Saturday, 12 July 2014

Protect yourself - for FREE

There are plenty of insurance products on the market – and many of them are definitely worth having, even at a cost. Any sort of extra protection is worth having, but when it’s free, it makes it even more worthwhile.

Actually, this also relates to protecting your whole family – not just yourself. Whilst some would argue that it’s not “free” in the traditional sense of the word, from an accountancy perspective, it is. Confused? I’ll explain.

Most insurance products offer a fixed payout, IF something happens, in return for a payment which is non-refundable. You’ll definitely pay the premium, but there’s no guarantee that you’ll get anything back.

I’m not knocking these types of insurance at all – they’re an essential part of proper financial planning for most people, and in most cases a very cheap way of preventing a financial disaster. But there is another way, where you can get these benefits – for free.

I’m talking about a product from AXA’s Hong Kong business – one of our key partners – which guarantees that if you don’t claim on the insurance element of it, you’ll get your money back – plus interest.

As you may be aware, AXA is a conglomerate of international businesses – for example, AXA Indonesia is an entirely separate business from AXA Malaysia. Whilst they all report to the French head office and repatriate some profits there, each business unit offers different products, and different pricing levels, to reflect the different market places in which they operate. And we’re consistently finding that its Hong Kong business is delivering some great financial innovations.

How does this product work?

As soon as it’s issued, you’ll have life cover AND critical illness cover. A critical illness is any illness or injury that could kill you – such as cancer, heart attack etc. If you get diagnosed with an illness like this, it pays out, almost immediately, whether you end up dying from it or not.

You can also claim multiple times, for different types of illnesses (and death). So, if you’re unfortunate enough to get cancer, then have a stroke, then get paralysed, then get a brain tumour – you’ll receive four payouts. Plus a fifth payout upon death.

If you don’t get a critical illness or die, you get your money back – plus interest. The amount you get back keeps going up, then longer you leave the policy in force. There is one minor catch – to be guaranteed of getting back more than you paid, you have to leave it in force for a few years (the actual length of time depends on your age and what payment timescale you selected).

If you get to age 100 without any claims and/or without cashing it in, you get paid back a significant amount more than you paid in.

What’s the initial outlay?

This will vary from person to person depending on age, smoker or not etc, but here’s an example of a 40-year old non-smoking male.

For $200,000 cover, the cost is about $12,000 per year if you pay it over 10 years. If you spread it over 25 years, this almost halves to around $6,000 per year – you pay more in total, but this is reflective of the fact that you get full cover from day one, despite having paid significantly less in to it.

You can also pay in one lump sum – so around $120,000, and get a guaranteed minimum of $200,000 back at some point.

By the time our 40-year old non-smoking man reaches retirement age, he can get about $200,000 cash out of it if he hasn’t made a claim. If he leaves it in there until he’s 80, he can get out about $300,000.

Also, whilst the fixed payout for critical illness claims is fixed at $200,000 per claim (up to a maximum of four, totalling $800,000), the death benefit increases – so death at age 80 would payout about $375,000 to his family. The amount paid out on death is always higher than the amount available to take out as cash.

If he gets to age 100, it’ll pay him out $1,165,800. That’s a nice birthday present right there.

This is a fantastic product for children.

For exactly the same level of benefits as the example above, the cost dramatically reduces the younger you are. So, for a new-born child, it costs about $3,600 per year if spread over 10 years (total payment of around $36,000, which can also be paid in one go if you like).

That child will then have insurance protection all the way through life, and the ability to take out cash if they need it in future. By the way, if they get to age 100 with no claims (which may be significantly more likely in future as healthcare continues to improve and more diseases are cured), they’ll get a cash payout of $2,061,000. That’s an even better birthday present.

Enough numbers for now – the only thing left to mention is that you can of course choose the amount of insurance you want, choose the amount you pay initially, and choose how long you pay it for.

The options regarding payment durations are either in one lump sum at the start, over 10 years, 15 years, 20 years, or 25 years.

You can choose a very high or very low level of cover, or anywhere in between, and you can have up to $500,000 cover without the need for a medical exam (if you’re under 45, the non-medical-exam limit decreases with age).

You can start with an insurance amount and work out the initial cost, or you can start with an initial budget and work out the amount of insurance you’ll get.

If you want to find out what you could get personally, with definitive numbers specifically for you or your family, please contact us – it only takes us a couple of minutes to produce a fixed personal quotation, and we’re more than happy to provide it to you with no obligation at all.

You’ll not be disappointed – this is a really great product for everyone! 

