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Expatriate Banking a key part of the expat relocation process

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Expat Banking
Expat Banking

Expat banking is a topic that many people deciding to live abroad needs to learn about as this fact is part of their everyday living. There are so many things that you as an expat should take care of even before leaving your home country not to mention the things that you need to deal with upon your arrival in that different country. Financial planning is definitely one of the things that must be considered because from this fact you can have a normal, decent way of living.

Beside planning your budget, learning about income taxes as an expat and others alike, you should have a clue about the expat banking. This is as well strictly related to the matter of currency and the matter of exchange rate. Not everybody is familiar with these notions let alone planning their living in accordance to them. Therefore it is very important for you as an expat to learn about the currency of that country even if you plan to live there for a short time.

This is where the expat banking can be of help. You can ask for the bank you are dealing with to sort out the things when it comes to currency. There are many other matters that banks can be helpful such as enabling you to pay the household bills, pay your taxes on your property and so on. It is moreover important to know about expat banking services if you choose to live in another country for longer time. Say that you have an international bank account in your home country. In this case you can transfer this account into the country where you have chosen to relocate.

Opening an account always makes the things run more smoothly and the same will happen in the country where you will live from now on. Through expat banking you will ensure that every document is in place and that nothing is expired such as your visa or your passport. You can pay your taxes through the banking operations, send money in the home country if this one is necessary, and so on.

You must have learned by now that almost any bank has its own branches overseas and thus the expat banking has become easier than ever. Let’s not forget that with the internet access, the online banking has made these financial operations so easily to conduct that with any computer connected to internet you have the chance to make your financial transactions from the comfort of your new home.

Relocating to Paris: Vive la Difference

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Paris Expatriate

Paris ExpatriateBest known in American circles as a city of romance, Paris is also home to a growing number of US expatriates. Following is some helpful information for expats who are new to the city.

Getting to know the people

Unlike Americans, the French rarely make verbal or physical contact with each other when walking down the street — nor do they wave, whistle or yell on the bus, in trains, or the supermarket. In fact, in some areas, the French do not speak to strangers at all, since it is considered impolite. Expats shouldn’t expect — or force — spontaneous conversation.

They should also keep in mind that a French person is often fiercely proud of his region, its history, and its contribution to France, Europe and the rest of the world. Expats who take the time to learn a little about their destination region’s dress, accent, food and drink, industry and landscapes, will develop greater perspective and appreciation of their French co-workers and neighbors.

Getting down to business

Typically, the French workday begins at 9:00 a.m. and ends at 5:00 or 6:00 p.m., although this may vary depending on the expat’s location. Lunch is usually at 12:30 or 1:00, and most employees will take a full hour to dine with their colleagues.

Important lunch meetings, however, can run up to three hours or longer. The French have a deep appreciation for their cuisine, which is considered among the world’s finest. Eating is designed to nourish the body as well as the soul, and the business lunch is no exception. (Long lunches also afford the opportunity to get to know one another and build a relationship before getting down to business.)

French managers may work later than their subordinates, and occasionally on the weekends. Unlike their American counterparts, however, they don’t make a habit of it. The French draw clear lines between their work and private lives; business calls at home are especially unwelcome.

Holidays and vacations are considered sacred, and it’s common for employees to take two or three weeks at a time. French law guarantees all salaried workers five weeks paid vacation each year.

Dressed for success

French businessmen prefer to wear a suit, or slacks and a blazer, shirt, and tie. They are not as conventional as their American counterparts, and enjoy expressing their individuality through their work clothing. Although casual dress is catching on in the workplace, especially in younger companies, a more formal style is still the norm.

Corporate structures in France vary widely depending on the company and industry, but the typical company still tends to be fairly hierarchical and centralized. As a result, decisions are usually made on a top-down basis.

 

In keeping with this trend, subordinates usually address their superiors by title and formal address. Co-workers greet each other with a handshake each morning and again at the end of the day. Contrary to popular American opinion, however, the practice of kissing females on the cheek is reserved for close friends outside the workplace.

Workstyles and teamwork

The French management style tends to be authoritarian and paternal, and French workers do not expect to develop close personal relationships with their superiors. Managers are expected to be experts and have the answers to subordinates’ questions. They are also expected to give clear directions, while maintaining a hands-off approach concerning how subordinates complete the task at hand.

