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Eight Expat Investment or Financial Planning Considerations

Its natural to experience culture shock as an expat but the real shock will come when you consider just how complicated proper investment or financial planning becomes once you expatriate from your home country as the following are some of the key areas you will need to have a plan for and likely consult with knowledgeable experts about:

• Exchange Rate or Remittance Planning. If your income is largely fixed and denominated in a currency different from the currency of the country you are an expatriate in, you will need to have a plan for dealing with exchange rate fluctuations as well as the transactional cost of remitting your money to you. In the worst case scenario where the exchange rate makes a big and sustained movement not in your favor, you may have to plan on making major cut backs on living expenses or even return home.
• Inflation Planning. Chances are, your home country has low inflation as well as low interest rates, but emerging markets like Thailand tend to have much higher rates of inflation that your income or investment returns will need to keep pace with while keeping risk in mind as high returns can often mean higher risk of losses.
• Emergency Planning. As an expat, you need to tie up cash in a much bigger emergency cash fund than you would otherwise need to back home. This emergency cash fund should be large enough to cover things like medical emergencies where cash may need to be paid upfront or to cover repatriation to your home country should you need to return home. You also need to keep in mind and plan for the likelihood that various social welfare entitlements like unemployment compensation or disability from your home country probably won't cover you while living abroad and you may even need to reestablish residency back home in order to qualify.
• Tax Planning. If you are an expat from certain countries like the United States where there is worldwide taxation or maintain a residence in your home country, you could face double taxation (unless there is a tax treaty in place) - meaning you need to consult with a tax expert to find out what taxes you and your investments could be liable for as investing in various offshore investments marketed to expats as a way to lower taxes may actually not make sense.
• Education Planning. If you have children, you will not only need to have a plan for how to pay for their university education, you will also need to have a plan for how to pay for their international school fees up until they are ready for university. If your employer is currently footing the bill for most international school fees, consider yourself lucky, but you better have a backup plan in the event you don't always have an employer willing to do so in the future.
• Health Care Planning. The older you get, the harder and more expensive it will be to get good expat health insurance coverage while your home country's retirement health care scheme will likely not cover you while abroad - meaning you may need to plan on returning home after a certain age or if your health deteriorates to a certain level.
• Retirement Planning. If you are an expat working abroad, you might be paying into your adopted country's government sponsored retirement program and still be eligible for a pension back home if there is an appropriate tax treaty. If not, you will need to plan on saving and investing a considerable amount of extra money for retirement.
• Estate Planning. No-one likes to talk about the inevitable but planning for the inevitable becomes much more complicated if you have assets or family members who need to be provided for both in your adopted country and back home. If your financial and family situation is complicated, you better find a lawyer or lawyers who are experts in estate planning back home and where ever you currently reside. At the very least, make sure you have a written will and appropriate power of attorney documents kept in a safe place.
Don Freeman is president of Freeman Capital Management, an independent US Registered Investment Advisor. He has over 20 years experience and provides personal financial planning and wealth management to expatriates living in Phuket. Specializing in UK and US pension transfers. Call 089-970-5795 or email: [email protected]

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Eight Expat Investment or Financial Planning Considerations