At first, international investing might sound and feel like a giant step into the unknown, but, in simple terms, it is any investment outside your jurisdiction of residence. For example, if you are resident in Portugal but have investments or accounts in Spain, you can be said to have international assets.
So, are there any special or beneficial reasons why you, as a resident of Portugal, should put some of your money into international investments?
Well, it depends how you look at it. For a start, as an expat, there may be many reasons why it makes sense for you to maintain savings and investments in your home country, whether it is Britain, the United States, Ireland or elsewhere.
However, if your international investing is confined only to your country of origin, it not only limits the scope of opportunity, it also restricts diversification and the potential for consequent gains. Yes, there is comfort to be found by investing in the familiar, but, in reality, if transferring your ISA is as adventurous as your investing gets, you are steering a conservative course and risk losing out on the possibility of global returns.
Why invest internationally?
Everyone is familiar with the phrase, “Don’t place all your eggs in one basket”. International investing is basically an extension of this approach to risk management. The more you spread your assets across jurisdictions and/or asset classes the greater your personal protection, flexibility and opportunity for portfolio growth will be.
Pensions are a good example. For example, a British expat living in Portugal could place his or her retirement scheme offshore with a view to enjoying greater control of how their assets are managed. Furthermore, by selecting the right fund, the expat could also increase his or her inheritance planning options, potentially bringing financial benefit to a spouse and/or dependents.
Diversification may be beneficial in other less obvious ways, too. For example, when you diversify your assets by moving them offshore, you protect your wealth from being vulnerable to any single cataclysmic event in one country or, more realistically, from any regulatory or legislative changes in your country of origin or country of residence that might place your property, business and investment portfolio at risk of unfavourable taxes. It is also worth considering how global diversification can protect individuals and families from exposing their entire net worth to the dangers of blackmail, kidnapping and bribery.
International investment may offer additional benefit in the protection it can provide from unwanted litigation. For example, lawyers must receive approval to act in a jurisdiction where particular assets are held. This is frequently expensive and complicated enough to deter such litigation from arising in the first place. Similarly, in the unwelcome event that an investor becomes insolvent, certain offshore investments may be legitimately protected from creditors and other parties.
Lastly, one should never underestimate the tax efficiency benefits of investment in other jurisdictions. Portugal is party to numerous tax treaties that enshrine these benefits and it is up to you and your adviser as to how you utilise these most effectively.
Help making beneficial international investment
Of course, not all offshore investment is good. You will have to carefully research the jurisdictions and investments that are right for you and your circumstances, including your residence status in Portugal.
You should always consider the following when selecting offshore investing opportunities:
1. Beneficial taxation and tax treaties
2. Potential destinations for frequent holidays or residency
3. Stability of the jurisdiction, both political and economic
4. Stability of local infrastructure
5. Ease of communication (Do you speak the language?)
6. Relevant Consumer Protection Acts and regulatory bodies
7. Time zone differences for ease of contact
Your risk tolerance level is also fundamentally important in any investing strategy, so your financial adviser should spend time understanding your comfort level alongside the asset classes, sectors and types of company or fund that you are most at ease with when diversifying your portfolio offshore.
Contact Blacktower Today
Blacktower’s financial advisers in Portugal work to ensure that your investments align with your needs and goals. We have vast experience and are committed to a world-class service that identifies and understands the needs of our clients and ensures clear communication with all parties.
Get in touch with us today for more information about how we may be able to help you.
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. With an office in the Algarve and Cascais and representatives servicing expats all over Portugal and Madeira, we can help you today by calling 289 355 685 or 214 648 220, email info@blacktowerfm.com or visit www.blacktowerfm.com
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.