The concept of teams is still somewhat foreign in the French workplace. Like their American counterparts, French business people have been encouraged to pursue individual academic achievement and competition, and this mindset carries over into the workplace.

Business meetings in France usually have an agenda, but allow for a broad — and spontaneous — discussion of the issues without regard for a specific time frame. In general, the French prefer less structure than Americans or Germans, and may spend a fair amount of time analyzing the facts rather than setting objectives and action steps.

Women in the workplace

A large number of French women work outside the home — and many hold high positions in French corporations and government. Although the trend toward women entering upper-level positions continues to grow, however, there are few female CEOs. Since the family plays an important role in French society, many women may choose to pursue a family before a career.

 

Housing choices

Many of the apartment buildings in Paris were built during the period from 1850 to 1920 and as such, share the same distinctive style. Typically, ground floors were designed to house shops, and first floor apartments were reserved for the shopkeepers. With their low ceiling and semi-circular windows, first-floor apartments can be quite dark. Second and third floor apartments feature higher ceilings and larger rooms, and are usually the most expensive, while apartments on the fourth floor and up tend to be less expensive.

Overall, rental laws in France are designed to protect the tenant, and allow for a written contract, and rental deposits that don’t exceed two months’ rent. Leases for unfurnished apartments range from a minimum of three years if the apartment is owned by an individual, and up to six years if it is owned by a company. Rental increases occur once a year and are tied to the official Cost and Construction Index.

“Rent” comprises building charges, registration tax and rental fee. In addition, expats will be required to pay a yearly government tax, which varies depending on the area.

Although furnished apartments can be found in central Paris — and come complete with all the necessities — they are harder to come by in other areas. Unfurnished apartments are more commonly available in other parts of the city and in suburban areas. However, these are often rented without such items as light fixtures and curtain rods, which the tenant is expected to install himself.

As is true with many apartments in the US, tenants are required to sign a statement verifying the contents and condition of the apartment at the time of their move-in. Since tenants are responsible for all damages, it is important that expats carefully prepare and review the statement to ensure all present damages are listed.

Schools for children

Expats with children have a variety of schooling choices, including bilingual education, American curriculum, international schools and the French system. France maintains a number of excellent state schools which require no fee, but do require a good knowledge of the French language.

Parents of children with special needs can get assistance from SPRINT (Sharing Professional Resources, Ideas and New Techniques), and SPAN (Sprint Parents Action Network), two organizations that have a great deal of experience dealing with special needs and bilingual students.

Help around the house

Expats can find domestic help through word of mouth, or by checking the notice boards of a number of international organizations such as the American Church (1) 47 05 07 99, St. Michael’s English Church (1) 47 42 70 88, The British Institute of Paris (1) 45 55 71 99, and the France/USA Contacts (1) 45 38 56 57.

Babysitters are also widely available and can be located by contacting a babysitting agency, or calling the American College or graduate programs.

Spouse assistance and support

Expats whose spouses desire to work in France can get assistance from The Business Development Network International, a networking group that provides business opportunities for American and European professionals and companies.

There are also numerous educational opportunities available to expat spouses, including adult courses, lectures and MBA programs, at the various universities and colleges in Paris. These include: The American University of Paris (47 20 44 99), and the University of Hartford Business School (49 00 19 61).

Shopping in Paris

Most stores in Paris are open from 9:00 a.m. to 6:00 p.m., although clothing stores keep slightly different hours — from 10:00 or 10:30 a.m. to 7:00 p.m. Few stores are open on Sunday, and some are closed on Monday, as well. Grocery stores may close for several hours during lunch. Most also require expats to bag their own groceries in the plastic bags provided; paper bags are virtually nonexistent.

The French “plastic cards” are not credit cards, but rather debit cards expats can use to pay for purchases using money drawn from their checking accounts. Like many credit cards, however, they require a subscription fee.

A Visa or Eurocard gives expats the option of either paying by direct debit from their checking account or deferring payment until the end of the following month.

