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Paul Gambles
Co-founder of MBMG Group


Update June 25, 2016

EU Referendum: Spin emerges as the only winner

You can sway a thousand men by appealing to their prejudices quicker than you can convince one man by logic.

– Robert A. Heinlein, If This Goes On, Chapter 10 (p. 426)

If there’s one conclusion that can be drawn from the build-up to the UK’s referendum on its membership of the European Union, it’s that if you’re not British, you should feel quite lucky right now.

Frankly, the whole charade is getting tiresome. That’s not because I don’t find the topic of the benefits and the downfalls of the EU interesting; nor is it because I don’t have a view on the way forward for a union which incorporates some of the world’s largest economies. The issue I have with it all is that, in the run-up to the referendum, political rhetoric has long since diverted itself away from the most important tools of my trade: fact and analysis.

On one side you have former Mayor of London Boris Johnson and former Education Secretary and current Lord Chancellor Michael Gove flag-waving and tub-thumping about non-issues. On their soap boxes they talk of putting money saved by exiting the EU into the health service. Yet Johnson’s oft-quoted figure of GBP350m is plainly inaccurate and even the more accurate figures don’t take into account the amount channelled back into the UK through social and development projects.1 Another example is the clamour to veto Turkey’s membership of the EU, which conveniently ignores the facts that a) Turkey’s membership is not even on the table until certain human rights issues have been resolved; and b) membership can only be obtained by unanimous agreement of all EU members – if they think that either Cyprus or Germany will allow that, it demonstrates a total lack of understanding of European politics.

Chart 1 - Source: Capital Economics for Woodford Investments.

The other side fairs no better. Prime Minister David Cameron has offered anyone who will listen his four pillars on which EU reform should be based.2 They are competitiveness (which talk about the size and influence of the Single Market but doesn’t mention its bureaucracy and inefficiencies); a multi-currency Single Market (but the euro aggregates national interests of Eurozone members, whilst going against the interests of the non-euro members); sovereignty (he wants the UK to stay out of a closer political union, yet the German government wants a more federal union); and migration (forget jingoism, the British economy has benefited greatly from immigration for centuries, but through the EU it is done randomly, rather than through demand for certain skills).

Gambles’ guesses on the effects of BR-In and (orderly) BR-Out

These graphs are merely estimates to provide an example of what may happen in a given scenario.

The result of all this politicking is that the answer to the big question what would happen to the UK economy if it left the EU?  is, “It depends who you believe.” Chart 1 shows how varied forecasts are, depending on which side of the fence they land.

The reality of course is that we don’t really know. That’s not only because of newspaper stories as twisted as the bananas they purport to defend3 but also, as I said at the beginning of the year,4 we’re in unusual times; as it is impossible to predict what shape the global economy will be in over the coming months, never mind years and decades.

With that in mind, I decided to compare in which direction I think the FTSE, the pound, interest rates and property prices could in both In and Out scenarios (see graphs). On the whole, I see an Out vote having an immediate negative effect on prices, before levelling out around 12 months later.

My own concern about the UK remaining in the EU is that, although 80% of European legislation5 is drafted through a procedure as, if not more, democratic than Westminster, the big policy decisions – such as the euro – are made across the negotiation table between the heads of government. The natural consequence of that is that France, Germany and UK have tended to be able to call the shots because they have the largest populations and economies. However, that changed dramatically when Angela Merkel agreed that Germany could underwrite the Greek euro crisis in return for being able to dictate EuroZone members’ sovereign economic policy – for Greece, think Esau, for bailout think pottage. Non-membership of the Euro debacle excludes Britain from any significant voice in EU economic policy making – something akin to Prussia’s strength in the days of the  Zollverein, which led to German unification and ultimately World War I.

A Pew Research Centre survey published in early June suggests that citizens of other EU countries are unhappy with the Union as well. It reports that EU favorability is down in five of the six nations surveyed in both 2015 and 2016. France is down 17% and Spain 16%.

Maybe if the UK were to leave the EU, momentum would build to the point where it would disintegrate, allowing modern equivalents of Monet and Schuman to create a new platform on which countries can co-operate rather than dominate. One thing is for sure, whatever the result of the referendum, UK politicians need to take a long, hard look at their conduct during this campaign and evaluate how democratic their own political system is.







Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

MBMG Group is an advisory firm that assists expatriates and locals within the South East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning and Property Solutions. For more information: Tel: +66 2665 2536; e-mail: [email protected]; Linkedin: MBMG Group; Twitter: @MBMGIntl; Facebook: /MBMGGroup

Update June 18, 2016

After the pensions revolution: making sense of QROPS

It may not necessarily capture the imagination like a George Osborne speech (!?!) but ensuring you’re getting the best out of your UK pension has become more difficult to gauge than ever.

