Should You Buy Property Abroad or Invest Offshore to Make More of Expat Earnings?

The age-old question on any investor’s mind is whether stocks and shares or property make for the best, most solid investment asset.  You will hear arguments for and against both approaches and indeed, it can be very hard to know which method for the intensive saving of your wealth is likely to return you more and provide you with greater stability.

The past decade has really shown us all that both property and equities have their extreme ups and their dramatic falls – proving that perhaps neither one is ideal for our money?  But there again, we can’t stuff our mattresses with cash because of the erosion effects of inflation…

So what’s the answer for an expatriate who has gone abroad to take advantage of a high paying job and a low tax lifestyle?  Should you buy property abroad or invest offshore to make the most of your expat earnings?  New research provided by both The Halifax and Barclays Capital identifies why really, either approach can work, but that the secret in all of this is the length of time you commit to either approach.  Read on to discover what the in depth and lengthy research has revealed….

If you compare the findings of The Halifax and Barclays Capital like for like on the page, you will see that over the past 50 years house prices have outperformed stocks and shares unless dividend income from investments was reinvested along the way, and then stocks and shares have significantly outperformed property!

Halifax’s figures reveal that in the last 50 years house prices have almost quadrupled in real terms – however, a significant portion of the growth was rapidly ramped up in the last 10 years when we’re all aware Britain was in a property boom cycle.  Now that that bubble has burst and property is stagnant in the UK again, who’s to say how the average figures will look in another 10 years from now.  On the other hand, equities have risen 86% over the last 50 years before dividend income reinvestment, and a whopping 1,180% after inflation where dividends were factored in.

An expatriate investor thinking carefully about whether they should perhaps move into property abroad now that they’re living overseas, or explore equity based offerings offshore, may find these figures very interesting indeed.  They certainly show that property has perhaps become a more popular investment asset over the past 10 years…and that if you are going to invest in stocks and shares you need to be prepared to keep reinvesting if you’re ultimately going to grow your pot for income drawdown later in life.  This is all exceptionally valuable data…but the most valuable piece of information available is that actually, it’s taking a long-term approach to saving, investing, squirreling away and wealth management that quite literally pays dividends!

In the 50 years plotted by The Halifax and Barclays Capital it is very interesting to look from year to year.  In the 1990s for example, property prices dropped dramatically in the UK returning a 22% fall overall.  The following decade was horrendous in terms of stock market growth; the FTSE 100 hit 6,930 in December 1999 and has since then failed to ever top that again!  But if you look at patterns over a period of longer than 10 years, you begin to see that actually, if you balance out your investment approach and are prepared to literally hold investments in place for the long-term, you stand a greater chance of winning out in the investment lottery.

Now you may like to point out at this stage as well that it is unfair to compare property price growth with capital and income growth of shares – so, if you want to think about property investment as returning you an income in the form of rent, you could perceive that perhaps an investment in a property abroad would be more advantageous to you.

It is very much a personal choice – and really, as long as you remember that diversification and taking a long-term view of your finances are what’s important, you shouldn’t go wrong with your thinking!  However, when it comes time to take action, it is always recommended that you seek specialist and targeted advice from a qualified and regulated offshore, independent, expatriate financial adviser so that you can benefit from their guidance, their suggestions and their advice.