On the streets of Paris

There are many ways expats can get about town. The Paris Metro system, for example, has 15 lines that span the entire city. The Metro opens at 5:00 a.m. and closes between 12:30 and 1:00 a.m. The RER (Reseau Express Regional) serves as the Metro’s suburban extension and accepts Paris Metro tickets. Travel by taxi in Paris is safe but costly. Taxis making airport or race track stops require an extra charge, and a baggage charge is also common. Most taxis will only transport three people, although larger cars are available if the taxi reservation desk is notified in advance. Typically tips for taxi drivers range from 10 -15% of the fare.

Driving in Paris is on the right and passing on the left. Seatbelts are mandatory for the driver and all passengers when they are available, and children under the age of 10 cannot ride in the front seat. People under the age of 18 are prohibited from driving a car or motorcycle over 125 cc, regardless of whether they hold a valid license from their home country.

France also adheres to strict drinking and driving laws. Drivers with a blood alcohol level of 0. 8 mgs per thousand or over, or whose breath contains 0.4 gms or more per liter will receive a prison sentence ranging from one month to one year and a fine of between 500 to 8,000 Francs. They may also lose their license. Expats would do well to familiarize themselves with local driving laws since they vary from those in the US.

A relatively safe haven

Many expats to France say they feel safer in Paris than in most large cities, but it still pays to exercise caution. Pickpockets may be present in the Metro or in tourist areas. If expats do experience a theft, they should report the incident to the local police, and report any stolen check books or credit cards to their bank.

Since police will require a complete list of any items taken in a home burglary, expats should prepare an inventory of all their belongings when they arrive in France. In addition to notifying the police of a home burglary, they should also notify their insurance company by registered returned mail, usually within 24 hours of the event.

 

Dubai offers expatriates an abundance of sun, sand and sophistication.

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Palm Deira Dubai
Palm Deira Dubai

Once a small fishing settlement, Dubai today is a cosmopolitan city-state embodying both old and new, east and west. Visitors to the city will find ancient windtower houses along with modern high-rises, bustling souksas well as sophisticated shopping malls, raw desert along with lush green parks. Home to more than 674,000 people, the city is also the port of call for an increasing number of expatriates who lend a colorful and exciting mix to its customs, culture and cuisine.

Dubai is the second largest of the seven sheikdoms comprising the United Arab Emirates (UAE), formed in 1971 when Britain withdrew its presence from the Persian Gulf. The UAE’s most important port and commercial center, the city is located on the banks of the Dubai Creek, a natural deep water inlet that divides the city into the Diera district to the north and Bur Dubai to the south.

The discovery of oil in 1966 was followed by rapid development that laid the foundation for modern-day Dubai. Much of the credit for this development is attributable to the late Ruler, HH Sheikh Rashid bin Saced Al Maktoum, whose vision ensured Dubai’s oil revenues — although relatively modest by the standards of the region — were used to maximum effect.

Sheik Rashid’s work continues today under the present Ruler, HH Sheikh Maktoum bin Rashid Al Maktoum, creating an advance infrastructure of transport facilities, schools, hospitals, tourism developments and other amenities.

A hot, sunny climate

Dubai has a sub-tropical climate with very little rain. Summers are exceptionally hot and humid, and winters are mild. The climate is most pleasant from November through the end of March, when temperatures range from 50F to 68F, and sometimes warmer. The weather turns hot from May to October, with July, August and September being the worst months. Temperatures at this time may exceed 113F and humidity is over 85%. Understandably, many people leave Dubai on holiday during the summer to escape the heat.

Getting around town

Expats will find that having a car in Dubai is a necessity due to the fact that most residential areas are located some distance from commercial zones. Taxis are readily available in the city. Some are equipped with meters, while fares for others are subject to negotiation between the driver and passenger.

Dubai has an extensive network of highways both in and around the city, but central areas of the city have changed little and can become quite congested, particularly during peak periods.

The lay of the land

Although Dubai’s official language is Arabic, English, Hindi, Urdu and Farsi are also widely spoken. Both Arabic and English are commonly used in business and commerce, so it is not necessary for expatriates to learn Arabic. They’ll find, however, that knowing at least a few phrases is both useful and appreciated.

The official monetary unit of Dubai is the Dirham (Dh), which is divided into 100 fils. The Dirham has stayed more or less constant against the US dollar since 1980 at approximately $US=Dh 3.67.

