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Financial planning for expats

Building a better financial future abroad

Expat life offers unique opportunities to enrich your life abroad with new experiences in different countries, but it can also present a unique set of considerations – especially in these uncertain times. 

Moving money between countries, dealing with multiple currencies, managing your finances in the home country you’ve come from and the host country in which you’re living, adds another layer of complexity.

On the other hand, most expats find themselves saving more than they did before they moved abroad. It may not be a priority right now, but at some point you may want to take advantage of the opportunities available to expats that aim to grow and protect your wealth.

Having a solid financial plan can help you unlock greater wealth potential, as well as be better able to cope with setbacks. It can also bring you closer to your long-term goals, whether that’s the trip of a lifetime, putting money aside for school or university fees, or planning for a comfortable retirement. 

Whatever your financial situation, now’s the time to make some positive changes to help maximise and shore up your finances, whatever the economic outlook.

Understand your tax situation

Understanding your tax requirements, whether that’s with the help of an independent financial advisor or by making use of HSBC’s extensive tax information, developed in partnership with EY, can play an important role in the management of your money.

There are potential tax advantages to working away from your home country, and a tax adviser can help you understand how these differ depending on your nationality, current residence, and where you may be domiciled.

There may also be potential tax-efficient savings and investments in various currencies, although any tax benefits would depend on your own particular circumstances.

Time proof your currency exchange

Keeping an eye on currency fluctuations can make a real difference to your finances, especially if you’re making investments in one currency but plan to move elsewhere in the future. Whatever your goal, it can be risky investing in one currency if your goal is in another. This is because adverse foreign exchange movements could mean the cost of that goal increases beyond the value of your investment, simply because of currency fluctuations.

If you’re planning to return home eventually for example, and are saving or investing towards a property in your home country, changes in foreign exchange rates could affect your final pot.

To limit the risk, invest in the currency of your goal. So for example, if you are saving to buy a house in Spain but live in the UK, you could invest in euros well ahead of your move to lessen the impact of any adverse currency fluctuations.

Moving around in an uncertain outlook

As an expatriate, you may plan to live somewhere for a couple of years and then return home, but life is full of surprises. Perhaps, just as you think you’re approaching the end of your posting, a new opportunity arises and instead of going home, you move to another new country. 

As you move round the world you could end up with lots of different pots of money in different countries – and different currencies. 

For expats, having a provider with worldwide accessibility who can help you reach your financial goals is more important than ever, however long you stay somewhere. It’s important to consider a financial service provider that allows you the flexibility to continue with your plans if you move to another country with a different currency, for example. Offshore banks can offer this kind of access and flexibility.

Whether you’re planning to stay abroad long-term, are looking to return home, or seeking new opportunities in a fast-changing world, it’s important to consider portability when making financial plans. 

Getting this right means no matter how many times you move, you can build towards one set of financial goals and won’t end up with pots of money scattered around the world.

Invest as you go

Whether you’re planning to retire in your new country or move back home, a common issue faced by expats is paying into a pension scheme. Our living in retirement calculator can help you work out what you might need to invest to achieve the retirement you are aiming for. You might find you’re unable to pay into a scheme in your home country, however, and you’ll want to avoid creating smaller pension pots in countries around the world.

Longer term investment plans are one option to consider, and are seen as a different way of saving for retirement. Whether you want to put money away in an investment fund or get more bespoke investment advice from a financial planner, you should be prepared to invest for at least 5 years – although you can always access your money if you need to. Keep in mind – the value of investments can fall as well as rise, and you may not get back what you invest. But generally speaking, longer term investment risk tends to reap rewards. Our retirement planning calculator and our wealth growth calculator can help you work out how much you’ll need to put away, and what you might be able to achieve with the right investments.

Saving for what matters most

If you have children, their education will be one of your biggest priorities. When moving abroad you’ll usually want to make sure their new school offers continuity in the syllabus they’ve been following. 

This will often mean looking at international schools, and if this isn’t covered in your company package, planning in advance for their school or overseas university tuition fees is vital. International education can be expensive, plus fluctuating exchange rates can affect fee payments, so you need to factor that in too. 

Plan appropriately and consider future plans and where you’ll be in the longer term. Research the costs of international education and seek advice on a long term plan to help you meet those costs. Our education planning calculator can help you factor in and plan for these costs, whatever little surprises come your way in the meantime.

Managing your savings and investments with HSBC Expat

If you’re living abroad, or you're due to move, our award-winning services for expats will help keep your money working as hard as ever. We’ve got plenty of options for managing your wealth, whether you’re a seasoned investor or a total first-timer.

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Disclaimer

HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. 

The HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, Jersey Branch and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article. 

This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for such use or reliance by you. 

Any market information shown refers to the past and should not be seen as an indication of future market performance. 

You should always consider seeking professional advice when thinking about undertaking any form of prime residential or commercial property purchase, sale or rental.

You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.

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