Investing as an expat seems complicated, but it doesn’t have to be.
There are simple rules to follow that will help you build your wealth, and avoid the traps that catch out the unwary. Print out and keep this handy guide below and start today on a clear path to what to do, and how to do it:
1. Don’t buy offshore bonds
Unless you’re sure they’re right for you. It’s unlikely you’ll need them. Unethical salespeople may use them to hide commission.
2. Don’t mix insurance and investments
If this sounds confusing, or you aren’t sure of the difference, just remember not to mix them up. Buy insurance for your car, home, travel and health. Not your investments.
3. Think very hard before buying structured products
They often exist to hide vast commissions for the salesperson and the company they work for.
4. Don’t buy into long term contractual savings plans
These can be a complete rip-off. Guess what they exist for? Clue — it involves commission. They are usually completely unnecessary and lock you in to inflexible (and often inappropriate) expensive investments. Do any of us know where we will be in 25 years?
5. Only invest in things you’ve researched
And that you GENUINELY understand. Weirdly, most people do more research on their next holiday than on their investments.
6. Transferring your pension might not be right
If you have a good pension arrangement at home and you may return there, it’s often a VERY bad and expensive idea to switch it into an offshore pension.
7. Don’t leave all the planning to your spouse
You’ll both be devastated when you realise the damage caused by a financial salesperson. Sadly, by the time you work it out, he’ll have disappeared.
8. Don’t believe anyone who says there is no fee
If someone tells you they’re doing something for free — for example, the charges are paid by the product provider - they’re often lying.
9. Only take advice from those with qualifications
And who work for a regulated firm (not one based offshore with a posh-sounding name), whom you can (hopefully) sue if they steal from you. Most expat jurisdictions have minimal, if any, legal protections for investors.
10. Own your decisions
For most normal people, financial planning is really boring. That’s a bad reason to delegate it to someone else. Get involved in the plans, know them well enough to explain their pros and cons to your spouse, and read the small print.
Investing is really easy, and can be very cheap. Don’t let someone make it harder, or pricier, than it has to be, particularly if they are doing so for their benefit and at your expense.
If there are two things to take away from this, they are:
1. If it doesn’t make sense to you, don’t do it.
2. If it doesn’t match your time frame, don’t do it.
I’d add one more. If your adviser turns up to a meeting with a big flashy watch and a big flashy car, tell them to go away.
Rory Gilbert is the managing director of AES International.
pf@thenational.ae
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