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What products and rates available for Expats to acheive best income on investments.
Best Income for Expats - Update Blacktower Financial Management (International) Limited
Here is a brief resume of what is exactly available in the market place for investors and the rates you can expect to receive. Getting the best income possible from your investments is crucial in the current economic climate.
Deposit Accounts – If you are lucky enough to be an existing customer or have an address in the UK you can have a bank account that offers interest. Currently the best providers are Holmesdale Building Society which is offering a whopping 2.00% on between £10 and £50,000. This is far away out in front of all the providers but take note it is a VARIABLE rate so they could reduce the interest at any time, this is for existing customers only so unless you already have an account with them you cannot get this rate. The best of the rest now is the Loughborough Building Society offering 1.3% on up to £50,000 – again this is a variable rate. If you want a fixed return and can forgo access National Savings Guaranteed Growth Bond is paying 1.95% for 3 years. The providers are typically similar and can be compared to suit your needs, I got this information from Comparethemarket .com.
If you are limited to a Spanish provider now you will not be even able to get 1% now unless you are willing to tie your money up for 18 months. I saw one client recently who has just had their interest reduced after the 18-month period at 0.5% to 0.01%. Yes 0.01% which means you will get the princely sum of €1 interest after one year if you invest €10,000.
In the current climate deposit accounts, should be used for emergency money only with the rates offered often do not even match inflation. One way to combat inflation is to put money away for some sort of term. I would be wary of fixing for a long term too as there is a possibility that interest rates could soon rise and you might find yourself locked into a poor rate.
Spanish Compliant Bonds – Rates vary and depend on the size of investment. Prudential offer a Cautious Fund that is currently paying growth rates of 4.8% for Investments in Euros and 5.5% for investments in Sterling. This type of investment is great for people wanting medium to long term income or growth. 5% of capital is allowed to be withdrawn each year penalty free. These offer very good tax benefits but are only available if you are a Spanish Fiscal resident.
Shares – These are a bit of a gamble but do offer an attractive longer term approach. Dividends are paid to give you income (which in the FTSE 100 for example can get you an average of 2.5%). Growth on your investment can also be provided by the performance of the company of the share you invest in. If you are not an expert, it is often best to use a Fund that provides a basket of shares and they have experts to do the picking for you.
At Blacktower we have partnered up with Quilter Cheviot in London to offer the Nexus Dynamic Portfolio. 2016 saw growth on this fund of over 14% and 2017 saw growth over 10%. There are other investment vehicles such as Annuities, Structured notes, unit-linked or unit trust funds but then we are going up the risk ladder and usually a fully Qualified Financial Adviser will be involved. Remember everything is ok in moderation and putting all your eggs in one basket can lead to trouble.
In today’s financial climate it is essential you do everything you can to make sure your money is safe and secure and what you want to transpire in the future has the best chance of happening.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity. Blacktower Financial Management (International) Limited is licensed by the Gibraltar Financial Services Commission. Licence 00805B. Blacktower Financial Management Limited is authorised and regulated by the Financial Conduct Authority in the UK.
Financial Advice Issues for Expats in Spain
I have been a Qualified Financial Adviser for almost 35 years now. 25 years in the UK for major institutions such as Natwest, RBS and Royal London. I have been in Spain giving expats financial advice now for 10 years and it is quite remarkable the different approaches as well as advice that is required for an expat now living in Spain. Blacktower is a company that has specialised in providing the best solutions for its clients living outside the UK for 30 years also.
The currency issue is always high on the agenda and a discussion for the long term future has to be taken onto account. Questions like What will happen if one partner dies? Will the other remain in Spain? What about other family members? What Inheritance tax provisions do you have in place? The list goes on and on.
Existing portfolio’s and investments that were the mainstay of portfolios in the UK may now be obsolete. An example of this is quite often tax efficient products in the UK like ISA’s and previously held TESSA’s PEP’s actually have low growth rates and provide no tax advantage to a Spanish fiscal resident.
Existing Pension holdings either paid by the state or private pensions built up through working lifetimes are topics that have to be covered. Many expats have lots of small pensions from many ex employers and can be confused by the communications and administration in dealing with them. At Blacktower we specialise in advising on how to consolidate and bring all these pensions together in one place.
Bank accounts and investments in Spain always bring up lots of questions too. Quite often the small print associated with financial products in Spain is in Spanish this can make it very difficult even if you have a good grasp of the language. Understanding Jargon in English is sometime difficult enough. I provide clear easy to understand letters and documents in English so that you fully understand any terms and conditions before making a decision.
Advice on tax efficiency is just as important and offering good returns. There are products available exclusively for Spanish expats that can provide invaluable benefits. Having a good base knowledge of the tax implications both now and in the future is an essential ingredient to making a sound decision.
I will complete a thorough factfind, ask you the right questions, establish your individual needs, attitude to risk and capacity for loss and desired returns before providing you with a full written report of advice and my recommendations in plain English. You will then have time to read and consider all the information before contacting me with how you wish to proceed.
Click for more information about Keith Littlewood.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
The Blacktower group of companies operates across multiple jurisdictions, each authorized under its respective regulatory license. For further information, please refer to the relevant regulatory page.