There are a number of established banks within the UAE that provide the usual commercial banking services. Since there is no exchange control and the Dirham is freely convertible, currency exchanges are easily made.

Generally, banks are open from 8:00 a.m. – 1:00 p.m. on Saturday through Wednesday, and from 8:00 a.m. to 12:00 p.m. on Thursday. Some banks are also open from 4:30 p.m. to 8:30 p.m.

We recommend the Mashreq Bank for newcomers to Dubai, since it offers speedy service for obtaining check books and credit cards.

Telecommunications are excellent for both local and international calls, and phones have international direct dialing to most countries. Phone calls within Dubai are free. Full telex, fax and e-mail are also widely available.

To apply for a telephone line, expats will need a completed application from Etisalat (the local telephone company); a copy of a tenancy agreement; location map; the telephone number of a neighbor’s house; a valid resident visa; a copy of their labor card; and 250 Dhs.

Postal service in Dubai is also reliable and accommodates deliveries to most anywhere in the world.

A shopper’s paradise

One of Dubai’s greatest attractions is its shopping, which draws visitors from as far away as Eastern Europe, Africa and India. Souks or street markets sell everything from spices, fish and fresh vegetables, to gold and jewelry. Modern shopping malls boasting a wide range of shops, boutiques, restaurants and fast food outlets are found throughout the city. Shopping hours in Dubai are usually from 9:00 a.m. to 1:00 p.m., and from 4:00 p.m. to 9:00 p.m. or later. Most supermarkets stay open all day from Saturday to Thursday. All shops close for prayer on Friday from 11:30 a.m. to 1:30 p.m.

Expats will find there is no shortage of quality food in Dubai. Imported fresh and frozen meat is readily available in supermarkets and butcher shops. Fresh and long-life milk are also available, as is reconstituted powdered milk. Good fresh fish, imported vegetables and fruits can be purchased in local markets. The city’s tap water is considered drinkable, although many people prefer to drink bottled water.

Health and well-being

Basic modern medical care and medicines are available in the UAE’s main cities. As is true with any foreign assignment, expats should bring appropriate health and accident insurance documents and copies of any important medical records.

Aids testing is required for entry into the UAE member states. The testing must be performed upon the expat’s arrival in the UAE; tests performed in the US are not acceptable. For further information, contact the Embassy of the United Arab Emirates at (202) 338-6500.

Vaccinations should be considered for Hepatitis A, Hepatitis B, rabies and typhoid. A booster shot for polio is also advisable. For more detailed information, visit Shoreland’s Travel Health Online.

Getting down to business

The typical workweek in Dubai is between 40-45 hours for most commercial and professional firms. As is the case in all Muslim countries, Friday is the day of rest. Traditionally, the “weekend” for office personnel has been Thursday afternoon and Friday, although some companies are changing to a five-day week, with Friday and Saturday as the weekend.

Men generally wear dress pants, shirts and ties to the office (jackets are worn for important meetings), while women wear dresses, or a long-sleeved blouse and a skirt.

Leisure time activities

Dubai is home to a number of excellent recreational and sporting facilities. Its waterfront location makes it an ideal spot for all types of water sports — from diving and sailing to water-skiing and fishing. Other favorite pastimes for expats include golf (the Emirates Golf Club is home of the Desert Classic, and the Dubai Creek Golf and Yacht Club hosts an event on the Asian PGA Tour), tennis, and squash. Many expat families also take trips into the desert in four-wheel drive vehicles to camp and enjoy the scenery.

Entering the UAE

The UAE Federal Authorities are primarily responsible for all immigration matters. Visitors who are in doubt about their visa requirements should contact their nearest UAE embassy or consulate, or the overseas offices of the Dubai Commerce and Tourism Promotion Board.

With a few exceptions, all visitors to Dubai must obtain visas sponsored by a local entity, such as a hotel, company or travel and tourism firm. A business visitor may enter Dubai using either a transit or visit visa. A transit visa enables the visitor to stay for a maximum of 14 days exclusive of arrival and departure. Those planning longer stays may prefer to enter the country with a visit visa, which entitles them to a stay of 30 days, which is renewable twice up to a total of 100 days. Visit visas also entitle their holders to change their status to that of residence or employment providing certain conditions are met.

