A Comprehensive Guide to Expat Savings: Maximizing Your Finances Abroad

Unlock the potential of your expat savings with our comprehensive guide. Delve into key strategies that help you navigate through international banking, investment opportunities, and the intricacies of insurance while living abroad. Your journey towards successful expat savings starts here.

Key Takeaways

  • This blog emphasizes the importance of early planning for expat savings. As soon as you decide to live abroad, your financial planning journey should begin.
  • Diversify your investments to boost your expat savings. Options such as real estate,  mutual funds, ETFs, and offshore investments can grow your savings significantly.
  • Expat financial planning & insurance plays a critical role in protecting and growing your expat savings.

Table of Contents

Introduction: Understanding the Value of Expat Savings

Expat savings can make or break your overseas living experience. This guide intends to highlight the importance of financial planning for expats and provide actionable strategies to maximise your wealth while living abroad.

Expat savings people putting their money in a piggy bank

The Importance of Expat Savings

Understanding why expat savings are critical is the first step towards successful financial planning. Dealing with foreign currency, varied living costs, and different tax laws can be challenging. Having a robust savings plan can help secure your financial future.

Early Planning for Expat Savings

Your journey towards amassing significant expat savings should start as soon as you decide to live abroad. From trying to clear your debts to evaluating your new location’s living costs, these initial steps form the core of your financial planning.

Wise Bank (Formely Transferwise) with their debit cars

Choosing International Banking for Expat Savings

Managing your finances across borders can be a daunting task. International banking, however, provides an effective way to augment your expat savings. Let’s explore the various options and how they could cater to your unique financial needs.

There are three major categories of banks to consider: Global banks, digital banks, and local banks.

Global Banks

Banks like HSBC and Citibank operate internationally and can help you manage your finances smoothly across borders. Keep in mind that when using big mega banks, you are just a “very small fish in a very big pond”. You might not always get the personalised service you’re promised due to their vast customer base. Moreover, their charges may not always be favourable.

Digital Banks

With the rise of technology, digital banks like Wise (Previously Trasferwise) or Currenxie have grown popular amongst the savvy expat community.

Wise is one of the fastest-growing online banks, offering some of the cheapest rates and “speed of transfer available”. Banking forms a crucial part of your financial planning and day-to-day living.

Currenxie is also a very good option, but from our experience and the feedback of our clients, Wise always comes out on top.

The only downside we have seen with Wise is when you are transferring larger amounts of money, $15,000 and upwards. Larger transactions can take a few hours or a day, whilst $2,000 transfers take less than one minute to a bank you send to regularly.

If you would like to set up an account with Wise, which we strongly recommend, then click this link, and as a reward, Wise will allow you to transfer the first $550 completely free.

Local Banks

Depending on your destination, a local bank will offer significant benefits and better integration with the local economy.

I have been living in the Far East for twenty years, and local banking is naturally something you deal with on a day-to-day basis. Banking here is at the height of modernisation, with banking apps paying for nearly every item you buy down to a 10-cent bottle of water by scanning a QR code.

This has been adopted for over a decade whilst the West is lagging.

However, your experience of banking locally quickly changes once you have to visit your bank to perform a simple transaction that takes 30 seconds back home. This can leave you signing hundreds of documents and taking hours out of your day.

Investment Opportunities for Expats: Boosting Your Expat Savings

Investments can be an excellent way to grow your expat savings. Here are some options to consider:

Real Estate

Real estate is an excellent way to build your overall wealth whilst receiving an income in the process. However, it is not the complete solution, in our opinion.

When living overseas, you will be approached by many property brokers in person, online or over social media. Their main focus will be selling properties in the country where you are living but also in various other locations around the world.

The UK is always a popular choice for salespeople, as are various locations across Asia, such as Thailand and Malaysia and numerous countries in Europe.

Unless you are planning to live in your property, my advice would not be to be sucked into investing where you are living unless you feel very confident about the local market and your country of residence has a long good history of looking after foreign investors.

This rule also applies to the agency and agent you intend to use. Hampton Bridge believes that of all the destinations on offer, Berlin offers the most attractive proposition for investors.

You can read more here about our thoughts. You must check all of your options and speak to various agencies to get a good feel for what you think is right for you.

Stocks & Shares

Platforms like Interactive Brokers or Charles Schwab for US Nationals offer access to global stock markets.

We strongly believe that investing in individual stocks should be left to the professionals, and we strenuously advise amateur investors to avoid this option.

Mutual Funds and ETFs

Mutual Funds and ETFs (Exchange Traded Funds) are great for diversifying your portfolio, and they can be accessed through international or local investment companies and provide expats with a far safer entry point into the stock market.

You can read more about Mutual Funds or ETFs here.

Mutual funds and ETFs are investment vehicles that pool together hundreds of stocks and shares under one investment structure.

ETFs are passive investments that track a stock market index, such as the S&P 500, whilst Mutual Funds attempt to outperform an index.

All company, government and private pensions will be largely focused on ETFs and Mutual funds, so as long as you pick the right options and the correct advice company, your money should be in a safe place that grows to a good level.

Everybody should have a reasonably sized portion of their investment portfolio allocated to this area of finance.

Please read the next section to learn how to invest in mutual funds and ETFs.

Offshore family financial planning.

