Today’s climate presents many challenges to both preserving your wealth and seeing it grow over time. As well as the economic uncertainty surrounding Brexit, we have endured a prolonged period of ultra-low interest rates, and are exposed to an ever-changing tax and regulatory landscape.

All this makes it harder for investors to achieve returns that are not eroded by inflation and taxation without leaving their comfort zone. 

At times like this, careful planning plays a particularly important role in securing your financial security over the long term. Whether you are living in Spain, France, Portugal, Malta, Cyprus, Gibraltar or Monaco, here are six key tips that can help.

1. Establish a suitable strategy

When it comes to investing, there is no such thing as the right solution for everyone – one size definitely does not fit all. What will suit you depends on your specific objectives, time-frame and attitude to risk. With an ill-fitting investment portfolio, you could find that your money is not working as hard as you would like it to, or it is difficult to access when you need it. Even worse, it could be eaten away entirely.

It is crucial that your portfolio is created and managed to meet your particular set of circumstances and goals, including your requirement for income. For example, are your investments tailored for your life as an expatriate, where your expenses are mostly in euros, or are they better suited to someone living in the UK? Make sure your strategy adjusts to keep up with your current situation.

2. Understand your appetite for risk

Before investing, you should establish the right balance of risk and return for your peace of mind. Different investment assets represent varying levels of risk, from cash and fixed income assets (government and corporate bonds), to equities and ‘real assets’ like property. Low risk generally means settling for low returns, but taking on more risk potentially brings bigger rewards.

It is extremely difficult to effectively assess your own tolerance for risk. Instead, speak to an experienced adviser who can ask the right questions and use appropriate tools to create a clear and objective risk profile for you. They can then recommend an appropriate blend of investments to match your specific profile.  

Remember: without some element of risk, you may struggle to outpace inflation and could lose money, especially with longer term bank deposits and todays’ low interest rates. An adviser can present options to help control risk within your defined boundaries, for example, staggering the timing of investments in riskier assets to reduce exposure to market movements.

3. Identify your timeline for investing

The longer you have to invest, the more risk you can generally afford to take. With time, you can ride out market volatility and also benefit from compound returns (interest on interest, for instance). Understanding your time horizon is also the key to ensuring your investments offer the right level of ‘liquidity’. You never know when your plans may change – for example, needing to return to the UK unexpectedly for family or health reasons – so it is important to make sure you hold some liquid assets that can be sold if you need to access your capital or change your strategy.

4. Insist on diversification 

The higher your concentration in one particular investment type or area – including the UK –  the higher the risk. The best way to limit risk is diversification. By spreading out investments across asset classes, as well as by geographic region and market sectors, you limit your exposure to any one area. You can take diversification further by choosing an adviser who uses a ‘multi-manager’ approach to spread your investments out among several carefully-selected fund managers. This can reduce your reliance on any one manager making the right decisions in all market conditions.

5. Incorporate effective tax planning 

To help maximise your real returns and protect your wealth for future generations, factor in tax planning when setting up your portfolio. Look for arrangements that can shelter capital from tax while providing a tax-efficient income, and that enable you to transfer wealth to your beneficiaries with minimal bureaucracy and inheritance taxes. 

For expatriates, this is complicated by having to work with the rules of more than one country. An adviser with cross-border expertise can ensure you meet your tax liabilities, in your country of residency and in the UK, while taking advantage of available opportunities.

See more on tax planning

6. Regularly review your strategy

Good financial planning is not a ‘set and forget’ exercise. Not only does everyone have their own unique set of circumstances, aims and requirements, these often change over time. This may be the result of moving into a different stage of life – approaching retirement, for example – or following a major event, such as relocating or receiving an inheritance. Or you could simply change your mind about what you want to achieve. External influences such as changes in the law or tax rules may also prompt a strategy rethink.

You should review your financial planning around once a year to keep it on track. If anything significant happens that might affect the effectiveness or suitability of your portfolio – such as a change in the law, your personal circumstances or new opportunities – make sure you bring this forward. With Brexit and current global political uncertainty, regular reviews are even more important to help control risk and encourage a positive effect on portfolio performance. 

The key to bringing all these guidelines together is ensuring you take personalised, expert advice from a regulated adviser. Whether you are looking at investments, tax planning, estate planning or your pension, it is crucial that your approach is appropriate for you. With the right strategy in place, you can protect and grow your wealth – in real terms – not only during your lifetime but for the next generations to enjoy. 

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All advice received from Blevins Franks is personalised and provided in writing. This article, however, should not be construed as providing any personalised taxation or investment advice.