We work diligently throughout our lives to progress in our careers, make sound investment decisions, and manage our wealth as efficiently as possible. Protecting that wealth, and defending against risk factors, is vital to financial stability.
Many expats have multiple assets, from savings accounts to investment products and pension funds. Each requires regular assessment and monitoring to ensure that your assets are performing as well as possible and are not exposed to potential losses or damage that could be detrimental to your future.
Here we summarise five of the best possible ways to defend against such risks and protect your finances now and in the years to come.
As always, professional advice and financial guidance is key to making confident judgements about the ideal investment or retirement strategies. If you have any concerns about the stability of your wealth, it is imperative that you seek expert support to ensure your assets are suitably protected.
Account for Inflation
Inflation is part and parcel of long-term capital investments. While we can’t remove the reality of inflation, we can consider strategies to mitigate the effect or prepare for anticipated inflation rates.
Here are a few examples:
- Switching static long-term savings into equities, with better potential for long-term growth and the prospect of appreciating in values above inflation.
- Maximise your tax-efficiency, which is of primary importance to expats who may be subject to cross border or international tax regimes. Being tax-efficient can mean reducing your liabilities, increasing your returns, and avoiding drops in value.
- Smart investment management, with planning required to ensure anticipated returns are above inflation and yet correlate with your appetite for risk exposure.
If you have stabilised these factors and know that your plans account for expected inflation, you will be in an excellent position to ensure your assets or savings do not erode over the long-term.
Regularly Evaluate Investment Risks
We’ve touched on the need to consider your investment risks, but this factor is vital to protecting your wealth and worth covering in more detail.
Every investment product with viable returns will carry an inherent level of risk. Simply opting for investments with a negligible risk factor can be an option during precarious times. Still, for most investors, that is not sustainable, given that the low returns associated with such a strategy are likely to fall below inflation.
This option might safeguard your assets from exposure, but over time will almost certainly mean that the total value decreases.
Portfolios should always be tailored to your aspirations, plans, and risk strategy, taking into consideration:
- Planned expenditure.
- Expected changes in circumstances.
- Required returns.
- Costs of living.
- Age and retirement plans.
By tailoring your investment portfolio and balancing higher risks with higher returns and, conversely, risk-averse strategies, you can gain maximum investment success without exposure during times when you rely on your investments as a primary income stream.
Consider Your Tax-Efficiency
The next priority to safeguarding your wealth is to look at your tax-efficiency and consider measures or structures that may improve your financial position.
Taxes are one of the most significant outlays for millions of investors, businesses and families. By revisiting your tax position and identifying solutions, there may be opportunities to restructure your assets, income or investments to reduce your tax liability substantially.
Unfortunately, taxes are a part of life, impacting every asset portfolio, covering:
- Succession planning and inheritance tax.
- Income taxes and wealth levies.
- Capital gains charges and investment taxes.
It is always valuable to carry out a tax analysis exercise with advice from a taxation specialist to determine where you can make efficiencies and protect your wealth from unnecessary obligations.
Evaluate Retirement Budgets
Many savings products and investments are selected to provide for steady income streams into our retirement years. There are numerous different options when it comes to pension schemes and funds, including:
- Flexible access to pension wealth.
- Lump-sum withdrawals.
- Investment risk strategies.
- Tax liabilities arising.
- Fund management options.
- Pension structures and products.
Leaving pension funds in situ, which aren’t showing positive returns, can cause significant concerns when approaching retirement. Even substantial pension pots can decrease rapidly over time and make a difference to your expected pension income and standard of retirement living.
Chase Buchanan pension specialists often consult with clients who have lucrative pension funds, which haven’t been leveraged to their full capacity. These assets, therefore, show diminishing values, which can be reversed with an investment plan offering more positive results.
Decisions around pension investments should always be made with the benefit of experienced advice to ensure these align with your anticipated retirement age, plans, and budgets.
Seek International Financial Advice
Wealth management is a multi-faceted area of professional skill.
Expats living overseas, with assets or properties in different nations, and potentially with wealth held across borders, should always look to implement a bespoke strategy to ensure they are maximising their wealth, minimising obligations, and offsetting inflation risks for the long-term.
Multiple threats can arise over time. Having an eye to future regulatory changes or taxation regimes is just one benefit of having financial advice on hand to defend the value of your assets.
That might mean separating asset holdings, taking out liability insurances, creating separate legal entities to manage your wealth, or restructuring your portfolio in ways that create more attractive returns without exposing you to additional costs or taxes.
Overseas legislation is often markedly different from that in the UK, impacting the breadth of financial planning choices and often meaning you have a range of options available to choose from.
Chase Buchanan consults with UK nationals living abroad and global expats who require dedicated support to ensure that issues such as taxation, inflation, low investment returns, and lack of retirement planning cannot damage the value of their finances. We look to implement contingency plans to ensure that our clients’ future is always safely provided for.
To schedule a portfolio review or consider options available to safeguard your wealth, get in touch with your nearest Chase Buchanan office to arrange a private consultation.