What to do about a stronger pound?Posted on July 29, 2014
As the pound continues its trend of strength, retired expats in Asia and beyond have been enjoying a nice uplift in their pension payments; but how long will this trend continue?
Recent rumours of the Bank of England planning to finally raise the base interest rate by 2014 (after sticking to their guns with the 0.5% for 6 years) coupled with European Central Bank growth policy spell a continuing good forecast for the pound. This massive rise has been largely down to UK growth and the ECB’s strategy to drive growth by export –led demand through maintaining a weak currency.
Nonetheless, if anyone should remain wary of currency fluctuations, it’s expats. Going back a few years, the financial crisis and the resultant global economic downturn saw UK expats sometimes lose up to a third of their pension payments as a direct result of sterling weakening.
This is why investors should always maintain a wide range of investments in their portfolio, including property, equity, cash and bonds. These types of investments stay untouched by (short term) currency fluctuations are always going to be more predictable and stable (if say the housing market is set to go down, you’ll at least be able to see it coming). That’s not to say that currency fluctuations are always irrational, but they’re just a bit more of a head scratch when it comes to analysing.
A sure-fire way to protect your pension from such a disaster is to look at the possibility of switching your plan over to a QROPS. A QROPS, or Qualifying Recognized Overseas Pension Scheme, is a clever way to shield your retirement investment, as well as probably benefiting from several tax advantages and a wide choice of currencies. Because of the degree of flexibility they offer, QROPSs are becoming quickly known as the smart expat’s solution to pension woes.
About Caterer Goodman Partners
Caterer Goodman Partners is a Shanghai based wealth management firm established with a clear vision to provide a new level of personalized financial planning services for expatriates in Asia. Our financial advisors provide guidance for our clients in all areas of investment, specialising in managed accounts, money-market funds, retirement planning and alternative investments. At Caterer Goodman Partners, we offer our advice and experience to provide low cost, tax-effective and simple solutions to match our clients’ interests.
About Owen Caterer
Since graduation Mr Owen Caterer has worked with the Queensland Premier's Department in Trade Facilitation and then as a financial adviser in Shanghai from 2005 until 2010. He then rose to Senior Adviser, then Business Development manager and then to Chief Investment Officer responsible for portfolios to a value of US$280 million across Asia. Following that Mr Caterer left to found his own firm with a partner in the financial advisory and wealth management area. This focused on developing China and Asia's first fee-based financial advisory (rather than commission-based). This has grown to now have 8 staff and and managing almost US$35 million for clients throughout Asia. This business success was recognized as a finalist in the 2013 ACBA in the Start Up Enterprises category and are one of a small number of foreign managed firms to have a full asset management license in China. Owen has also been active in the community volunteering for the Australian Chamber of Commerce in Shanghai and acting as the Vice-Chair of the Small Business Working Group (2012-2014) and as the Co-Deputy Chair of the Financial Services since 2013 until the present. They have continued to grow their business and have now been selected as a small group of companies who are platinum members of the Australian chamber of commerce. The achievement they are most proud of is their efforts to reform the financial planning industry in China and push it away from a hard-sales commission driven model to a more ethical management fee and long term customer service model. Owen has a Graduate Diploma of Applied Finance from the Securities Institute of Australia of which he was a member as a Fellow of Finance for many years and also has an undergraduate degree from Griffith University in International Business. Owen's interests are tennis, running and his wife and two children. He speaks fluent Chinese, first arriving in China in 1997.
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