 

Lawton Asia – Bangkok, Thailand

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LawtonAsia was established in 1997 to provide comprehensive financial and insurance solutions for both
individuals and companies.

We are independent, and so able to work with products and services from different organisations to put together top quality packages tailored to individual client needs.

Our professional staff comprises both Thai nationals and expatriates, who between them cover a wide range of
specialised skills, ensuring the quality of knowledge and service our clients expect.

LawtonAsia was one of the founding members of the Asia Pacific Independent Brokers Alliance.

In 2002 we also formed a strategic alliance with the European based Higgins Insurance and Investment Limited (a company of over thirty-five years standing), adding to the depth of our experience and the scope of our services.

Today, our professional products and personal service provide peace of mind for an ever-expanding client base.

Lawton Asia specialises in providing tailor-made insurance solutions for both local and international
companies, as well as individuals residing in Thailand.

We provide a complete range of general insurance cover, including:

  • Property
  • Consequential Loss / Business Interruption
  • Construction / Engineering
  • Marine Cargo
  • General Liability
  • Casualty / Miscellaneous
  • Automobile
  • Householder / House Owner
  • Trade Credit
  • Director and Officer / Professional Indemnity

Our professional team has extensive technical and operational expertise in all areas of general insurance.

This expertise, together with a readiness to listen to your needs, ensures that we offer you the best possible solutions, at the right price.

So whether you’re a new business, or a well-established company looking for competitive terms and conditions, we can provide you with a custom-made programme to fit your specific requirements.

In today’s ever changing investment and financial environment advance planning is the only way to ensure a sound financial future for you and your family.

At LawtonAsia our staff of dedicated financial specialists take the time to sit down with you to understand your  financial needs. Then, working with international blue chip insurers and fund managers, we put together a choice of options to suit your circumstances and budget.

LawtonAsia not only provides insurance services, we are also part of the very fabric of the insurance industry in Thailand.

Our management team have held senior positions within major listed companies. This valuable experience has led to them being appointed to  various industry bodies, such as the Association of British Insurers, Department of Insurance Thailand and The Insurance Brokers Association.

The personnel in our Claims Department include experienced healthcare professionals – we even have
a dedicated in-house nurse. And of course, we have a 24-hour multi-lingual assistance line.

LawtonAsia is licensed by the Department of Insurance (DOI), under the Ministry of Commerce, to act as a broker operating both General and Life Insurance businesses under Registration No.11/2546 and No.19/2548 respectively.

For UK expatriates, LawtonAsia is also able to  provide FSA-regulated advice through our affiliates in the UK.

LawtonAsia Ltd.
5th floor, M Thai Tower
All Seasons Place
87 Wireless Road
Bangkok 10330
Thailand

Tel: (662) 654 1150
Fax: (662) 654 1151
E-mail : [email protected]

Education Fund Planning: Expats should figure their big expense Now !

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Meet the Smiths.

Bob is 34 years old.  He’s been married to Susan for 10 years with 2 children.  Samantha is 9 (born in 1999) and Johnny is 7 (born 2001).

How much is it going to cost Bob and Susan to meet 2 basic financial obligations – sending their two children to private university and providing a retirement nest-egg that will enable them to enjoy the lifestyle that they are accustomed to?

Let’s assume that each child starts college at age 18 and graduates in 4 years (though many take 5 years!)  Tuition is $30,000 TODAY, with room and board coming in at $10,000.  Inflation – conservative at 3% per year – will raise the annual total to nearly $51,000 by the time Samantha enters university in 2017.

This is what Bob and Susan Smith will be paying in tuition during the 6 years from 2017 through 2015:

2017:  50,835
2018:  52,381
2019:  107,948 (heeeere’s Johnny, starting college)
2020:  111,232
2021:  57,307 (Happy Graduation, Samantha.  Now get a job.)
2022:  59,050

Their all-in price for sending 2 children through school?  $320,000 in 2008 dollars, and a whopping $438,753 by 2022 (thanks to inflation) — when he’s finished.  Ouch.  But remember – that calculation is based on tuition rising by 3% a year.    If inflation runs closer to 6%, he should plan on shelling out just a little over $602,000.

Retirement planning

And what about retirement?  Let’s say that Bob works until he’s 65 and plans on being retired for 25 years (i.e.: living until 90).  If the Smiths wants a retirement income of $100,000 per year in 2008 dollars, what will they need to retire?

