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Expat Investor : November 2007
expatinvestor.com 24 EXPAT INVESTOR November 2007 FIRST PERSON Raisons d'être for banking offshore Why is it desirable to have an offshore bank account in the first place? Tax planning may be an important way to help you make the most of your overseas appointment. If you are living in the UK, but not UK domiciled, or if you are a UK expatriate living abroad, there may be considerable tax advantages to placing your money offshore. This should be discussed with your tax advisor. What tax optimisation measures are available to expats and how can these be used to the best advantage? To obtain more detailed information about your status and implications for taxation, it is recommended that you consult a tax advisor. Tax advisors may offer advice on areas such as structuring non UK investments and banking arrangements to optimise UK tax, retirement planning, planning for spouses of different nationalities and domiciles etc. Tax advisors can assist you in understanding your resident and domicile status and the implications for your financial circumstances. Citibank International Personal bank offers a free one-hour tax 'health check' with a choice of leading professional services firms, subject to terms and conditions. How will the EU Savings Directive affect my investments? If you become resident in an EU country, including the crown dependencies, then any savings income paid will be reported to the revenue authority in which you are resident. What tools enable an expat to move his or her finances offshore? Multi-currency accounts, which provide an easy way to manage your finances between the UK and your new country of residence or other countries in which you may have finances. Certain banks provide UK expatriates with essential financial services in their destination country, so that upon arrival, they can be prepared financially as if they were at home. For example, setting up credit cards and in some cases personal loans, cross border client credit references to provide credit cards on arrival in your destination country. These services are available for several countries, depending on the bank. How can an expatriate tell whether the financial advice they're being offered is appropriate to help them to achieve their wealth aspirations? An important consideration in obtaining the right advice for you is whether your advisor can provide unbiased and holistic advice that you can trust. You should look for services such as: a dedicated Relationship Manager who will build a long-term relationship with you and tailor their investment recommendations around your personal financial objectives and attitudes towards risk. a provider that is not tied to particular fund houses and managers. access to a broad range of mutual funds from leading fund houses. expertise leveraged from a global team of market experts. thorough research methodology to select a first-class and diverse range of products for specific types of risk profiles. Why is it important to select an international bank? market and investment experience -- leverage the collective expertise of an international team of investment and market experts when recommending where to place your money. a wide range of banking and investment products - for example, sophisticated multi-currency products, time deposits, capital protected investments and mutual funds. a global network will enable you access to your money wherever and whenever you need it. A checklist of services you should look for when choosing your offshore bank a sophisticated range of multi- currency banking and investment products. a dedicated Relationship Manager -- providing personalised service and advice on your banking and investment needs. investments ranging from international brokerage across multiple markets and capital protected investments to mutual funds from respected third party fund houses. ability to create bespoke capital protected investments for individual clients, enabling them to take advantage of current market trends. ease of accessing your money -- 24/7 online banking, global banking network, access your funds 24/7 via a debit card, regular statements to provide an overview of your accounts and portfolio. To find out more from Citibank, enquire through the fast facts number below. Citibank found the time to answer typical expat questions about the necessity of banking offshore. Fast Facts 99490 The average Brit shells out £386 to attend a wedding, splurging on gifts, clothes, accommodation, travel and reception drinks. Of this, £130 is often spent before the wedding day itself on stag and hen parties. New research published by CreditExpert.co.uk reveals the cost of other people's nuptials -- even if we don't really know or like the person getting hitched. In fact, a fifth (20%) often attend weddings of people they arely know (such as a distant family ember or friend of a partner), ding to one in seven (16%) of us ually resenting the investment. he research, conducted to light the financial implications edding fever, also exposes that are likely to significantly estimate the cost of their own g, believing it will set them ly £9,000, whereas recent shows that the actual ost of a wedding is parity may be due to the coverage of celebrity here costs regularly ns of thousands of of 1,500 British adults 6% of Brits (1.6 million people) have gone into debt so they could attend a wedding -- for Londoners the figure is 9%. 