International Banking Guide
Overseas territories
The term overseas territories is an acknowledgment of the political
correctness lobby.
Formerly called dependencies, overseas territories are Bermuda,
the British Virgin Islands, Gibraltar, and the Turks & Caicos
islands.
OEICS
Open-ended investment companies, an OEIC is the same as unit trusts
except that it is legally constituted as a limited company.
Most OEICS operate as umbrella funds, meaning the OEIC can set up
sub-funds without gaining individual authorisation.
Most OEICS only have one unit price, and the initial charge is added
as an extra. Unit trusts always have two prices, the lower or bid
price is what you get when you sell back to the managers; the higher
or offer price is what you have to pay when you buy.
International Banking Guide & Pension
Pension
A retirement fund that every expatriate should seek to build up
to avoid a sudden drop in wealth upon retirement. Offshore pension
plans are life insurance-linked and offer tax-free growth on a portfolio
as long as it remains offshore.
Private banking
Private banking essentially means you are allocated your own personal
banker who will look after your entire portfolio of assets - from
stocks, shares, funds and deposit account.
Once you would have needed a minimum £500,000 to access private
banking facilities, but these days private banking is available
from several retail banks.
International Banking Guide & A Regular Savings Scheme
Regular savings scheme
Accounts offered by banks, building societies and fund management
groups to regular savers/investors.
If you buy into a bank account, you will generally be offered a better
interest rate because your cash has been committed.
Many fund management houses will also accept small monthly contributions
into their funds. Resident
See ‘Non-resident’
Roll-up fund
See ‘Accumulation fund’
International Banking Guide & School Fees
School fees
As a rule of thumb, the cost of school fees inflates by 8 per cent
per year. Current prices range from around £5,500 to £10,000
per year - not including boarding fees.
A popular way of paying for school fees for expatriate Brits is to
buy into traded endowment policies - either individual policies or
through TEP funds. Advantages are twofold: first, TEPs have a fixed
maturity date, so you can time your purchase of a TEP to coincide
with the time school fees will fall due.
Second, because as long as you cash them in while overseas, they
will not be subject to capital gains tax, and if you do cash them
in as a UK resident, TEPs are only subject to capital gains tax
on the proportion of the time you have spent in
the UK.
Shares
When you invest in a company and certain funds, you buy a ‘share’.
Your share’s value can rise or fall depending on supply and
demand.
Sicav
Stands for Societe d’investissement a Capital Variable. This
is the name the French (and many French-speaking countries) give
to funds.
Most of the funds sold of Luxembourg to expats from Luxembourg are
Sicavs. You buy shares in Sicavs rather than units.
International Banking Guide - Single Premium
Single premium
One-off premium paid into a life-insurance product. Many offshore
life policies provide access to offshore funds to bolster growth of
underlying
investments.
Stock exchange
Place where shares are traded. A country may have scores of exchanges
- America has the Nasdaq and the Dow (among many others), Britain
has the FTSE and AIM (among many others).
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