Of course, this does not mean that those looking to save for their retirement should automatically look to put their cash into savings; it simply means that those looking for a low-risk strategy could do worse – Lewis’s study found that unlike shares, savings always produce profitable returns.
“People who prefer the safety of cash can make returns that beat those on tracker funds,” said Lewis. “Over the longer-term shares are likely to do better but I wanted to find out when the boundary is. My research shows that it’s only at about 18 years that the balance turns in favour of shares over cash.”
Lewis’s data showed savings accounts outperforming shares in the majority of five-year periods beginning each month from 1 January 1995 to the present. However over the course of 21 years the tracker yielded a compound annual return of 6%, superior by one percentage point to that produced by best buy savings accounts.
It should be noted, however, that in order to achieve the best possible returns on regular savings, expats need to become what Lewis terms “active savers”. This means that every year they need to move their savings between ‘best-buy’ accounts.
What Lewis’s study certainly underlines is the importance of good expat financial advice. There are so many variables applying to both people and the products they choose that good guidance is imperative.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Norway’s novel wealth management strategy of allowing taxpayers to pay additional tax if they feel their mandatory contributions are an insufficient reflection of their true capability to pay has yielded a perhaps unsurprising result: since the scheme’s launch in June just $1,325 in extra revenue has been raised.
The UK government has admitted there are not enough pension transfer specialist advisers to deal with demand, particularly in the case of more complex transfers into overseas pensions. This was the government’s response in March to a consultation launched two years ago, on whether the need to take financial advice, introduced with pension freedoms, created difficulties for overseas residents – residents such as those living in Cyprus wishing to transfer their pension savings from the UK to a qualifying recognised overseas pension scheme (QROPS).