...and you won't believe what they said.
Expats’ pain points are something we are always curious about, so we asked 150 expats what was the worst advice they've been given, and these are the most shocking answers they gave us:
1.“Chase the money, so you can save much more.”
Why is this terrible financial advice?
Before moving abroad, many expats think they will be able to save more than they can at home, and are blinded by the promise of higher income, and in some cases, the absence of income tax (such as Qatar and the UAE). But many also fail to consider the cost of living in their country of destination, while some get absorbed into the illusion of being on an extended holiday.
Saving can be difficult without financial discipline. High expectations of how much cash you will hoard when you become an expat can soon be dashed by the realities of life abroad. Even if you live in a low or no tax environment, increased social commitments and the temptations of life in an exotic location, can make saving hard.
What can you do?
Set a goal and a timeframe. Think about how much you can save and what purchases you are planning to make in the future. Once you know how much you can save, you will be able to decide how best to do this and whether you are also able to invest some of your cash. To learn more about how you can achieve your goals, download How to become an Expat Millionaire.
2. “You don’t need an offshore bank account.”
Why is this terrible financial advice?
The first item on an expat’s financial checklist should be to open an offshore bank account, and many expats neglect the absolute necessity of banking offshore. This applies to all regions, but consider if you live in the Middle East for example, where local laws could mean your money is withheld if you are involved in an accident or on death.
What can you do?
Open an offshore bank account. There are a lot of benefits, such as being able to organise all your assets in one place, peace of mind and security that your money is safe, and convenience, which is especially needed for mobile expats. Read our Expat Guide to Offshore Banking: UAE Edition.
3. “Guaranteed growth in offshore investment bonds.”
Why is this terrible financial advice?
Not all offshore investment bonds are bad. In fact, these can be a good type of investment if used appropriately.
Offshore investment bonds are recommended because of their tax efficiency, helpful for expats living in high-tax jurisdictions.
However, if you live in a country with low or no income tax, an offshore investment bond may not be the best savings vehicle for you as it does not help your tax position at all. And more often than not, these are laden with hidden charges and filled with unsuitable investments.
What can you do?
You can start by requesting for an X-Ray Report from us and we can look at how your investments have performed against their benchmarks and determine whether they were responsibly set up. To learn more about offshore investment bonds, download Insider secrets: How offshore financial salespeople make money on your investments.
We have all been at the receiving end of terrible advice, whether financial or otherwise. But the cold, hard truth never starts sinking in until we find ourselves face to face with its consequences (Read our blog, 7 terrible pieces of financial advice you should ignore).