At 3% inflation the Smiths will need an income of $250,000 a year to equal today’s salary of $100,000 when they calls it quits in 2039.  To pull this off they will have to put away $3,196,000 – assuming a return on  investment of 9%.

If inflation were 6% and their returns remain stable at 9%, they’ll need an impressive $10,600,000 to build up the reserves needed to payout the equivalent of 100,000 per year in today’s terms.

 

Is your long-distance financial planner relationship still working?

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Do you already have a financial plan put together by a professional adviser or planner back in Europe or the US before you came to live overseas? If you do, then you are well ahead of the game.Great news. Now check up on him.

Those expats who already have a comprehensive strategy for meeting all of your life goals – particularly retirement and tuition – then you’re in better shape than most.

It still may be appropriate, however, to meet with someone who is familiar with your new situation. As an expat, there are some things that you can now that you can’t do from back home – and vice versa. It’s important to know your options – and your responsibilities.

Three broad areas to consider for overseas-based expats who rely on a US or European-based financial planner:

1)Is your plan still appropriate for your situation?

    Living overseas
    isn’t a vacation for you – it’s hard work. Make sure that your money is working hard as well. Many expats come here for a short-term assignment and then end ups staying for years. Have there been any big changes in your lifestyle, career or household while you’ve been away? One of the biggest challenges to meeting your financial goals is that they tend to be moving targets. If you are working with a planner who lives back home, make sure you are in regular contact with him via e-mail and make sure you schedule a time to sit down with him at least twice a year.

2) You are here – your planner is there.

      The person who set up your plan – be he an

IFA

    , an insurance broker or an accountant – is far away and in a different time zone. It’s probably not a big deal if all you want to do is check on your account balances every few months – but if you want to do anything involving signatures, applications, check-ups or payments, the distance can make your life significantly more complicated. Give yourself plenty of lead time, and make sure that your insurance companies and banks back home accept the documents and paperwork that you supply. (This is especially important for check-ups, taxes, medical certifications and other matters that require some sort of approval or standard). Chinese contracts and official documents are only legal in Mandarin. Western institutions rarely accept anything but their own local language(s). Someone’s got to figure out how to reconcile the two sets of demands – and it will probably end up being you.

3) This is not USA.

    US and European IFAs (independent financial advisors) should be well versed in the fundamentals of your situation, and thoroughly trained in all the instruments that they think you should buy. But western IFAs tend to be pretty clueless when it comes to overseas. Issues like health insurance & hospitals, wire transfers & banks, taxes and offshore investing can go over their heads quickly. You may also end up missing out on offshore tax havens and international investment targets that your advisors back home just aren’t familiar with. US IFAs are notorious for their domestic investment focus.

How can you tell if your plan is still intact – and that your professional staff is giving you the best advice? First, you can measure your plans performance against major benchmarks to make sure your returns are strong. But you should also pay attention to how good a job you are doing of continuing to drive your financial plan while you’re living here. If you haven’t made any contributions or adjustments in 18 months, then your planner back home is neglecting your interests. And finally, how much time (and/or stress) are you devoting to relatively simple issues like fund transfers or insurance issues?

Some households are better off maintaining the plans they began at home – but if your situation has changed significantly since you’ve come overseas, then you should consider augmenting your team of advisors with someone who specializes in offshore-based expats.

 

Buy Low – Sell High. Easier Said than Done, but Worth the Effort.

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Buy low, sell high. Its sounds so simple that even a child could understand, but turning the principle into action is a difficult matter. That’s why many investors are standing on the sidelines right now – paralyzed by indecision and waiting for a clear buy sign. Unfortunately for many of us, the clear sign that we’re waiting for will be that prices have returned to their former high levels and that another buying opportunity is well and truly gone.

The ugly fact is that Buy High, Sell Low is what really comes natural to human beings. We like security and clarity and dislike loss and confusion. When all the experts have weighed in and everyone else has already bought something it tends to confirm the value to us and make us feel safe following suit. Unfortunately, that’s just when prices are at their all-time highs – pushed up by the wave of optimism and security that most investors crave. Selling high is also uncomfortable, because you are alone again – bucking the trend and breaking the happy, complacent mood.

