Six tips for protecting and growing your savings
Amidst today’s climate of global uncertainty and prolonged low interest rates, careful planning is particularly important to secure long-term financial security. These six key tips can help.
- Establish a suitable strategy
Crucially, your portfolio should be created and managed to meet your particular circumstances and goals, including your risk tolerance and income requirements. Make sure your investments are tailored for your life in Spain rather than for a UK resident. With an ill-fitting investment portfolio, you could find your money is not working as hard as it should, is difficult to access or becomes eroded by inflation.
- Understand your risk appetite
Before investing, you need to pinpoint the right balance of risk/return for your peace of mind. It is difficult to assess your own tolerance for risk, so speak to an experienced adviser who can ask the right questions and use appropriate tools to create an objective risk profile for you. They can then recommend an appropriate blend of investments to match your requirements.
- Identify your timeline for investing
Generally, the longer you have to invest, the more risk you can afford to take. With time, you can ride out market volatility and benefit from compound returns. Understanding your time horizon is also useful to establish the right level of ‘liquidity’. Your plans may change unexpectedly in future, so make sure you hold some liquid assets that can be easily sold if you need to access your capital or change strategy.
- Insist on diversification
The higher your concentration in one particular investment type or area – including the UK – the greater the risk. By diversifying across asset classes, geographic region and market sectors, you limit your exposure to any one area. You can take diversification further with an adviser who uses a ‘multi-manager’ approach to spread your investments out among several fund managers. This can reduce your reliance on any one manager making the right decisions in all market conditions.
- 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 taxation.
For expatriates, tax planning 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 Spain and in the UK while taking advantage of available opportunities.
- 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. 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, bringing it forward if anything happens to affect the effectiveness or suitability of your portfolio.
You can bring all these guidelines together by taking personalised, quality advice from a regulated adviser. Whether you are looking at investments, tax planning, estate planning or your pensions, it is crucial that your approach is appropriate for you. With the right strategy in place for your life in Spain, you can protect and grow your wealth – in real terms – not only during your lifetime but for the next generations to enjoy.
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. Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com