Wealth creation and management – Five key elements for success


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For expatriates there are 5 key principles for achieving an optimum investment portfolio to ensure peace of mind that your investments will meet the unique needs of you and your family.

Expatriates should be aware of five key principles to obtain the optimum investment portfolio to suit you and your particular situation:

  1. Choosing the right tax-efficient structure
  2. Identifying your particular appetite for risk
  3. Matching your risk profile to the optimum investment portfolio
  4. Diversification, repeat, diversification!
  5. Regularly review your portfolio


1. Choosing the right tax-efficient structure

A suitable tax-efficient structure – such as a pension plan or ISA in the UK – can keep most of your investments in one place and legitimately protect you from paying more tax than necessary. 

This is usually more straightforward in the UK, where you are more likely to be familiar with the local rules. For expatriates, however, once you factor in a foreign tax system and the cross-border situation, it can be much more complex. You will need to understand your tax liabilities, here and in the UK, and recognise the tax-compliant opportunities available to you. An adviser who has cross-border experience and understands the local taxation system where you live will be best placed to help here. 

Otherwise, you could find an investment portfolio that produces excellent returns, only to see them slashed by taxes that could have been avoided, or at least significantly reduced.

2. Identifying your particular appetite for risk

Of course, no risk often means no returns. And arguably, as we witnessed in recent years, even bank accounts are not 100% safe. Today’s historically low interest rates mean that returns may struggle to keep up with inflation. Putting funds under the mattress is hardly the solution either!

Most of us recognise that some exposure to risk gives us a better chance of outperforming inflation and producing real returns over time. However, without a clear and objective assessment of your appetite for risk, you could end up with an investment portfolio that does not suit you.

Today there are sophisticated ways of accurately mapping your risk profile. These usually combine psychometric assessments with an evaluation of your finances as a whole, while taking into account the goals you have for you and your family and your timeline for investing.

3. Matching your risk profile to the optimum portfolio 

Every set of investments can be ranked according to an ‘amplitude’ of risk. Low amplitude brings less risk but also lower likely returns, while a higher amplitude potentially brings greater rewards. Where you feel comfortable within this range is best decided objectively. Just as most surgeons will not operate on their own family due to subjective emotional involvement, neither should you try to determine your own tolerance to risk. 

Without professional, objective guidance to match you to your optimum blend of investments, you could find yourself with a portfolio that is either too risky or too cautious for you. 

4. Diversification, repeat, diversification!

In any case you should ensure your investments are suitably diversified so that you are not over-exposed to any given asset type, country, sector, currency or stock. 

By spreading across different asset types – equities, government bonds, corporate bonds, property, cash – as well as regions and markets, your portfolio has the chance to produce positive returns over time without being vulnerable to any single area under-performing. 

Ideally, this sound investment approach should be extended one further step. A ‘multi-manager’ approach – where several different fund managers are blended together – can reduce your reliance on any one investment manager making the right decisions in all market conditions.

Remember that while you should choose the right tax-efficient structure, that does not mean that you have to put all your eggs in one basket. Diversification done properly should reduce your exposure to risk at the same time as legitimately minimising taxation.

5. Regularly review your portfolio

Finally, it is important to review your portfolio around once a year to re-balance it and make sure it is still in line with your unique risk profile, aims and circumstances. 

As the world keeps turning and asset values rise and fall, your portfolio can shift away from the one designed to originally suit you. You may need to make adjustments to re-establish your original weighting, and also consider if any of your circumstances or goals have changed.  

In uncertain times like this, with Brexit and global political developments likely to continue unsettling markets and currencies, regular reviews are even more important to help control risk and encourage a positive effect on portfolio performance. 

While there is no one size fits all solution for investing, these five key principles are the essential cornerstone of any successful wealth management strategy. Applying them in the right way can help you have the peace of mind to sleep at night, knowing your investments are best placed to meet the unique needs of you and your family.

Any questions? Ask our advisers for help

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. 

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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