If you doubt me just look at the global real estate crisis that is affecting investment around the world. The same assets that cost $1 million last year are now selling at substantial discounts. But most people aren’t jumping on the sale-prices – they’re too nervous that what has already happened will keep happening, or happen again, or that something new and even more terrible will happen. So we all wait for the buying signs – those signals that make us feel that the situation is safe enough to move forward. (Note: When your neighbor tells you about the killing he just made, that usually means the tide has already switched from undervalued opportunity to overpriced and unprofitable.)

Two Kinds of Price Moves

There are two kinds of price changes that we need to understand: cyclical and structural.

Structural price shifts: When the intrinsic, underlying value of an asset is permanently changed (i.e.: a result of new regulations or a new technology) then we can expect to see a permanent price change. This is part of the structure of the industry or economy. One clear illustration is how the price for computers has fallen as companies got better at making them and designs improved.Another example is how property prices in China and Eastern Europe moved up after their governments opened to the international economy. We don’t expect structural price trends to reverse as part of the natural process – unless something new happens these trends will continue.

Cyclical price changes are part of the normal (but disorderly) up-and-down process that asset prices go through. Stock markets are the clearest example – but the ‘boom-bust’ nature of the global economy means that general price levels are always in flux. The underlying assets are just the same as they always were, but our valuation of them is different. Cyclical changes aren’t started by changes in the intrinsic value of the asset, so market forces will quickly act to find an equilibrium price.

Which one are we witnessing now? For any given market, investors have to determine which forces are driving prices – structural or cyclical. But don’t be too quick to decide on a conclusion, because both structural and cyclical drivers may be present. Emerging markets are in a long term uptrend that will see new value created for decades to come. But they are also being affected by cyclical forces, such as inflation, stock market corrections and global economic growth rates.

Investment decisions.

As an investor, you have 3 decisions to make.

1) Is the price change for a given asset either a Structural change or a Cyclical change?

2) If structural, then are the forces driving the change long term or short term; positive or negative?

3) If cyclical, then where are we in the cycle?

Investment Rationale:

Long term structural changes are sometimes hard to spot. But if you think you have uncovered such a change in the early stages, then your next challenge is to find a way to capitalize on it. For long term up-trends finding asset-pricing trends is pretty straight-forward. Property or equity investments will both do well AS AN ASSET CLASS. You next big hurdle is to find a reliable way of

What’s the clearest buy sign of them all?

Cyclical downturn at the start of an upward Structural re-adjustment.

If an investor could write his own “dream scenario” he would imagine a structural change that has just begun to lift an assets true, long-term value. (Imagine turning back the clock to 1950 and shopping for real estate in Florida or the Long Island section of NY). Then he would write in a cyclical down-turn that puts the markets on ‘pause’ for a few minutes and scares off the herds of passive investors. A little bit of panic will clear out the ‘fast money’ and drive prices down a bit. If he chooses correctly, his investment’s asset value will benefit from two significant trends at the same time – a structural upswing coupled with a bull-market recovery in the cyclical market. This best-of-both-worlds scenario doesn’t come along too often – but we may be witness just such a case in the world of emerging market real estate development.

Expat Asset Management: Calculate your net worth.

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Asset management
The first thing to do is make a list of everything that you (or you and your partner) own which has resale value. By that, I mean anything that is an asset. You might own five thousand books, but if they were all bought second hand in charity shops you will not be selling them on for much. In this case, you shouldn’t count them.

Assets might include any of the following:

– Property (residential, commercial or land)
– Cash in the bank
– Shares in stock market quoted companies
– Hard assets (gold, silver, diamonds, etc)
– Collectibles (antique art, furniture, etc)
– Unit trusts or mutual funds
– Shares in unlisted companies (perhaps a family firm)
– Corporate or government loans (known as bonds)
– Pension funds

The list may be big or small, only you know. Take your time and try to think of everything you can.

I would now like you to put a value next to each asset. This value will be either the amount that you think the asset is worth (for example art is very difficult to value) or, in the case of quoted assets such as shares, the real value. If you need to find a value, just check in the daily papers or online.

The one major problem area here is property. Generally, the biggest asset any of us own is our residence. But what is it worth? Equally importantly, since we all need a place to live, and would need to buy elsewhere should we sell, why include it in the list?