Wednesday, 18 June 2014

Retiring in Australia

Since the last blog post, a few people have been asking about retiring in Australia – particularly in view of the recent changes to the pensionable age.

If you weren’t aware, the Australian government recently announced (alongside a raft of other unpopular measures) that the pensionable age would move to 70 years old by 2035 – basically meaning that Australians born after 1965 would have to wait until 70 to claim the “Age Pension”.

Needless to say, that’s quite a ripe old age to keep working until through necessity. The general questions have been ‘can something be done about it’, and ‘if so, what’.

The basic answer is yes – there’s always something you can do about it. But usually, ‘what’ exactly to do is the bit that people struggle with.

Ultimately it comes down to three things:

1)      Effective planning
2)      Timely planning
3)      Intelligent planning

Retirement, including the time of retirement and the wealth in retirement, is always in the hands of the individual. Like other well developed countries, Australia’s government will ensure that you’re not flat broke – but they’re not going to keep your fridge stocked with beer and your barbeque loaded with shrimp. That’s all up to you.

Effective planning is all about getting stuff done. Plans on paper are great, but it needs to be executed for it to make any difference. This sounds simple, but is the biggest mistake people make –they can confidently state what they want in retirement (they’ve “planned”), but cannot demonstrate how they’re going to achieve it, and are not actually doing anything about it (it’s not effective planning). Quick tip: If you’re not currently saving for retirement, you’re not planning effectively.

Timely planning is all about getting stuff done at the right time, to make it better. It should be fairly obvious that those who start saving up for retirement at 45 end up with a lot less money in retirement than those who start saving at 25. This is particularly relevant to expatriates, because you’re often not forced to save for retirement (which you would be at home), and you’re living a great life on an expat package so don’t really spend too much time thinking about what happens when the expat package finishes. Quick tip: If you’re not currently saving for retirement, you’re not planning in a timely manner.

Intelligent planning is about squeezing every last drop out of what’s available to you. This includes maximising the benefits offered by governments, structuring your financial planning in the most cost-effective and tax-effective way possible, and allocating your accumulated capital in the most efficient way (amongst other things). Quick tip: If you’re not a pension expert, or you’re not using the services of a pension expert, you’re almost certainly not planning intelligently.

One of my colleagues, Paul Milbourne - who is an Australian pensions expert (and remains fully licensed in both Australia & Malaysia), is running a couple of seminars – in Batam, Indonesia, on the 24th June, and in Kuala Lumpur, Malaysia, on the 25th June – with a particular focus on some of the intelligent planning you can do if you own, or plan to own, property in Australia. On the most basic level, anyone who wants to retire in Australia will need somewhere to live, so it’s something you should consider now, rather than in future (timely planning).

It’ll also cover some of the tax-efficient ways of holding Australian property through a Superannuation (pension), how you can buy a property now (combining the use of international mortgages and pension savings), and how you can ensure that your total retirement package is greater than the sum of its parts.

If you’d like to attend one of the seminars, please just contact me at; if you can’t attend but would like to discuss the topic anyway, please just let me know and I’ll arrange a personal introduction.

Finally, if you’re not planning to retire in Australia, most of the above still applies – so get planning!

Tuesday, 3 June 2014

Why people with Pensions in the UK should act now

There’s just one week left before the UK government finishes its consultation on changes to pension legislation, which will shortly have an impact on anyone who has a pension in the UK.

Not long ago, the UK government said that it will definitely be introducing legislation to prevent the transfer of UK Public Sector Defined Benefit pension schemes as soon as possible, and the current consultation focusses on whether this restriction should also be applied to Private Sector Defined Benefit schemes.

“Defined Benefit” (DB) is the official term for what is commonly called a ‘final salary’ pension – i.e. a pension scheme which will pay OUT a fixed amount upon retirement. In comparison, “Defined Contribution” (DC) pensions are those which pay IN a fixed amount, but give no guarantees about what the pay-out will be.

Needless to say, DB schemes are generally seen to be much better for pension holders than DC ones, but also massively more expensive – as the schemes need to not only hit the growth targets set for them, but also cover any potential risk along the way. In the vast majority of cases, companies (and the government) vastly underestimated how much would have to be paid in to the schemes in order to be able to fund the fixed pay-out, leaving the schemes with a hefty deficit.

For example, Lloyds’ deficit is £998million. Barclays Bank has a deficit of around £1.8billion. At least five of the UK’s largest companies – BAE Systems, British Telecom, International Airlines Group (British Airways), Royal Bank of Scotland, and the insurer Royal & Sun Alliance – have pension liabilities which are greater than the equity market value of the entire company.