In or out? If out, then what? No, I’m not talking about the UK’s referendum on EU membership but the Brave New World of transferring pensions overseas now the changes to the UK system are a reality.

Anyone who has ever worked in the UK but is no longer resident will likely be rolling their eyes at the very mention of the term QROPS.  There are a number of possible reasons for this: including the barrage of internet advertisements you’re exposed to every day and the uncertainty of what’s best for you – stay in the UK scheme or transfer it out.

In case all of that isn’t tricky enough, the UK government has, over the last couple of years, decided to revamp the entire UK pension system. The main thrust behind this was apparently HM Treasury’s desire to offer Freedom and choice in pensions.1 That translates as being the opportunity for those already receiving income from an annuity to agree with their provider to assign that income to a third party, in exchange for a lump sum or an alternative retirement product. Obviously the changes had nothing whatsoever to do with the government’s thirst to cash in a load of tax money (ahem!). Like many other governments, it mistakenly thinks that will somehow make a huge difference to the UK economy.2

From an expat point-of-view, one thing this change has done is muddy the waters regarding the advantages of QROPS schemes, which were previously the only way to move pension money to a different retirement product.

For example, under the new rules, pension schemes must prohibit members from accessing their savings before the age of 55, unless the member is retiring early due to ill health. Consequently, HMRC has delisted several schemes in the last couple of years because they allowed expats to access their funds before reaching 55.3 Australian funds were hit particularly hard; where the only schemes available now are a limited number of superannuation funds, which have been adjusted to meet UK requirements. These look increasingly unsuitable even if you satisfy the criteria of being an Australian resident whose transfer is within the annual limit of AUD 180,000 (c. GBP 91,640) up to an overall maximum amount of AUD 540,000 (c. GBP 275,910).4

In spite of the obstacles brought by the changes to the UK system, many of the upsides of QROPS remain; particularly the fact that you’re moving your fund out of the UK government’s jurisdiction and thus no longer at the mercy of any new government-imposed freedoms. There is also seemingly a wide choice of destinations: the HMRC currently approves of QROPS in 41 different countries, meaning you can choose depending on your preference (lower tax, flexibility, etc.)

And that’s the crux of the matter. There is no one place which is the best to transfer your pension money into a QROPS – each has its strengths and weaknesses. For example, in Mauritius tax is just 3% but there is no flexibility regarding when you can drawdown your fund and there are currently only three QROPS based there, of which only one seems particularly active.5

Similarly, with a scheme based in Gibraltar you wouldn’t retain absolute flexibility over when and how you drawdown your pension pot but, on the bright side, tax there would cost you just 2.5% of your withdrawals (other than your tax-free 25% lump sum entitlement). In fact this tax has only come in the last four years so that HMRC would once again allow transfers to the Rock – this privilege had been withdrawn because Gibraltar’s tax rate was previously 0% for pension transfers, something which the UK authorities do not allow.

The same issue has resulted in the delisting of all QROPS in Guernsey, where income tax is zero for non-residents.6 For those who already have a Guernsey-based QROPS, however, there are workarounds; be it moving the fund to a different jurisdiction or to a local fund which provides the same flexibility as a QROPS at 0% tax. This appears to be UK pension nirvana which is why the door has been bolted and no new transfers in are accepted.

If you haven’t moved your fund to Guernsey and prefer flexibility over tax, Malta allows flexible drawdowns. Added to that, its status as an EU member state means (at least for the time being) that HMRC cannot stop the provision of QROPS schemes unilaterally, even if Maltese authorities bring the tax rate down. The issue though is that tax in the island state right now is relatively high at a maximum of 35%,7 unless your country of residence has a double taxation agreement (DTA) with Malta, which reduces the tax burden to something much more bearable. Guess what? Thailand doesn’t yet have one.

For many, but not all, UK pension holders, QROPS can still bring great advantages but you need to ensure the jurisdiction to which you transfer your pension money meets your own priorities and goals. That’s why it’s best to ask a licensed, objective, fee-based, independent financial adviser to help you come up with a plan for your retirement fund that suits you. After all, it’s your money!









Update June 11, 2016

Reasonably-priced university can still be possible

There could still be a way of putting your children through university which does not involve accumulating huge debts or creating gaping holes in your bank balance.

Despite governments of the world’s biggest economies concentrating on the size of their own public debt, the massive amount of private debt is actually the real issue.1

Slight progress has been made on that front – for example, household debt as a percentage of disposable income has decreased to some extent in four of the G7 countries,2 compared with levels at the eve of the global financial crisis (see chart 1).

Chart 1 - Source: OECD.

