There was once a time when it was almost fashionable to be in debt – okay, so the term debt was not used and no one actually spoke about how much they owed - but it was fashionable to spend to the max, live a lifestyle emulating that of the rich and famous, to have a good car, a well-furnished home, to be well-dressed, buy our children everything their little hearts’ desired and to think nothing of trading up thanks to a 125% mortgage loan.
And then reality bit. It bit when Lehmans went bankrupt, it bit when the British government began bailing out banks with bucket loads of billions, it bit when we read about Americans being made homeless and living in their cars and it really bit when the media jumped on the bandwagon and coined phrases such as ‘credit crunch’ to label a time in our history when all of a sudden it was no longer cool to spend more than you earned and to ‘max out’ your credit cards.
A massive corner has been turned in terms of the way we, the public think about our money – and for the first time in many people’s lives, finding ways to save money is far more important than working out what to spend that new loan on next. Whether you’re an expatriate living abroad, you’re a British taxpayer living onshore or you live, work, travel or are retired abroad, could you now benefit from an offshore savings account - seeing as how it’s suddenly fashionable to be clever about money and to be getting the best rates of return on your cash?
If you’ve never been a saver there are some very simple ways you can adopt the savings habit, some of the best are as follows: -
1) Each month, on payday access your current account and move a sum of money from it that you feel you can live without that month. Put that sum of money in to a savings account that earns a higher rate of interest and is perhaps a little less easily accessible than your current account with its nifty little ATM card!
2) Set up a standing order to move a fixed sum of money out of your current account and in to your savings account each month – a) this saves you the hassle of having to do it manually and b) it means that you can forget all about the transaction, that way you’re more likely to keep on saving because if you have to manually do it each month you may become lazy, forgetful or just decide that you can’t move any money one month and that will be at least one month of savings missed.
3) Have that standing order debit a percentage and move it to a savings account each month – therefore if you get a bonus one month or you have spent less the month before and when the day comes around for your standing order to be debited, if there is more in the account so a higher percentage will be taken out and saved.
4) Have your bank ‘sweep’ out your account the day before pay day and move anything that’s left in your current account into your savings account
These are all hassle free, easy ways to start saving painlessly. But if you want to make your savings work harder for you, an offshore savings account could be the way forward. If you save into an offshore account the interest you earn is paid gross – i.e., without the deduction of taxation. What this means is that each month more interest is earned because it is earned on a higher sum – i.e., your money plus interest without the deduction of taxation! At the end of the tax year or at the end of the term of your savings account you may well have a tax liability – however, in the interim your savings will have enjoyed a real boost.
Depending on your tax status, you may be able to avoid the payment of tax on an offshore savings account altogether. Note, this does NOT apply for Brits living in the UK and paying tax in Britain! But it may apply for expatriates tax resident in a nation where they are not liable for tax on money not remitted to their new nation. Find out from your tax adviser about your tax status – and make sure you make the very most of it if you can! Also remember that when it comes to the reporting and payment of tax, ignorance is not an excuse so you have to be well versed as to your liabilities and obligations.
Taxation saving is not the only advantage associated with an offshore savings account however. If you lead an international lifestyle – e.g., you live abroad, you travel overseas for work, you earn in a different currency to the one you pay out bills in day-to-day – you could benefit from the flexibility of an offshore savings account. Such accounts can allow you to transact in multiple currencies, such an account can be accessed from anywhere in the world, such an account might be in a more stable and economically and politically secure jurisdiction than the country in which you’re living.
All of these benefits are then made even more attractive when you take into account that you can sometimes get preferential interest rates offshore, more favourable terms – and that the leading international independent financial advisers are sometimes given limited access for their customers to even more attractive rates than the so-called ‘headline’ interest rates. These are all very good reasons for you to explore not only whether an offshore savings account could be beneficial to you, but which account offered from which finance house or through which adviser is best for your and your money.