As companies (and the UK government) gradually come to terms with the problem, changes are being made. One in three corporate DB schemes have been scrapped in the last decade. According to the UK Occupational Pensions Regulatory Authority (OPRA), over 58,000 company schemes have been wound up. Over 110,000 company schemes still exist, but OPRA says that 30,000 of those are under threat as the funding crisis becomes more apparent.

Some companies have gone bust – notably Woolworths and MFI – taking their pension schemes down with them. Just as with anything else, any guarantee is only worth the amount that the guarantor can afford to pay – so when the company disappears, so does the “guaranteed” defined benefits of its pension.

The UK does have a Pension Protection Fund (PPF) to pay out to individuals whose pensions have gone bust – which has bailed out around 700 corporate pension schemes so far – but this is capped at around £32,000 per year, and it doesn’t cover inflation-linked increases. Its purpose is to ensure that people are not left with nothing; it’s not there to ensure that you get what you were promised.

Therefore, the danger with the current proposals – which are expected to be implemented later this year – is that if an individual has future concerns about the ability of their former employer to fund the Defined Benefits of their pension scheme, and want’s to transfer to another scheme before the company goes bust, they won’t be able to and could lose a significant amount of their retirement income.

The only way to properly protect yourself against potential future problems is to act now.

Using a longstanding pension arrangement known as a “Qualifying Recognised Overseas Pension Scheme” (QROPS), individuals can currently transfer their pensions away from the at-risk corporate-backed group schemes, and into a UK government-approved pension scheme, which has a number of benefits.

Firstly, as soon as the transfer is made, it is ring-fenced for the individual, rather than collectively with all other employees and former employees of the company. This immediately eliminates any risk of the company or its pension scheme from collapsing.

Secondly, as soon as the transfer is made, it eliminates the risk that future changes could be retrospective. The current plans include allowing, in certain circumstances, companies to make changes to the pension promises they gave you in the past, for example removing the allowances for dependents, widows, widowers and children, or increasing your retirement age so the pay-out starts later than you were originally promised.

Think that sounds highly illegal? It is. But soon it won’t be, because the UK government are changing the law, to make it legal. Isn’t democracy wonderful…

Thirdly, it gives you a lot more control over your own pension – you can even change into a different currency if it suits you better.

So what should you do about it? Quite simply, if you have a UK pension, you should look at it properly, now.

But be wise – as with anything else, not all changes are good changes. The QROPS structure is great, but it’s a step towards financial security, not the final destination. Once your transfer is made, it’ll need to be looked after properly – what’s the point of taking it out of one high-risk place, and investing it into something else that’s just as high risk – or even higher?

Unfortunately, whilst the structure offers great freedoms, those freedoms can be destructive if used badly. Investing your pension fund into something which goes bust will leave you with no pension. It’s really, really important to get it right.

Are we able to help you with these sort of things? Yes of course; whether you’ve still got a UK pension or you’ve already transferred it and want a quick second opinion on the current risk level, I urge you to get in touch, before it’s too late.

And if you currently don’t have a pension, you’re in even greater danger of struggling through retirement – so start now!

Wednesday, 21 May 2014

How time flies

First blog in quite a long time – how time flies eh? So, to tie in from the last one, the US government did extend the debt limit after a fierce political battle, which means that they have plenty of money (all of it borrowed, of course), until at least the middle of March 2015. Yay.

Here in Indonesia, the political battles have led to different outcomes, notably some horse-riding. We even have two rival proposals to reduce the government’s fuel subsidy liability, which could have a massive positive impact on the national finances – one to ban foreigners from buying subsidised fuel, which will definitely reduce the amount the government spends on fuel subsidies, and one to gradually phase out the subsidy completely, thereby removing the likelihood that oil tankers will leave some Indonesian ports full of (subsidised) fuel worth $millions, and mysteriously arrive at other Indonesian ports nearly empty – which would also definitely reduce the amount that the government spends on fuel subsidies.

The upcoming election is also having a major impact on other financial activity in and around Indonesia – the stock market is registering sizeable movements every time significant new information is released (as you would expect), and there’s an awful lot of projects, mergers, and acquisitions which are ready to go – but not until the July vote has passed without any nasty surprises.

