Expat savings plans used to be something to avoid. There are a multitude of companies, here in Southeast Asia, Hong Kong & the Middle East that offer bad advice, products that are extremely complex and that quite frankly don’t make sense as a savings plan for the average individual.
These companies frequently get fined by regulators, are often banned from doing business in ‘western’ countries and you’ll usually come across a handful of people throughout your extended network that have some pretty horrific stories to tell.
Expat Savings Plans Historically
The reason why several companies and the outdated platforms receive so much negativity is because the products they offer are antiquated and only benefit the financial advisor. Some key features why are:
They get paid an upfront commission - often in the 10s of thousands - which is based on your savings and is often payable by you if you want to break your contract early. Usually inform client they must contribute for first 18-24 months. After this period, they cannot get their commissioned clawed back shall you cancel.
Have high and often hidden annual management fees that can range from 3-6%, whilst also including standard monthly fees.
Recommend obscene term contracts, not uncommonly pushing 25+ years which rarely suit anyone
Sell outdated products with terms that are banned in ‘western’ regulated financial markets, hence why they come in droves to Asia
Expat Savings Plans in 2020 and Beyond
Luckily, times are changing and people are wisening up to unsavoury independent financial advisors, and whilst they try to cling on to their outdated practices and products, we at Tenzing are following ‘western’ trends, regulations and offer a new type of savings plan which hasn’t been banned by regulatory authorities around the world. Also, we:
Are always transparent and upfront about fee structure, and wouldn’t recommend any product with annual management fees above 1.5%
Will never advise or try to tie you into a 25-year savings plan that does not suit your goals, we’ve found that a 10-year plan is the sweet spot for most of our clients
Don’t receive upfront commission so we have no incentive to deceive our clients in order to receive large payouts
So after all of the above, why should you open a savings account, and an offshore one at that?
Well, while you may have never considered opening one before, there are a number of reasons why you should at least consider doing so and here are the top 4:
1) Save for the Future
We all have goals for the future and, whether that’s saving for a deposit on a house, retirement, or accumulating enough money to put your children through school and university, we all need a plan or a strategy to get us where we need to be financially.
When you open an offshore account, the point (in our opinion) is not to lock your money away for 25 years, but instead to help you meet a goal in the immediate foreseeable future - around 10 years from now.
And, whilst it is always accessible to you, being able to see your wealth grow in a separate account, which is specifically designed with a timeframe associated with your goals will help you not frivolously use or dip into funds that you actually have plans for down the line.
The old adage goes: never put all your eggs in one basket. This is true in most walks of life and is especially pertinent when it comes to your finances. Which is logical, right?
Rarely will you find anyone that invests all of their money in real estate, because the risk is too high. Similarly, we would never advise anyone to place most, or even 50% of your disposable income into a savings plan, but it is worth
By diversifying and spreading your wealth across several avenues and through various regions, you are essentially lowering your risk by safeguarding yourself and your hard earned money.
Especially if you earn your money in a volatile country like Vietnam, where there are a large number of banking rules and regulations; which brings us to our next reason for setting up an offshore savings plan.
3) Protect yourself from Domestic economic downturn
Yes, whilst financial economic downturns are often felt in markets around the world, the ups and downs of smaller nations rarely cause much stir on a global scale. However, domestic economic downturns can have a significant impact on you as an individual where you are paid in one currency and nation, but home is somewhere else.
We’ve all felt and considered these effects on a small scale when either moving abroad on secondments, or simply going on a holiday. One day, your British Pound, US Dollar, Euro, what have you, will get you further than it will another.
Now imagine if all your money is held here in Vietnam. One day you might decide to move to a different country, or simply move home, and at this point, the VND could have dropped in value meaning your money is actually worthless. Of course, the opposite could be true too; however, is that a risk worth taking?
By opening an offshore savings account, you will ensure that at least part of your wealth is less likely to get affected by domestic shifts in any one given economy.
4) Offshore saving and investing
Whilst in the past the term ‘offshore’ brought to mind dodgy dealings by the elite few, global regulations incorporated into the workings of financial hubs have done a great deal in removing the negative connotations resulting from being financially aware, and utilising the benefits awarded by keeping some of your wealth in the likes of Singapore, Guernsey or the Isle of Man.
By using a product and platform such as Dominion Capital Strategies - based in Guernsey and is one of the most reputable and well established financial centres - the gains accrued through your savings and investments strategy will remain tax-free as long as you aren’t a resident of the island.
Speak to a Tenzing Advisor
Short needs analysis to go over your current position and savings goals
Get a few savings illustrations
Go over key features
Customized video outlining how it all works.
Start savings for your future today, with My Savings Strategy.