Best UK Expat Savings Account | Your Options Abroad
LEARNING OBJECTIVES
We’re passionate about providing free, high quality and up-to-date information to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
Why saving is important as an Expat
What options there are internationally
The difference between saving and investing
The best savings account for Expats
Expat Savings Accounts
Managing your finances as a UK Expat can feel complicated and at times overwhelming. International wealth management involves navigating various tax systems, currencies and cross-border regulations.
The basics of financial planning is generally understood by most in the UK. For example recognising the benefits of an ISA as a savings vehicle, or topping up your pension for tax-relief. However, offshore is an entirely different matter. Common concerns faced by Expats include:
Where can I open a savings account?
What interest rate can I get?
Can I choose the investments?
Where will I be taxed?
How safe is the account?
In this article, we'll delve into the above and assess the importance of savings as an Expat, as well as running through the options available.
The Importance of Savings
Moving abroad should not interfere with your long term goals and objectives. Savings may at first seem daunting in a new country with new rules, however there are many options available. Below, we will run through the choices available for international savers and investors.
Local Banks
The most obvious is with your local bank, wherever that may be. Local banks should provide you with security for your savings, and peace of mind knowing that they are held with a reputable institution (depending of course on where you are living).
For example, in the EU, most banks should offer you an interest rate close to the European Central Bank's base rate (4% at the time of writing). If you are holding substantial amounts of cash as an Expat, be sure to speak and negotiate with your bank manager. Various fixed deposit accounts may be available. However, note that these will generally lock away your savings for a period of 12 months or longer.
UK Institutions
If you still hold UK bank accounts or investment accounts, your existing provider may continue to work with you, dependent on your position.
UK banks and investment providers will be covered by the Financial Services Compensation Scheme (FSCS), as well as being regulated by the Financial Conduct Authority (FCA). This combination essentially operates as a double-lock of investor protection, and will provide a great deal of peace of mind to your savings.
Note, also that the UK base rate is higher than the Eurozone (5.25% at the time of writing), meaning you can get a greater return on your savings, providing your bank has a good offering.
We are seeing post Brexit that the majority of UK institutions will ask you to close your accounts when you move abroad, or provide a new proof of address. In this scenario, former UK residents will likely have to consider taking regulated Expat financial advice.
Offshore Savings Account & Offshore Investment Accounts
For non-UK residents, often the best option is international investment accounts. There are a variety of these available to British expats, including Saxo Bank, Novia Global and Capital International. Each have their own merits, however our recommended provider is Novia Global.
Be sure to check the regulations of any provider that you look to hold your money with. We recommend only using offshore investment platforms that are regulated by the FCA, and fully covered by the FSCS. This ensures you have the same amount of protection that you would receive with a traditional UK savings account.
Once you set up your account, you'll then have the choice of the investment instruments. This can be low-risk money-market funds. These essentially pay you a daily interest rate on the holdings, which will mirror the base currency interest rate (i.e 5.25% if the account is in Sterling, 4% if in Euros).
Investing vs Savings
Whilst this may be prudent if you are looking for short-term capital preservation and safety, there may be better options for longer term savers.
If your time horizon is longer, and you do not need immediate access to the funds (think pension provisions, educational savings plans, future house deposits), consider speaking with a regulated Expat financial advisor to assess the options.
Investing your savings instead of leaving them in cash can help your money grow over time. When you keep your savings in cash, like a regular bank account, the value of your money stays the same, and you might even lose some value due to inflation (the rising cost of goods and services).
But when you invest, you put your money into things like stocks, bonds and commodities which have the potential to make more money for you.
For example, the S&P 500 (500 largest companies in the USA) has averaged an annual return of 11.8% since its inception in 1957.
Over the long run, investments will generally earn you more than what you originally saved, helping you to generate international wealth and reach your financial goals.
Investing is always the smartest choice for your long-term financial future - think about your UK pensions or retirement accounts for example. Legally, these have to be invested by your employer, to provide you with adequate retirement provisions.
Taking Expat Financial Advice
International wealth management isn't easy. Working with an independent and regulated financial adviser can add value, as well as provide peace of mind that you are taking the right steps to secure your future well-being.
The Wealth Genesis is the first Expat Wealth Management company to charge the same flat-fee to all our clients, regardless of their background, wealth or objectives.
Being fully independent, our sole priority is providing unbiased, regulated and bespoke advice to our clients. To schedule an intiial consultation with a member of our expert team, use our contact form below or simply email info@thewealthgenesis.com
Get Started with The Wealth Genesis
FAQS
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Your local bank should be able to offer you a rate close to the currency base rate.
If they don’t, ask them why and perhaps tell them you’re considering moving your money. This may encourage them to offer you a better rate.
If they can’t, consider your options elsewhere. -
Everything has a risk, including cash (for example, inflation risk).
The risk associated with savings accounts are interest rate risk (if rates change rapidly) and default risk (if your bank goes under).
Both of these are unlikely scenarios. -
If you require your savings to be used within a 2 year period, we’d suggest leaving the funds in interest accounts, or fixed term accounts. We also have access to low risk alternatives which provide a greater return.
For anything more long term, you should consider investing. Historically, investing has always outperformed cash - this is why your pension has to be invested! -
Providing you are working with a fee-based and independent adviser, they can help you access better rates for your money, as well as look at other more exciting investment options.
Be sure to complete your due-diligence, and check they are regulated before proceeding.
