Expat Finance Guide Continued

Equities

Equity means the stake one holds in an asset. So you could have an equity stake in property, land, business - or even a bond fund. When investors talk about the equities markets they are generally referring to company share prices that are often listed in financial publications.

Financial adviser

A person who brokers agreements between investors and financial institutions such as insurers, fund managers and sometimes banks.
Their job is to provide you with ‘best advice’, but less reputable IFAs may sell you products that pay them the biggest commission. (Ask them for a written declaration of what cut they will take!)
Adviser standards vary enormously around the world. For example, the UK financial advice industry is stringently regulated, but in Germany, there is next to no regulation at all.

expat Finance Guide Contintued & Fixed Interest

 Fixed interest fund

Essentially, fixed interest funds are those that invest in - and derive growth from - bonds and gilts.

Funds

Gearing

Gearing means borrowing to increase the size of your investment. While gearing can bolster the value of your investment by a factor of three or four (if it is geared three or four times, of course), it also increases your downside risk enormously. So if you plough £100,000 into a fund and ‘gear’ it three times, then you have, effectively, invested £400,000. But if the investment fails to perform, the bank could call in its loan. And if the £400,000 investment was to lose, say, £150,000, then you could be out of pocket to the tune of £150,000.

On the upside, if your £400,000 grows by 15 per cent, then you could be looking at a return of £60,000 - minus (high) borrowing costs.

Expat Finance Guide Continued & Gibraltar

 Gibraltar

UK Crown dependency that holds an almost unique position in the offshore finance arena.

As part of the European Union, Gibraltar is allowed to market its products to EU countries via a ‘passporting’ agreement. This means financial products sold into Europe from there must first be ratified by the Financial Services Authority in Britain.

Unfortunately for Gibraltar, it has a ferocious enemy in Spain, which sees the dependency as an easy political target. Spain has repeatedly caused trouble for Gibraltar, most notably, Gibraltarians claim, when it used its influence within the Financial Action Task Force, to claim Gibraltar was too weak in its anti-money laundering procedures.

Gilt

Government bond. Ultra-low risk when issued by strong economies. Low returns to match, but in volatile markets, gilts become more attractive as investors seek financial safe havens.

Expat Finance Guide Continued & Healthcare

 Healthcare

Health insurance is one of the essentials for expatriates, especially those who are new to a territory and do not know what provisions they will be able to count on from the state in which they are living.
If your healthcare is not provided by your company, then make sure you understand the policy exclusions - what it won’t pay for, and the ‘excesses’ - what you must pay first before you get treated.
Typically, for example, you might be expected to spend £50 on outpatient care with the insurer picking up anything over and above that fee.

By having health insurance, you will also have an expert on your side, checking that you are receiving appropriate, reasonably priced treatment.

If you do not have health cover, how will you know you can be sure that your doctor is not exaggerating your ailments to charge you extortionate fees?

Expat Finance Guide Continued - Hedge

 Hedge

What investors do to cover the downside risk of an investment. Hedge funds are highly leveraged investment vehicles that trade in derivatives using complicated formulas in the hope of guaranteed returns. Sometimes they get their maths very wrong.

Hong Kong

Marketing base for many products sold by fund management houses and banks to expatriates and investors based in the Far East.
Income tax

Tax paid by UK residents on income. There are three levels: the lowest is 10 per cent, then it is 22 per cent, with the highest at 40 per cent. However, if you achieve non-resident status, then you should be able to avoid this tax.

Expat Finance Guide Continued - Inheritance Tax

 Inheritance tax

Tax levied when assets are passed from parent to child upon the parent’s death. In the UK, if you have less than £242,000 worth of assets (year 2001-02), then IHT will not be levied.
In many countries, particularly Spain, IHT is significantly higher. Expatriates can

sometimes legally avoid IHT by setting up a trust.