FINANCE & INVESTING
By Don Freeman
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
• 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
• 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
• 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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