However, one area which is still a cause of growing concern is student debt. In the US, for example, student loan debt is the only form of consumer debt that has grown since 2008. Balances of student loans have eclipsed both vehicle loans and credit cards, making student loan debt the largest form of consumer debt other than mortgages.3

The situation is even worse in England. A recent report found that, according to multiple estimates, the average English student faces the highest levels of graduate debt of the 8 Anglophone countries surveyed (England, Wales, Northern Ireland, Scotland, US, Canada, Australia and New Zealand).4 The report suggests that English students graduate last year with higher average levels of debt (around US$64,000) than even the average graduate of a private for-profit US university (US$32,600),5 while Canada-based students left university in 2015 owing an average of just over US$21,700.

Since 1995, 14 of the OECD’s 25 member countries have implemented reforms on higher education tuition fees – most of which have led to an increase in the average level of these fees.6 The trickle-down effect of this is that it is increasingly difficult to send our children to higher education, without taking out a loan or using a substantial chunk of our savings.

All-in-all it’s an expensive business, yet remains popular: 17% of students who attend American colleges ranked in the world top 200 aren’t from the US.7 It has to be worth questioning whether these institutions provide value for money, given the debts accumulated and the broad nature of college courses: in the first year students tend to take courses from a variety of fields and only declare a major at the end of the first year or even during the second year.8

One way to avoid such a large financial commitment is to join the US military, which offers free college education.9 Otherwise you could look beyond borders and consider universities in a whole range of countries. Your kids don’t have to study in your local or home country: there is a wide range of cheaper options where courses are taught in English or another non-local language and the level of education is equal, if not better.

Universities in Ireland don’t generally charge fees to EU passport holders; nor do universities in Denmark or Sweden, who offer a large number of courses taught in English. The Netherlands was the pioneer of the non-Anglophone countries to teach courses entirely in English and fees start at US$2,230 a year, whilst German institutions (in all except two regions) charge between just US$170 and US$280 a year.10

On a cautionary note, there’s a little more to it than that. The figures I’ve used are the cheapest possible and to get a truer idea of what the fees will really cost, we’d need to delve further into factors such as type of course (medicine is often one of the most expensive undergraduate courses11), the university and its location. The last of these is important as there can be huge differences: institutions in Bavaria and Lower Saxony often charge between 4 and 6 times more than elsewhere in Germany; and whilst Brussels-based courses charge an already reasonable minimum of US$415, their Flemish equivalents’ lowest rate is just one US Dollar!

Possibly the largest discrepancy though, is in the UK. In England the legal maximum a university can charge an EU/EEA citizen for an undergraduate course is GBP9,000 (c. US$13,040) – and all but a handful do so.12 In Scotland the standard fee is GBP1,820 (c. US$2,640), which could be paid for by the Student Awards Agency for Scotland if your daughter or son qualifies for Scottish or other EU nationality and residency… unless they are categorised as an English resident, in which case you may have to pay GBP9,000 (c. US$13,040).13 Residency for this purpose is defined as “ordinarily resident in the EU, the EU overseas territories, elsewhere in the EEA or Switzerland for the three years immediately before the first day of the first academic year of the course” and nationality of an EU country means either the student or a family member.14

If students don’t meet the residency requirements, they can still qualify for funding if they were born in and have spent the greater part of their lives in the place they declare as home; or they (or a family member) are returning from temporary employment or study outside of that place. To get the full fee funding, you or your son/daughter may have to have lived previously in Scotland; otherwise you could qualify for the standard Scotland rate.

To qualify for local fees for universities in other EU/EEA nations15, the student must usually be a national of one of those countries.16 However, some European countries also allow the same rates to apply to someone who has lived in the EU for a certain period of time before applying for the study programme or holds a permanent residence permit in any EU country.

If your daughter/son doesn’t meet the EU/EEA criteria, fees are generally much higher in European universities; although there are exceptions in France and Germany and costs remain relatively low in Belgium (especially Flanders) and you may qualify for some kind of scholarship or financial assistance.

Unfortunately, it’s not purely about tuition fees: we also have to factor in the cost of living in general. Adding together an average spend on food, rent for a 1-bedroom apartment and a monthly public transport pass, shows us there’s quite a difference depending on where the university is located (see table).

Table - Sources:,,,

The actual figures will of course differ according to individual spending patterns, but the table gives us some indication as to how much you’d need to fund your child through an undergraduate course. Greece comes out as a clear winner with many courses taught in English,17 zero fees for EU and just US$1,115 for non-EU citizens,18 plus average monthly living costs of around US$725.19

The numbers mentioned are just a rough idea of the potential costs involved. Having said that, I think they open the eyes to the possibilities of a value-for-money university education outside Thailand or your ‘home’ country.

If your children aren’t yet at university age yet, thinking about fees can be a useful reminder to put together a financial plan for the last years of their education. We all know it can be very costly and it’s vital to have some money set aside. Those student days will come sooner than you realise!






