Managing wealth as an expat in Kuwait can be a complex affair and your approach will depend entirely on your current situation and future needs. Your strategy will depend on what assets you currently have, your income and expenditure, your family set-up and where you want to live in the future. There are however a few guiding principles that help to keep you on track.
Firstly, whilst portability and flexibility are key when it comes to handling expat finances, at the same time, it may also pay to keep your investments in a single location. It can be easy to build up assets by changing country and currencies frequently but keeping the structures as simple as possible will save you time and the need to constantly manage your portfolio. Think how difficult it can be to move your personal belongings from one country to another. Well, it’s just the same when it comes to transferring your wealth, largely thanks to differing tax regulations and currency fluctuations. Instead, consider consolidating your assets into fewer regions.
It’s not only a good idea to simplify a portfolio by consolidating the assets into a single location but also to keep the structure simple. If your wealth is invested in only shares and bonds for example, these are easy to transfer from one country to another because these asset classes are traded around the globe and tend to be treated the same way by different tax regimes.
You need to understand that your plan should not be set in stone as your own situation will change and evolve. Allowing for fluidity enables you to be flexible for example, by working with one central global institution that can deliver tailored and adaptable solutions for you.
Simplifying a portfolio however, can expose you to greater risk. A portfolio of just shares and bonds for example, will be far greater riskier than a number of broader assets such as property or protection products.
Ensure you consider the charges associated with different financial products. Offshore bonds, for example, might include ongoing management fees as well as establishment management fees, payable once when setting it up. Figure out, therefore, how much your portfolio needs to grow by to outpace these charges. If the market fell by 10% for example, you could actually lose 16% of your money, when factoring in these fees.
TAX & CURRENCY
Ultimately, the biggest risks to a portfolio are tax and currency. You need to ensure the capital you have will provide the best possible lifestyle, rather than leave you caught up in a never-ending vortex of tax payments. It also pays to gain a solid understanding of the impact that currency fluctuations can have on the value of your income, expenditure and assets.
Seek good currency rates and guidance on the best timing to buy a particular currency. Consider using money orders, for example, which allow you to implement a trade when a certain exchange rate is reached, to ensure the trade is placed at the best rate. You can also take advantage of stop-loss orders so that if the value of a currency falls below a certain amount, an asset will be sold.
Where you call home will determine what tax you may be liable to pay when returning to your home country. Ideally, you want to return home with your wealth vastly improved so considering how to repatriate your financial assets needs careful consideration.
Determine whether you’re best leaving your wealth offshore and pay attention to expected future movements of currency rates. If you plan to return home in a year’s time but you like the current exchange rate, for instance, you could use a forward to ensure that when you do repatriate your assets in 12 months’ time, it will be done at today’s exchange rate.