Expat personal financial planning

The Richest Expats in the world

Richard Colburn

This month, we would like to share with you some of the best kept secrets of personal financial planning to help expats in Thailand and the Far East make the most of their money.

A penny saved!

One of the best kept secrets in the expat world of personal financial planning is that the primary benefit of saving and investing is that expat savers or investors are simply not spending. That’s it! There are many people whose financial security and indeed all round health and quality of life, would improve enormously if they remembered this simple financial planning fact and just locked their cash in a safe and threw away the key or ‘kept it under their mattresses’. This is really the best free financial planning advice that anyone, expats or otherwise, can give or get.

Cash in the bank

Most expats that we meet do not keep their cash locked in a safe or under their mattresses but many of them do keep their paper currencies in virtual mattresses, called bank accounts. From a financial planning perspective, keeping your cash in the bank is certainly preferable to spending it but this strategy will almost certainly not meet your long financial needs as an expat.

As we mentioned in our August 06 article (‘The colour of money’) on currencies, price levels in the US in 1900 were almost the same as they had been 200 years earlier. Imagine reaching retirement age today and not having to factor unknown future ‘inflation’ into your financial planning to decide whether you could actually afford to stop working.

Those were the days!

Consumer prices in Thailand are currently rising at between 5% and 6% per year. This means that your expat savings, or salary if you are a working expat, need to grow by at least that amount just to stand still. If they do not, then the real value of your savings and income falls and will buy less when you eventually take your cash out of the safe.

Comfort in retirement

It gets worse of course if you happen to need to live off your savings. Expats retiring in Thailand today will typically require an income of around USD 25,000 per year to live in relative comfort. An expat with life savings of USD 500,000 will require a return of 5% to meet his or her living expenses. If savings are less, a greater return will be needed. This retired expat’s financial planning has a total target return of at least 10% just to survive. He or she needs 5% for living expenses and a further 5% just to make sure that the remaining savings keep up with ‘inflation’.

Cash in the bank can’t deliver this and neither can government bonds. Holding savings in cash and bonds is a strategy that provides one guarantee; the erosion of purchasing power, year on year.

Financial planning for comfort

To target returns that will provide expats with a comfortable retirement income and protect the real value of their savings means setting up financial planning that invests in asset classes that can and have consistently outperformed the relatively low returns of cash and bonds. These include equities, property and commodities. The exact portfolio mix of these assets in your financial planning, as well as cash and bonds will depend on your personal circumstances.

The expat factor

Expats enjoy investment and other financial planning benefits that people in our home countries can only dream of. There is a far greater choice of investments available to you as an offshore expat investor. These investments grow tax free. Your financial planning is best set up in one of the tier 1 offshore international financial centres that provide greater safeguards and security than even your home country with the added benefit of confidentiality.

By using the financial planning options offered by financial institutions in these regulated financial centres, expats can benefit from huge discounts in the cost of investing. The initial costs of up to 8% on fund purchase suffered by those in your home country can be completely avoided when investing through a financial institution located offshore. Expats can also enjoy huge reductions in dealing costs too. Flat fees of USD 50 or less for buying and selling funds, regardless of the value of the transaction, are common benefits of such financial planning solutions.

Financial planning that locates your assets offshore also leaves you firmly in control of your savings and simplifies your overall financial planning. Expats whose cash is located in an international financial centre have the peace of mind of knowing that thier money is safe from scrutiny and cannot be frozen, either by your home country or your country of residence.

Financial advice 101

In the home countries of most expats, it is a legal requirement for those acting as a financial adviser to be professionally qualified by examination. In some countries, like the UK, it is actually a criminal offence for people to even call themselves financial advisers if they are not professionally qualified by examination. Outside your home country this is not always the case. For this reason expats should always make sure that the person advising them on their savings and investments is a professionally exam qualified financial adviser and therefore able to act in your best interests.

Expats usually have far more disposable income and/or savings than those in their home countries, making professionally exam qualified financial advisers an even more important requirement for expats.

Any investment made on the recommendation of a financial adviser should always be made directly to the chosen financial institution. This is for your protection.

You can be richest Expat in the world

Someone once said that the richest person in the world is the man or woman who has ‘more than enough’. Personalised and professional financial planning can certainly help expats to achieve their goals of living a happy and comfortable life with more than enough money for their needs, wherever they plan to retire.

Remember, it’s your money and your peace of mind.

Richard Colburn is a UK qualified financial adviser.

Questions to the author can be directed to 053 839 463 or email us


Published in: on July 1, 2007 at 3:44 pm  Leave a Comment