Living abroad is probably one of the most thrilling and memorable ventures in your life. However, if you’re thinking about investing your money while living as an expatriate, you shouldn’t expect that to be as exciting. Since laws involving foreign investments differ from place to place, trying to form a portfolio of investments can be challenging. In case you’re wondering how you can invest your money when living abroad, take a look at these five smart and creative ways that can help you in this goal.
Assess how permanent your expatriate status is
You should think carefully when it comes to your long-term living plans before you opt for an investment strategy. In case you’re thinking about living and working overseas for a couple of years, it’ll be completely different from your investment strategy when you’re planning to retire in a foreign country. Above all else, you need to consider how you’ll manage currency risks. Currency risk can be defined as the risk of losing funds because of the rate of currency exchange.
One way of managing this risk is by investing primarily in the currency that you eventually plan to get your money in. So, in case you’re planning to retire in Europe, consider investing in mutual funds, bonds, and stocks that work with euros instead of dollars.
Construct a globally-diversified portfolio
Today, a good piece of advice for any investor living in the globalized economy is to work on a globally-diversified portfolio, and this is especially true for expats. In case you’re a digital nomad who’s undecided on where to eventually use investment funds, it would be best to work with a broker or a stock picking service to aid you in building a portfolio based on multiple currencies.
A globally-diversified portfolio based on multiple currencies can diminish general risk when the time comes to cash in your investments. Another thing for you to keep in mind is that although you can live off your investments alone, there are also other ways to earn money without quitting your career.
Invest in property
While international real estate can boost your asset mix, it’s crucial to have an open mind. If you focus on one region and country, you’ll narrow down your field of real estate cycles and needlessly subject your portfolio to possible risks like natural and political circumstances. For instance, in case you choose to invest in Europe, try searching for properties that are outside of the typical UK and French properties.
You can try to explore prospects of success in Montenegro and at the same time use the ideal chance to diversify your portfolio. By going to several geographic areas and exposing yourself in this way, you’ll avoid issues in terms of economic cycles and global real estate.
Seek an investment specialist with expertise in expat cases
If you plan on investing as an expatriate, you may face some challenges depending on your home country. That’s why you need to search for a broker who’s not only specialized in helping expats in general but also those from your country of origin. In case you’re an expatriate from the United States, this is particularly important due to FATCA which was enacted in 2010 and made investing quite challenging for American citizens living abroad.
This act gave the IRS permission to enforce United State laws on taxation as well as reporting investments in foreign countries. Due to all of this, plenty of foreign institutions are not working with American clients while even more US brokers are unwilling to get involved with citizens that live overseas. That’s why you should do your homework and seek a broker who works from your native country.
When you’re thinking about investing your money in a foreign country, remember to research laws and tax penalties in your country of origin when it comes to investments housed abroad. For instance, many people living overseas from the United States usually tend to avoid the tax penalties imposed by FACTA by buying foreign bonds and stocks via firms based in the US.
This is because if those foreign bonds and stocks are located in the States, they’re also subject to lower taxes. So, by doing some research in terms of taxes, you’ll save a large amount of money.
Not only can living abroad be a personally enriching experience, but with these smart and creative ways of investing your money, it can become even better.