My thinking on this subject is yes, you should include it in the list. We will do this for two reasons. Firstly, if you have a mortgage against the property,  the mortgage is a big part of your budget and planning. If we are to include the debt (and we must) then we might as well include the asset too. It will make you feel better! Secondly, if you are flattened by a lorry next week and die, you can bet that the tax man will be including it as an asset in your estate.

Property is a problem asset for a second reason. Since we have presumed that it will be your largest asset it will make a big impact on your balance sheet. However, you don’t truly know what a property is worth until you put it on the market and try and sell. This will make your balance sheet rather weighted towards an asset that we cannot really appraise.

With a little luck, you now have a long, long list of assets and valuations. Add them together and find out how much you own. I hope, for you, it is an impressive number that will make Donald Trump jealous.

Liabilities
As I’m sure you can now guess the other side of the net worth coin is how much you owe. Do you have any debts? Do you know how much they cost you (monthly) and how much you owe? Can you name the lenders?

To get a clear idea of your situation, a list will (if you have a lot of debts) need to be made of companies, payments and balances. In calculating your outgoings, any debt repayments were listed.

Once this list is complete, simply minus the debts figure from the assets and you are left with a number which represents your net worth.

Is it positive or negative?

Expat Investing: The best investments from a expat taxation standpoint

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One way to invest well, from a taxation standpoint, and often from an investment perspective too is in property.

I’m not 100% certain why property always is taxed quite so lightly as an investment, but generally it is. As a rule, if the property was your main residence, there is no tax to pay at sale. This means that in rising housing markets, investors that buy their own home can benefit greatly.

Second homes can and often will be, very profitable investments too. They will generally be taxed more heavily than a private residence, but they can still bring home the bacon.

I have a theory as to why property is taxed so generously in many countries. Whether or not I am right, I really cannot say, but for what it’s worth, here it is.

It is my belief that property ownership is treated well in most county’s tax codes because of the nature of the work of a politician. Most politicians will own a property in their national capital, to enable them to stay near to the Parliament building without being in a hotel. All politicians will also need to own a property in the constituency which they represent. Plus, most politicians are not actually from their constituency, which means they will probably have a ‘family home’ in some other part of the country. So if most politicians have the majority of their assets tied up in property, it stands to reason that property is and will continue to be taxed very favourably.

As if that were not enough, some countries (the House of Lords in the UK, for example) have a second chamber of government. This second part of government is filled with other political types (former politicians etc) who also own several properties. In the specific example of the UK, there are also many hereditary peers, people that have inherited their titles. These families initially came from the ‘landed gentry’ and if ever there were a class of people in favour of land and property ownership, it is these.

If I am correct, then it is very unlikely that there will be the political will to alter the tax status of property for a very long time. It might mean that property can be a useful investment for you.

Expat Debts: Repaying Your Debts Whilst living & working in overseas

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‘Every day I get up and look through the Forbes list of the richest people in America, if I’m not there, I go to work.’ – Robert Orben

‘Don’t borrow from anyone you don’t want to loan money to.’ – Doyle Brunson (2 times World Poker Champion)
‘The easiest way for your children to learn about money is for you not to have any.’ – Katharine Whitehorn

Do you owe money?

How much and to whom?

Do you have that sinking feeling?

The consumers (that is you and I) of nations like the US and the UK are drowning under a sea of debt. Personal savings rates have slumped whilst borrowings have risen dramatically. Much of this is due to the booms in house prices.

Average homes have risen so steeply in value that an ordinary family can ‘release’ equity every year or two to live beyond their means, repay credit cards and loans and still live well. However, the reality is that wages are not rising as quickly as inflation and as soon as interest rates leap into life again, these debts will become unsustainable.

As I write this in early 2012, interest rates in the UK have stabilised and US rates are increasing monthly. It will need more rate rises before the problems really start to show themselves, but whenever you are reading this, one thing is certain: you will be better off having lower personal debts.

When it comes to repaying debts, there are three issues to be addressed. The first relates to your lifestyle, how much you earn and spend, what your money is spent on and whether any cutbacks can be made. The second issue is how to prioritise your debts to repay them in the most efficient way possible. The last is to cut up your cards to prevent you from getting even further into debt.