Offshore Investment Advisors

Offshore Financial Advisors fulfil the majority of investment given when living overseas.

There are a multitude of companies to choose from, from multi-office regional advisors to individual solo independent financial advisors. Most expats choose to go with these companies as they are more catered to dealing with families and individuals on a personal level, understanding their specific needs and being able to tailor solutions accordingly.

Companies range from offering good, stable, independent advice with safety and growth at heart, which far outstrips the advice that banks can offer, to companies that employ salespeople to sell off-the-shelf investments.

Good offshore investment advice will provide you with a gateway to invest in assets such as ETFs and mutual funds and a whole range of financial, insurance and real estate investments.

After you have found a good advisor and advice company, you should be presented with something that fits the needs of you and your family to help you protect and grow your money in a safe jurisdiction through a reputable company, offering you the opportunity to take advantage of using your offshore status by accessing tax-free growth with added protection and security.

It’s crucial to consider different companies and invest in products you understand.

Please read this article to fully understand what your definitive options are.

Global Investment Houses

Offshore investing offers attractive tax advantages and a wide range of investment options, making it appealing to expats. To navigate against the potential pitfalls, you need to engage the services of a professional.

If we first look at the big investment houses such as JP Morgan, Fidelity, and HSBC, then your money, on the whole, should be safely invested with them. Banks of this nature invest in their own products, which they safeguard, but unfortunately, with safety, you will often find a lack of growth, which is a crucial element of any investment.

Don’t just assume that because these investment companies are household names, they are the best option for you.

Expat Insurance: A Safety Net for Your Expat Savings

Choosing the right insurance is a crucial part of expat financial planning.

We advise clients to research local forums on Facebook where they are living and get a broad view of what people are saying.

EXPAT HEALTH INSURANCE IS EXPENSIVE, especially if you are a family of four, and the older you get, the costs can spiral out of control.

Always negotiate a good healthcare package for your family into your employment contract if possible. If you are retired, hired locally or have to look after yourself, we advise you to follow some simple rules.

Before purchasing a policy, find a good local clinic/surgery close to where you live. Speak to the doctor and find out what services they offer, do they speak good English, and whether the surgery operates in a clean, professional, friendly manner.

Most of the time, you need medical attention for minor things like rabies or typhoid jab or some stitches for one of your children falling off their bicycle or developing a rash from the heat or something they have eaten.

You do not need medical insurance for these kinds of procedures. Often, you can drive to the clinic in five minutes and be finished and back home in thirty minutes for $20.

Once you have established a local clinic, start looking for a policy that suits your family’s needs.

You may find that even the most cost-effective policy will cover the above medical procedures, but your loading/excess charge on each claim, which can be a time and patience testing process, may be as much as $100-$250. Even if you are insured for these services, it is often far quicker and cheaper to use and pay for a local clinic to look after you.

Medical insurance for many people is the “what if” insurance. Car crashes, serious illness, repatriation, and overnight care. These are the types of services you will need comprehensive coverage for.

A couple behind a laptop planning their future

Proactive retirement and children’s education planning will secure your financial future.

With the likelihood of dropping out of your home country’s pension scheme while living abroad, it’s vital to explore personal options for retirement savings. Some measures can be taken, depending on which nationality you are, to self-electively keep up your payments. We strongly advise you to do this.

On the whole, government pension schemes fall well short of providing you with the lifestyle that you desire in your later years, so you must look for personal options as well.

Expats should also plan for their children’s education. In many countries, tuition fees may apply to nationals who’ve lived abroad for some time, and also, many countries are now making fees mandatory if this hasn’t happened already. Hampton Bridge recommends starting education planning and retirement planning as early as possible. Furthermore, you may wish to send your child to an international university, which may carry heavy fees.

In conclusion, building a robust expat savings plan involves careful consideration and strategic decision-making in areas like banking, insurance, savings, and investments. With the right choices, you can secure your financial future and enjoy your expat experience to the fullest.

Frequently Asked Questions (FAQs)

Why are expat savings critical?

Expat savings are critical because they can secure your financial future while living abroad. They help you deal with the challenges of foreign currency, varied living costs, and different tax laws in foreign countries.

When should I start planning for expat savings?

Your journey towards amassing significant expat savings should begin as soon as you decide to live abroad. This early planning involves clearing your debts and evaluating your new location’s living costs, forming the core of your financial planning.

What banking options are available for expats for managing their savings?

As an expat, you have three main banking options: Global banks like HSBC and Citibank, digital banks like Wise (Previously Transferwise) or Currenxie, and local banks. Each has its benefits and downsides, and your choice should depend on your unique financial needs.

What investment opportunities can help boost expat savings?

Several investment opportunities can boost your expat savings. These include real estate investments, stock market investments through platforms like Interactive Brokers or Charles Schwab, Mutual Funds and ETFs, and offshore investing which offers tax advantages and a wide range of investment options.

How important is expat insurance in financial planning and how to choose the right one?

Expat insurance is a crucial part of financial planning as it acts as a safety net for your savings. Choosing the right insurance involves researching local healthcare facilities and identifying a policy that suits your and your family’s needs. Consider factors like coverage, cost, and whether the insurer covers procedures relevant to your lifestyle.

Talk to one of our advisors now

Whether you are just starting out with your savings or you are reaching your retirement, we have the tools and experience to help you become successful.