you don’t pay tax twice on the same income unnecessarily. Equally it’s very important for you to know your tax obligations.
Speaking to a professional adviser may be essential to understand your obligations based on your circumstances, and how to manage your wealth tax-efficiently.
The 5 step action plan below could help ensure that your wealth is working hard to meet your current needs and future aspirations.
5 step action plan
1. Reassess your current situation
Review your situation to see if there are any significant changes. For example:
Do you have new goals? This could be buying a property, or a plan to move to a new location.
What are your priorities now and what progress are you making towards achieving them?
What assets do you currently hold, where are they, and do you need to diversify your investment portfolio?
2. Consider what might change in your finances
Expats often find themselves in uncharted waters. The plans you have in place now may not cover new eventualities:
What do you intend to do with the property you own back home?
Are you likely to move again in the years ahead?
Will your tax position change? If so, how?
3. Manage risk and flexibility
Having clarified your current situation and any potential future changes, you can begin to plan accordingly:
Start with your day-to-day finances and your currency strategies for making and receiving payments, then think of savings and investments for potential longer-term wealth growth and planning.
Understand what your attitude is to investment and currency risk.
Consider the available options for how you hold your investments. This includes thinking about whether your investments should be held across multiple jurisdictions or in a single location.
Check your insurance provides proper protection where you and your family now live and/or spend a lot of time.
4. Speak to your financial adviser
Given the often unique considerations and complex circumstances of internationally mobile individuals and their families, a good way forward is to take professional advice on how to manage your wealth.
A qualified specialist can help you complete this vital step of determining your goals, risk appetite and need for flexibility, before identifying a range of solutions that could meet your objectives.
5. Review your plan regularly
Bi-annually – or at least annually – review your strategy and the progress of your plan.
The context could change, and market events or tax rule changes may affect your strategy.
Assess if you’re on track or if there’s a need to change your approach.
Life abroad is always evolving, whether this means a new posting, a promotion, or a new addition to the family. Such changes will often result in a need to adapt the plans you have in place.
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The value of investments (and any income from them) can fall as well as rise and you may not get back what you invested. For some investments this can also happen as a result of exchange rate fluctuations as shares and funds may have exposure to overseas markets. Investing should be seen as a medium to long-term proposition of at least five years.
HSBC does not provide tax advice. The value of tax treatment will depend on your individual circumstances and may be subject to change in the future. Tax rules differ from country to country. If you’re unsure about your tax commitments, you should get professional advice. It’s your responsibility to disclose your income to the tax authorities. via HSBC expat