One such project is an Initial Public Offering (IPO – stock market listing) later this year that we’re involved with, and for those of you who have the ability to invest $1million or more, you can get in on the action by lending pre-IPO finance for the transaction, which will pay a fixed return of 10% for a 4-6 month loan – fully underwritten and secured by a large Indonesian financial institution. Details are still being finalised, but if you’re interested in being involved, just let me know.

For those of you who don’t have the luxury of a spare $1million lying around, we have another opportunity, with a much lower minimum investment of just $10,000. It’s from Makati Capital Partners (MCP), which is the rebranded name of Pilot Asia Capital’s merchant banking division - the same team that executed the Indonesian land transaction deal last year. Read previous blog posts for more info on that, the only “news” is that it returned all capital and fixed interest of 15/17.5/20% to investors early this year – slightly later than the expected duration of 9 months, but well ahead of the contracted duration of 12 months.

The new opportunity is a 3-year convertible bond – which basically means that you’re lending money to the company (secured on assets), with the option of converting to equity (shares) in MCP at the end of the 3-year term if you wish. The annual return is a fixed 12.5%, and any conversions to equity will be done at a 30% discount to the prevailing market price for the shares, thereby returning a total of 67.5% over just 3 years, which is not bad at all. If you’d like to know more, just let me know.

Finally, something which might interest you and/or entertain you for a bit – we’ve now launched our own investment platform, which means that people who want to manage their own investments can do so from one place –

It gives you access to over 7,000 international and offshore investment funds, from over 200 fund managers (including all the big banks you know and love), detailed analysis from the worlds’ largest fund ratings agency, and a very comprehensive search facility to find exactly what you’re looking for.

If you click on that link above, and go to the “getting started” tab, you’ll be able to quickly open your own demo account – which means that we’ll give you some pretend money, and let you play with it as if it was real money. Ever wondered if you could do a better job at managing money than the professionals? Here’s your chance to find out, completely free. You can of course invest real money if you wish!

That’s all for this post – thanks for reading. If there’s any topics you’d like to be covered in future posts, or anything finance-related you’d like to discuss privately, please just get in touch - I’d love to hear from you.

Have a great week!

Wednesday, 16 October 2013

The Biggest Ponzi Scheme in the World

You’ve probably already heard about this, as it’s all over the news – the World’s largest Ponzi Scheme is in trouble, and there’s a chance it could collapse later this week.

Admittedly it’s a relatively small chance, according to many – but it’s starting to worry investors who didn’t pay enough attention the last time a big Ponzi Scheme collapsed – Bernie Madoff’s one.

Unfortunately, the biggest lesson in that case was “it doesn’t matter how important, powerful, experienced, or celebrated the person running it is; if the maths doesn’t add up, people will lose their money eventually”.

As a reminder, here’s what the US Securities and Exchange Commission (SEC) says about them:

What is a Ponzi scheme?
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Why do Ponzi schemes collapse?
Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.

So who is running this latest Ponzi scheme, and why is it in danger of collapse?

I am of course referring to the US Government… and I’m not being completely sarcastic.

For years, the US has been living outside of its means – borrowing money to fund things such as the war on terror, the war on drugs, the war(s) on various countries around the world – all whilst maintaining relatively low taxation levels. And, in most cases, without achieving the desired result… but that’s another story.

And despite the advice the US Government frequently gives to others – whether the term “others” applies to other countries, companies, or individuals – the US Government sees only one option: Borrow more money, to pay the interest on the money that it’s already borrowed.

Which, of course, makes the US Government a Ponzi scheme - by the US Government’s own definition.

From a debt of around $1trillion (that’s $1,000,000,000,000) in 1980, it has been steadily increasing with an exponential growth rate. By 1990 it was over $3trillion, by 2000 it was nearly at $6trillion, and in 2010 it stood at $13.5trillion. We’re already at $17trillion today.

Part of the reason it is growing so quickly, is because the USA can’t even afford to pay the interest on the debt – even with a ridiculously low interest rate. So it borrows more money, to pay the interest. To put it another way, it needs money from new investors, to pay the returns to the older investors.

Most of the media reports don’t put it this way – they see it as a huge problem if the US Government isn’t allowed to borrow more money before the end of this week. Why weren’t they calling for more people to invest in Bernie Madoff’s scheme, to prevent that from collapsing?

Whichever way you try to calculate it, there is pretty much zero chance that the USA could repay its debts without causing a disaster just as big as it would be if they defaulted.

If the US Dollar decreased in value by the amount needed to repay it from foreign currency reserves, the world economy (and the US domestic economy) would collapse.

If US Dollar inflation went up to the levels it would need to go to inflate the debt away, the world economy (and the US domestic economy) would collapse.