5 idem

6 OECD (2011) How much do tertiary students pay and what public subsidies do they receive? p. 257, OECD, Paris.





11 ibid




15 EEA = EU countries, plus Iceland, Liechtenstein & Norway





Update June 7, 2016

Successful investment needs a clear goal


So you’re thinking of putting some money into an investment plan? Why?

No, seriously, why?

That’s a key question which, with the plethora of information available to us today, is often forgotten. It’s all too easy to check the internet, download the app, watch the 24-hour business TV channels and become engrossed in Wall Street’s 1-point rise between 2pm and 2.15pm today; but does it all really matter?

The point is that, in my experience, investment isn’t really just about out-performing the markets. Clients tend to have specific reasons to invest their money – whether they’re aware of it or not.

That’s why, before even writing a proposal, I ask clients specific questions about their goals and priorities. I find this approach has several advantages.

Firstly, it gives me an idea of the level of risk clients are comfortable with. Some people are looking to make a relatively high return on a small portion of the money they have in the bank; whilst others wish to use a large portion of their savings to retire comfortably.

This goal-oriented approach also gives both the clients and I a clearer picture of what they actually wish to achieve. It could be to have enough money to fund a child’s education or to put to work an amount of money which is lying dormant in a low-interest bank account.

With that picture accurately painted, we can get to work looking at the type of investments which are best suited to an investor’s aims. As much as analysts, forecasters or the shoe-shiner on the street corner may like to generalise about good and  bad investments, it really depends on the objective. Knowing this enables me to make recommendations to maximise chances of achieving the required value. After all, there’s no point in looking at high-risk short-term gain if it’s for a retirement fund you wish to cash out in 10 years’ time.

Another advantage is that it helps investors avoid making rash – and possibly disastrous – decisions. That’s because if you have the bigger picture in mind, you don’t necessarily react to the extreme situations which can crop. For example, imagine people who, back in July 2007, invested in a portfolio of funds based purely on the S&P 500. Without a clear plan in mind, they may have been tempted to sell up as the market crashed in late 2008 (see chart 1). They may have been lucky enough to have made that decision early; yet they could have easily waited a bit longer – anticipating a further drop – and actually sold when the market bottomed out. At the most extreme points, that would have translated into a 55% loss in portfolio value.

Chart 1

However, had those people established that their investment was a 10-year plan, they would have been more likely to stick to that and not sell near the bottom. If they had followed this path, by May 2016 – with two months to go before the ten years were up – the value of their investment would have been 33% up on their purchase price.

The opposite can also happen: whereby investors put money into a certain fund or asset class which thereafter increases in value at a strong rate. Without a clear goal, it may be tempting for the investors to keep their money in the fund, as it appears to be constantly increasing in value, only to persist as the price starts to fall.

For example, you may have seen books,1 articles2 or even CNBC’s dedicated blog, allowing you to follow every move of – and presumably invest as successfully as – Warren Buffet, the Oracle of Omaha3 and CEO of Berkshire Hathaway. Thanks to some wise investments, the company made a while ago, there have been some exceptional returns over the years – particularly in the 1960s and 1970s.4 But that doesn’t necessarily mean that it should be used as a sort of high-interest savings account. In the last twenty years, it has had moments of outperforming the S&P 500; but, crucially, has also had many periods of significantly under-performing the index (see chart 2).

Chart 2

Another example is gold, which has historically acted as an investment of refuge in uncertain times.5 Investing in the metal in May 2006 would have cost just under US$ 1,205 an ounce (see chart 3); the price rose swiftly soon after and remained there for three years, so it may have been tempting to hold onto the investment indefinitely. If investors had done that, by April 2016 their investment would have gone up a paltry 3%, thus proving that sticking to an old favourite does not necessarily bring a great deal of reward.

With all that in mind, the only real secret to successful investing is to have clear goals listed in terms of priority. It’s at that point when it’s time to look at how to achieve those goals.

Chart 3

Consequently, my idea is to help people focus on their objectives and explain how they may achieve them with complete independence and objectivity. That’s because – rather than taking commissions from fund management companies – I charge an advisory fee directly to the client. Furthermore, this ensures high-quality, competitive and cost-effective advice – after all, the better the job I do, the higher the chance of getting an ongoing fee.





4 Berkshire Hathaway


Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.
MBMG Group is an advisory firm that assists expatriates and locals within the South East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning and Property Solutions. For more information: Tel: +66 2665 2536; e-mail: [email protected]; Linkedin: MBMG Group; Twitter: @MBMGIntl; Facebook: /MBMGGroup


HEADLINES [click on headline to view story]

EU Referendum: Spin emerges as the only winner

After the pensions revolution: making sense of QROPS

Reasonably-priced university can still be possible

Successful investment needs a clear goal