How to manage your finances as an expat?

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Published on 2022-09-19 at 14:00 by Asaël Häzaq
Economic uncertainties are driving more and more expats to invest abroad. How to manage your money? Which bank to choose? What are the best investments for expats?

Assess your financial status with your banker

Before moving to another country, it's important to consult your banker. What's your current professional and personal situation? Are you moving abroad to look for a job or to take up an offer you've already secured? Are you a digital nomad? Are you keeping some of your earnings in your home country? Is your bank account overdrawn? Do you have outstanding loans?

Assessing your financial situation before taking the plane will allow you to better allocate your resources. You might need to re-evaluate your loans, open an overseas bank account, and close your savings account. Indeed, certain types of savings products are not compatible with an expatriation project.

Living abroad: which bank to choose?

Expats are strongly advised to open a bank account abroad, especially if you're going to live there for the long term. You won't be able to always carry cash with you. Your money will be safer in a bank account. However, some destinations are known to be less financially safe, for instance, because of political instability. Perhaps your bank in your home country has a subsidiary or banking partners abroad. In that case, you can be redirected to an expert advisor who will advise you about possible banking partners in your country of expatriation.

Regardless of whether your banking services will be carried out in person or online, you have to ensure that they allow you to perform all of your financial transactions. If you plan on buying assets abroad, a traditional bank (brick-and-mortar bank) would be better placed to advise you. Even if you don't plan on buying assets, you will receive your wages more easily via a traditional bank account. Don't forget to inform your bank back home that you've opened a new account in your expat country.

Real estate: the best investment for expats

Real estate remains the expats' preferred form of investment. Investing in brick-and-mortar property gives people a sense of security. It's also more tangible and safer than stocks or bonds. You can expect an average of 4% in profits. But that all depends on the type of property and its location. In general, expats prefer buying property in their home country, whose economic landscape they know better. Real estate is also a future-proof investment. In case expats return to their home country, they'll at least have housing or, even better, housing and other rental properties from which they can still earn rent. Real estate is hence a profitable form of investment that can be managed from abroad. Agencies specialized in this type of investment offer their services to expats. However, you should be careful to not blindly sign up with just any agency. It's always best to tour the property first. Virtual tours have been very popular since the first Covid lockdown. You can also ask a relative to conduct a site visit of the property on your behalf to check if it's in a good location.

Life insurance, the second type of investment preferred by expats

The other trusted investment is life insurance plans. This investment (which shouldn't be confused with death insurance) allows a person to prepare for their retirement and transfer their wealth to inheritors. For expats, a life insurance plan has another advantage: it is not subject to taxes. Moreover, it serves as a cash reserve that's always available. It's possible to transfer or withdraw money from this reserve without restrictions. A life insurance plan hence works as a savings account. It's a cash reserve that's much more profitable than a savings account (the least profitable investment).

How about the stock market?

Are you tempted by the stock market? This market offers, at least theoretically, higher yields than real estate and life insurance. But not everyone can be a small-time speculator. It's the riskiest type of investment. You can also have a stock savings plan if you are not moving to a non-cooperative country or jurisdiction. Another option is to open a securities account. It's an account that holds your entire portfolio of bonds and stocks; it also records all of your investment transactions. You can keep this account while living abroad, but be careful about the tax regulations of your country of expatriation. You should also keep in mind that a securities account is meant only for long-term savings (at least 5 years).