If the US decided to go on an imperialistic pillaging spree, to help pay down the debt, the world would be ravaged by war (which would collapse the world economy).

If the US decided to shrink its biggest expense – the Armed Forces - down to the level they could actually afford (a couple of sword-wielding soldiers and a horse), some less-than-benevolent countries would be encouraged to scale up their imperialistic ambitions, and the world would be ravaged by war (which would collapse the world economy).

So in many ways it is prudent, relatively speaking, to simply borrow more money – because it averts a crisis right now.

However, it doesn’t avoid it completely – it just postpones it. And the longer it’s postponed, the bigger the crisis will be.

So what will happen in the US Congress this week? Many people find it simply impossible to believe that the US would ever default on its debt, and expect a solution to be found – even if it’s found at the last minute.

However, the problem with this belief is that it’s not based on anything other than misguided wishful thinking. The US Government WILL default on its financial obligations at some point – just as every Ponzi scheme will, eventually. The question is when.

“Tea Party” members of congress, many of them new to national politics, know that their best chance of achieving governmental power is in a crisis (historically, right-wing parties always do better than normal in times of crisis, in almost every country). And they know that if they decide not to cooperate, America will be facing its biggest crisis since the Civil War. Will they budge this time? Probably – but only to allow a temporary, short term increase to the borrowing limit.

Then you can expect them to spend the next couple of months doing what almost every politician does – trying to figure out which course of action would result in the best outcome for them personally.

Hardly the stuff of a Triple-A rating, is it?

Tuesday, 20 August 2013

Solving the Energy problem

A bit of an argument is going on in the UK at the moment, about “fracking” – the process of extracting gas from underground shale rock by injecting pressurised liquid.

Supporters of the process say it’s a relatively clean and cheap way of producing energy; those in opposition to it say it is potentially hazardous and bad for the environment.

Also coming in to the debate are arguments about the wisdom of general reliance on fossil fuels (both in terms of their environmental impact and the fact that they are a finite resource), and of course no debate would be complete without some mention of “national security” – in this case, proponents say it would be more secure for the UK to be reliant on its own shale gas resources that to rely on Norway (from where the UK currently imports a large amount of gas).

So at least in part, the argument has degenerated into a rather silly squabble about global warming and the potential for Norway to turn hostile, both sides of which seem to be missing the point – we, as a race, need energy, somehow.

So what’s the solution?

France thinks it has the answer – nuclear fusion. Unlike nuclear fission, which splits the atom to generate power (used in atomic bombs, and nuclear power stations such as Fukushima and Chernobyl), nuclear fusion is the process of atomic nuclei joining (fusing) together to form a new type of atom.

Supporters of nuclear fusion say it’s cleaner, safer, and cheaper – and France is hosting a $20billion project (named Iter), funded by 34 different nations, to develop the technology, produce the energy, and harness it for our use. The project is decades away from completion, and will cost $billions more, but could this be the solution to our energy problem?

Maybe. The problem is, we already have a huge nuclear fusion power plant. It’s already built, it already works, it’s already clean, safe, and free – for everyone. It’s in the sky, and we call it “The Sun”.

The even better news, is that we already have the technology to harness the energy emitted by the sun, to convert it to power we can use for all sorts of things, such as a toaster, or an Xbox. We call this technology “solar panels”.

If only everyone could afford solar panels! Then all our energy problems would be solved – all with no threat to national security. Or so you may think.

The European Union (EU) has just brokered a deal with China, whereby China guarantees to artificially inflate the cost of solar power – and if they don’t stick to it, the EU will artificially inflate the cost of it.

Why? Because according to EU officials, Chinese manufacturers were “damaging” the European economy by selling solar technology at “unsustainable prices” – they were just too cheap. So cheap, that everyone could afford one. Terrible, isn’t it?

Of course there’s other aspects to this debate – our savings and pensions are invested into shares in big companies, the biggest companies are the oil companies, we can’t have them suddenly collapse otherwise we’d all lose our money, etc etc.

(When I say “our”, and “we”, I am of course referring to the 25% of the global population that is fortunate enough to have savings, not the 25% who don’t have access to a reliable energy source, or the other 50% who aren’t wealthy enough to have investments and have to pay relatively high prices for their energy usage).

