Wherever you might be in the world, a regular savings plan can help you use your money intelligently to make your future a little more certain.
Expats in Portugal benefit from some of the globe’s most beautiful locations and best climate conditions, but when it comes to planning for the future, there are certain considerations which may be masked by a general feeling of wellbeing amongst all the warmth and beauty. Don’t let complacency about your wealth management become a problem in later years – act now to prepare yourself for a more secure financial future.
Get the best advice
Firstly, we must emphasise that before you ‘buy into’ a regular savings plan, or any financial product for that matter, you should seek trusted and professionally regulated financial advice. Make sure the financial services firm or independent adviser making the recommendation is registered with, and regulated by, the appropriate jurisdictional financial authority and try, if possible, to seek out some independent reviews.
Over the last few years, there has been a lot of negative press and commentary about “mis-selling” of financial products, but, by educating yourself about what’s available and understanding whether certain products are suitable for your circumstances, you stand a better chance of benefitting in the long-run.
Bank and building society regular savings plans
Most banks and building societies provide regular savings accounts offering a higher rate of variable interest than current and basic accounts. Typically, you agree to pay in a fixed amount per month, with a limit on the savings balance accruing the higher rate of interest. Plans may be for a fixed term and/or with a fixed rate of interest.
At the end of the plan, or when you want to cash in your savings, you will get all your money back along with any interest accrued. Generally, you’ll have access to your money – some accounts may require you to save for a fixed term or you might need to give notice, otherwise a fee might be payable or you lose out on the higher rate of interest.
The downside to these savings plans is that the opportunity for growth and returns is limited.
Life assurance regular savings plans
Also sometimes known as endowment policies, you can buy this type of investment product from a life assurance company. You will be required to save a regular monthly amount in return for a lump sum at the end of the policy, backed by a life insurance payout if you die.
These plans can be used for a number of medium to long-term savings goals, including (often in the past) to buy property (endowment mortgage). They can also be used for general savings which will pay out a lump sum at a specific time.
You pay a certain amount per month into the plan – part of this payment buys life assurance, while the rest is invested into various types of assets; typically shares, government gilts and bonds, property investment funds and fixed-interest investments.
This type of regular savings plan will aim to provide greater growth than a bank or building society account, but the returns are not guaranteed and you may not get back all your savings. However, if you need to grow your money to fund your retirement or to provide a legacy, this type of plan could be more beneficial.
The key points and specific terms and conditions of theses investment plans will vary from provider to provider. Some will have administration fees and charges deducted, and there may be exit charges if you need your money before the plan matures (the savings term ends). You should also be aware that the financial adviser recommending a product might be in line for commission on the sale of the plan, so you should make doubly sure that the product is right for your needs before signing on the dotted line.
Tax benefits of regular savings
The tax payable on savings will depend on your personal circumstances as well as your place of residence and domicile. There could be significant tax savings to be had with a regular savings plan. However, it is important for your financial adviser to have a full understanding of your personal circumstances before tax obligations and any tax savings associated with a particular product can be established.
The Blacktower approach
In our view, there is never a one-size-fits-all solution for expat investors, so we always take the time to understand our clients’ personal circumstances and long-term goals and objectives.
ADVICE FROM BLACKTOWER
The Blacktower Group was formed in 1986 and has earned its reputation providing wealth and management and pensions planning advice to clients in the UK as well as those who are resident abroad. Our proven and bespoke service can help you accomplish your financial goals
By Manuela Robinson
Manuela Robinson is the Joint-Country Manager of Blacktower in Portugal. With offices in Quinta do Lago, Cascais and representation in Madeira.
info@blacktowerfm.com | 289 355 685
www.blacktowerfm.com
Blacktower Financial Management (International) Limited is licensed by the Gibraltar Financial Services Commission. Licence 00805B. Blacktower Financial Management Limited is authorised and regulated in the UK by the Financial Conduct Authority.
