Having covered an expatriate’s basic banking, savings and investment options and discussed the EU Savings Tax Directive and potential ways to legitimately avoid the restrictions it places on the individual, it’s time to get a handle on why you want to invest, how much you want to invest and what the money will eventually be used for. This is the sort of personal fact-finding that a financial adviser will complete with you, but it is also something you should spend some time thinking about yourself.
How Much Do You Want to Invest?
Are you in a position to invest a lump sum? Will you be looking for a regular savings scheme into which you can make monthly/quarterly/annual deposits? Are you paid bonuses sometimes which may result in you being in a position to make ad hoc contributions to an investment? Your answers to these basic questions will immediately bring up alternative investment opportunities for you, but what you need to know is that the sooner you begin investing, the longer you will have for your money to grow, with dramatic effects from compounded returns over time.
What Are You Saving or Investing For?
Having placed a certain amount of your wealth in cash deposits, which are easily accessible to you for short-term liabilities and to cover the odd unforeseen circumstance, do you want to save for your retirement, towards education fees, for the deposit on a property or for a large purchase? It’s highly likely that your savings objectives will cover a number of final goals – for example, most people do want to invest towards their retirement, whilst at the same time having shorter-term savings targets such as getting the money together to buy a new house perhaps. Therefore, the term over which you’re willing or able to commit your savings will dictate which particular savings path you follow. The amount and frequency of your investment commitment combined with your ultimate savings goals will dictate the products and policies that are applicable to you. Work with a financial adviser to determine what is possible, realistic and ideal for you, and then allow them to guide you towards the best investment vehicles or savings policies to suit your requirements.
Prepare Yourself for Investing
You need to make certain resolutions and decisions and reach various understandings before you are ready to invest. You need to know yourself and your objectives, i.e., you need to be aware of your own risk profile and what you want to achieve through investing – that way you will find it far easier and simpler to recognise the right investment or savings plan when it is presented to you. With the help of an adviser, the ultimate decisions you make about which savings or investments vehicle will depend on your financial circumstances and goals.
Remember that decisions made today may need to be revised and reviewed regularly. Therefore you need to commit to having a financial review at least quarterly or annually to ensure that your savings are still on track to match your ultimate targets. Understand that whilst there are many options when it comes to selecting the right investment policy, there are five basic underlying asset classes across which you will be investing. You have property, cash deposits, bonds, managed funds and stocks & shares (known as equities) to choose from. Look at each asset class, understand the basics of it, and consider that a sound and well-diversified investment portfolio spans all asset classes – ask your adviser to explain the benefits and risks of each sector. Simply leaving your money in cash deposits is not usually sensible as you may struggle to even keep up with inflation. You need to be more creative and look at ways to make yourself and not the banks richer – talk to your adviser or contact us if you want our help in receiving a detailed recommendation and financial health check.