So what to do? It’s a tough one to solve, it’ll probably need a lot of people working together to make it work. Maybe we should all sleep on it. Perhaps, with a bit of luck, when we wake up in the morning and look out of the window, the answer will be “blindingly” obvious…

Wednesday, 29 May 2013

How to reduce your tax bill

There’s been mild uproar in Europe and North America recently, about the amount of tax (or lack of it) paid by major multinational companies. At the front of the firing line are Google, Apple, Starbucks, and Amazon – all huge multinational companies who operate in numerous countries, with numerous revenue streams, from numerous business lines.

In a country where sales tax is applicable to good or services sold, it’s relatively straightforward – they pay the relevant tax on sales. But for corporation tax, which taxes the profit made by corporations, it’s not quite so clear.

Consider Apple – a huge corporation with literally hundreds of subsidiary companies. It may hire an employee in America, who designs a product to be made in China, which is distributed by a company based in the Netherlands, who pass it to a retailer in Dubai, to sell to people who have seen an advertising campaign created in the UK.

All of those stages, based in different countries, add value – and give Apple the ability to make a phone for $100, package/promote/distribute it for another $100, and sell it for $500. There’s a $300 profit that’s been made by the combination of all those stages – but how do you define a true monetary value to each of the independent business units? It’s very difficult.

For non-connected companies, it’s very easy – a free market economy will set the price, and each company will pay corporation tax on its profits. But for connected companies, it’s different – it doesn’t really matter whether the designer charges $1 or $10million for her services on paper.

Another way of looking at it is this: If the China-based company buys the parts to build a phone for $50, and the Dubai-based company buys the completed phone for $350, it doesn’t really make any difference to Apple as a company whether the Netherlands-based distributor buys it for $50 and sells it for $350, or whether it buys it for $350 and sells it for $350. It’s simply a matter of choosing whether you want the profit, on paper, to be made in China or the Netherlands.

Of course it’s not exactly this simple – there are plenty of opportunities for companies to route their business activities through other jurisdictions – jurisdictions which charge little or no corporation tax – so that the profit, on paper, is made by a sub-distribution company which in practice does little more than push a bit of paper around.

The slightly bizarre nature of the present discussion between government and business leaders is seeing politicians lobbying the corporations to change their tax practices, and the corporations explaining the law – which is a little surreal, as it would normally be the other way around.

Nonetheless, the discussion always stops at a very obvious point – these corporations are doing nothing illegal, and are simply maximising shareholder value. They see the legal minimising of tax expenditure as being as obvious as not overpaying for any other type of expense.

The ethical argument is that the current tax regimes unfairly benefit the larger companies – for example, a small bakery in a little village is unlikely to have the knowledge, or economies of scale, to route its purchase of flour through several random little countries in order to reduce its tax bill – and therefore will end up paying a much higher rate of tax, in percentage terms, than the large corporations generating $billions each year.

Fair? No.

Reality? Yes.

And an extension of that reality is that this doesn’t just apply to companies – it also applies to individuals. It’s not at all rare for an individual earning $100,000 to be paying more tax, in percentage terms, than someone earning $1,000,000 – partly because the more wealthy people have more to gain (or lose, depending on which way you look at it) and therefore put more effort into it, and partly because the cost of arranging an effective tax-minimising set up is smaller for them (as a percentage of their overall wealth).

But there are some really basic things which any individual can do to reduce their tax bill – legally. For some people, the favoured way in times past was simply to stash it in an “offshore” bank account – such as Switzerland or the Cayman Islands – and not declare it. Many people are now finding out that this wasn’t too smart – as they’re now being discovered, and being charged back-tax plus penalties.

The best thing to do is set it up in a way that’s legally sound, conforming to all relevant tax laws, but making sure that you’re utilising all of the ways possible to reduce it.

In particular, expatriates have a wide range of options available to them while they are living abroad – options which in many cases will cease if they ever return to their country of nationality. Some options are available to people living in their home country too.

The difference between the right structure (which doesn’t mean simply investing into any product classified as “offshore”) and the wrong structure (or no structure at all) can be huge – as you could save a reasonable amount by not paying tax on the growth of your investments, a large amount by not paying tax when you cash in or take an income from them, and a huge amount in a lot of cases when that money is passed on to your family when you pass away.

And the right structure doesn’t have to cost a lot either – in fact for a lot of our clients we can set this up for free, in return for the small 1% management fee we charge to manage their investments – which in itself generates a profit for the client through reducing risk and increasing returns, compared to people making guesses of what to invest in after reading a couple of news articles.

So – if you’d like to have a preliminary chat to find out more about how to legally avoid taxes, please get in touch and I’ll be more than happy to go through it with you. It might save you a small fortune…