Here are some questions we get frequently asked, they may help answer some of your queries. If not, please don’t hesitate to contact us. We’re always happy to advise you on basic financial planning with no obligation.
- What does offshore mean?
For expatriates, offshore refers means locating your assets other than where you are living and outside your country of nationality. These locations are tax-free international financial centres.
- What is a financial adviser?
In the home countries of most expatriates, there is a legal requirement for financial advisers to be professionally qualified by examination in order to provide personal financial planning services.
- How can I verify whether someone is professionally qualified?
The home countries of most expatriates have professional bodies to which exam qualified advisers belong. The Personal Finance Society is the financial advisers’ professional body in the UK. Membership of this professional body can be verified by contacting them via their website: www.thepfs.org
- How safe will my money be if I invest offshore?
In many cases your money will actually be safer invested offshore than in your home country! This is because international financial centers have much higher investor compensation arrangements.
In the UK for instance the maximum compensation in the event of an institutional meltdown is just £48,000 (or USD 95,000).
The Isle of Man and Guernsey have arrangements to compensate 90 per cent of investments, without limit and wherever you live.
- What is a trust?
A trust is an arrangement for holding the assets of a person or family. They are used to mitigate or avoid tax and to ensure that when the time comes your assets pass swiftly and easily to your heirs. They are also an effective way of protecting beneficiaries from outside claimants and indeed sometimes, themselves! (See our section on trusts).
- What is a foundation?
Foundations are set up with the same objectives as trusts but with additional benefits
- They are much harder to challenge and overturn than trusts
- They can be set up to run forever (trusts usually have limited lives)
- Foundations can provide greater protection against creditors
- It is much easier, quicker and cheaper to change the trustees of a foundation than those of a trust
(see our section on foundations)
- What about tax?
Offshore investments are designed to grow free of tax. Many expatriates have no liability to tax in their home country, regardless of their capital gains and income levels.
Even those expatriates who remain liable to tax from their home country can benefit from the opportunity to invest in a much wider range of assets and investments. If gains offshore can exceed gains in the home country, then investing offshore will be of benefit regardless of tax.
- How accessible will my money be if I invest offshore?
The best offshore investment plans are designed with maximum flexibility and accessibility. For the lump sum investor, this means that most of your money can be withdrawn on day one without penalty. For the regular saver, most of your money will be accessible, if you need it, after a relatively short initial period.
- Can I pay into an investment monthly or do I need a lump sum
Expats have access to far more options when investing offshore today than they did even 5 years ago. If you want to invest a regular sum from your salary, your plan can be set up to allow you to add lump sums perhaps from your bonus or even an inheritance. For those with a lump sum to invest, you will have the flexibility to add to your investment whenever you choose at any frequency.
- What sort of returns can I expect?
Your return will be driven by your wealth preferences and personal circumstances. Don’t expect to enjoy a 15% return year on year in risk free funds and don’t believe anyone who promises that either! But the more cautious investors might reasonably expect to enjoy net returns that comfortably beat the banks.
If your questions have not been answered here please don’t hesitate to contact us.