For many expats time spent working in Asia is a golden opportunity to benefit from generous salary packages, a lower cost of living and potential tax advantages. The happy confluence of these different factors means that many people end their stint in the East significantly better off and more financially secure than when they arrived.
If you want to make the most of your increased disposable income to set yourself up financially for life, we have come up with five common mistakes to avoid. These are based on the vast experience of our team of financial consultants who, between them, have helped thousands of expats to harness the potential offered during their time in Asia.
- Investing in the wrong products
There are many factors to weigh up when choosing investments products. These will depend on your investment time frame, your tolerance to risk, where you live, where your assets are held and where you pay tax. As a general rule, globally diversified investment products which are managed by strictly regulated companies operating with absolute transparency are the best choice. It’s important that the products you invest in are flexible and portable to fit in with your transient lifestyle. It really is worth taking professional advice on this as mistakes can be very costly.
- Speculating on currency
Currency markets are extremely volatile and currency movements very difficult to predict, even for professional forex traders. Speculating on currency is a risky exercise akin to gambling and not the best way to use your funds to secure your financial future.
- Impulse buying a property
Property is certainly an asset worth considering as part of a diversified and well balanced portfolio and over the long term can often prove to be a sound investment. BUT… property investment decisions need to come from the head and not the heart. That beachside apartment in Hua Hin may be very tempting but have you considered the implications and risks involved? If you relocate back to Europe or the US how practical an asset would it be or how quickly would you be able to sell it? Shiny new beachside developments can date quickly and be superceded by even shinier new complexes with better facilities and more competitive prices. If you want to add property to your portfolio do your research and be diligent in weighing up the pros and cons. We provide expert advice on property investment.
- Maintaining a home country bias for your investments
The ‘better the devil you know’ philosophy is deeply entrenched in many of us and is the reason why many expats tend to maintain investments back home and keep cash reserves in their home currency. Often this is not the best policy and it means missing out on the most tax efficient savings vehicles and/or losing money on currency transfers. For flexibility and convenience multi-currency offshore accounts are hard to beat and it might be worth you looking into this as an option. It’s certainly a practical choice if you have incomes and expenditure in different currencies. For example you may get paid in Hong Kong dollars or Thai baht but need to pay a UK mortgage in sterling and university fees in US dollars.
- Continuing to use your financial adviser back home
Cross-border financial planning requires specialist knowledge and experience which your adviser back home might not have. Familiarity with tax regimes and regulations which relate to your adopted country is important, as is an understanding of the common problems experienced by expats. It is far better to seek for advisers from your adopted country who are qualified with a transparent approach.
Here at Infinity we have a wealth of experience in advising expats from all over the globe living in Asia. Why not give us a call and find out how we can help you maximise the opportunity you have to build a healthy nest egg during your time here?
A leading provider of expat financial services and wealth management services across Asia.