Managing money goes a whole lot further than just picking an investment and sitting back waiting for the money to roll.
Many underlying factors often beyond the investor’s control can team up to drive the value up or down – from forces of nature, to fraud and volatile markets.
But some regular maintenance and housekeeping by an investor can help to wring out some extra return.
Just four basic rules can make all the difference between a spluttering investment and one that fires all cylinders.
Understand your tax status
Expat is not a tax status. An expat is either tax resident in the UK and living temporarily overseas or tax resident in another country.
The difference is marked.
As a UK tax resident, an expat can benefit from tax reliefs and allowances back home – like ISAs, pension contribution relief and investing in the seed enterprise investment scheme. These tax breaks are not available to non-UK residents.
Expats should look to using up as many tax reliefs and incentives as they can in the country where they live – and British expats or non-residents who have worked in the UK and have built up pension rights should consider a Qualifying Recognised Overseas Pension Scheme (QROPS) for tax effective retirement saving.
Non-residents also do not pay capital gains tax when they dispose of assets in the UK.
Set off losses against gains
Wherever possible, scour investment portfolios for winners and losers and try to match them up for disposals.
Ridding your portfolio of a bad performer in the same tax year as cashing in a star reduces any chargeable gain.
Share and share alike
Spouses should income shift wherever possible to use up lower rate tax reliefs and allowances. But don’t forget that if the relationship is rocky, whoever is transferring a share is giving up their right of ownership over the asset
Keep charges down
Always ignore the headline rates and look at the overall cost of an investment. The cost includes buying and selling fees, administration costs, management charges and a whole range of other payments that can quickly erode profits.
This is especially important if an investor needs to make an early exit from a poor-performing investment that will attract a raft of charges.
Some costs are unavoidable, but look at the net yields behind the shiny, bright gross figures the investment promoter will be only too glad to give.
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