45% of Brits have felt pressured by family and friends to attend a wedding. despite the growing trend for over seas nuptials, over one in four (44%) guests will be there under duress, claiming they resent having to attend. "The cost of getting mar ried and at tending other people's weddings is often underestimated, but it's a significant outlay that often hits hardest those who are first time property buyers or those still burdened by student debt. "As a result, attending lots of weddings in a short space of time can mean your credit rating is adversely affected," says Jim Hodgkins, Managing Director of CreditExpert, the credit monitoring and identity fraud protection service from Experian. Where does it all go? Stag / hen party -- £130 Wedding gift -- £70 Outfit / Clothing -- £64 Travel--£49 Accommodation -- £48 Drink -- £26 STATISTICS AND ANALYSES £386 -- the cost of attending a wedding unveiled re new trend in financial astrology A medley of statistics and analyses revealing much about our responses to saving, investing and spending our money. Doyouh joint acco Phishing scams: is the reality different from the perception? According to new research fr Abbey Cur rent Accounts, 5.5 million joint account holders (2 use their (joint) account to make purchases for themselves without telling their partner. Ye t, this is still less than the 24% of people who suspect their partner of doing so. While men and women were equally to blame for blowing joint funds behind their partner's back, men were more suspicious of their partner's behaviour -- as 26% believed their partner to have spent joint account money inappropriately compared with 23% of women. Given the levels of dishonesty and suspicion amongst joint account holders, it is hardly surprising that one in five said they'd fallen out with their partner over how their joint cur rent account is being used. Most people are happy to use their joint accounts to pay for household bills such as gas and mortgage payments (93%). Super market shopping (83%), home and kitchen appliances (75%) and holidays (72%) were also acceptable areas for spending joint In wi mo using with 3 still bel come ou In resp Abbey is u establish pr using their jo While the stu thirds of coupl sensible enough spending rules at joint account relat one in ten couples established rules tha comfortable with. A further 10% said taken between two and to do so. Nearly half of people in the UK (46%) do not know what a phishing email is, new research by secure online payment provider PayPal reveals. Just over half of women (54%) claim to understand what the term means, compared to three quarters of men (74%). PayPal is calling for greater consumer awareness and education. The research into our knowledge and awareness of phishing scams also revealed that people in the UK are so confused by phishing that just 4 in 10 of us (42%) would be confident enough to explain what a phishing email is to someone else. Phishing emails are bogus emails sent out widely to a host of email addresses asking the recipient for personal infor mation, usually rega rding their online credit card or bank accounts. Anyone responding to these emails is likely to find that money has been fraudulently withdrawn from their account. When it comes to solving the problem of phishing emails, 64% of people believe that better education for people who shop online will solve the problem, whilst 39% say personal signing and encryption of all emails would prevent phishing emails arriving in their in-box. Despite nearly half of people in the UK not fully under standing what a phishing email is, six out of 10 people (60% or 27.4 million) say they have received a phishing email at some point, with 66% of these people (18.1 million) receiving an email asking for personal information regarding their account that looked as though it had come from their bank account. When these emails hit their in- box, 71% of these people just deleted the email straight away, a quarter (25%) forwarded it to their bank, whilst just 5% forwarded the email on to an anti-phishing inter net site to be dealt with. The good news is that just 2% of people say they were fooled into re sponding to a phishing email. How to spot a phishing email Generic greetings. Many spoof emails begin with a general greeting, such as: "Dear PayPal member". If you do not see your first and last name, be suspicious and do not click on any links or but ton. A fake sender's address. A spoof email may include a forged email address in the 'From' field. This field is easily altered. A false sense of urgency. Many spoof emails try to deceive you with the threat that your account is in jeopardy if you don't update it ASAP. They may also state that an unauthorised transaction has recently occurred on your account, or claim PayPal is updating its accounts and needs information fast. November 2007 EXPAT INVESTOR 5 guide to tipping abroad know they new ices. n the same -- wherever they go. But different cultures dictate that every country in the world has a unique approach when it comes to tipping etiquette. For example, while the UK standard reward for good service is Hotels Bars Guides Taxis ery!Y es Yes,afew coins.U sually 5-10% for mostD river s ofmetered taxis y.s ervices,including guides.e xpect tips of10-15%. 5%-20% or 1-2 euros T ip by rounding the No Tip by rounding the bill f o r concierge and porters.b ill to the near est euro.t o the nearest euro. is added 1 -1.5 euro S ervice is usually included,but 1 --1.5 euro Tip 10 --15% ofthe fare. rs, it's customar y to round up the charge. e.%.N o No N o No G enerally tip a fe w dollar s 2-3 dollars N/A 15% tip is expected for housekeeping,in mor e expensive hotels,. 15% tip is expected. I n Romania,expect to give N/A T ip at your discretion N o atipupto5%. A service charge is added N /A Its about £1 per day -- T ip is normally about 10% to most hotel bills but on Nile cruises usually but normally during a 5% tip is expected.h ave to pay up front, the bargaining process. N o N o N o T old to keep the change. ts N o N o No N o around 10%, in some countries that level of tip would be an insult. Restaurants in the US expect 20 to 25% for great service. In contrast, the act of tipping in Japan is considered rude. ARY TIPPING ETIQUETTE FOR OVERSEAS DESTINATIONS fortunes on the back he stars is a w gaining UK, war ns alyst mmensely popular ny financial fads trology, as the etary e es, stock and other bsites, e US, are lUK investors with spam email inviting them to invest via this unconventional methodology. "It is also worrying that there are now specialist fund managers, such as The Astrologers Fund, incorporating planetary movements within their standard calculations, and this is in our view quite frankly dangerous for investor s," said Moneyspider.com Managing Director Bill Ross. "It is one thing to have a bit of fun with the likes of Mystic Meg et al, but would anyone in their right minds seriously want to invest their hard earned cash on the basis of the relative positions of celestial bodies," asks Mr Ross. A recent study by The British Association for the Advancement of Science asked a professional investor, a financial astrologer and a five-year old child to invest a fictional £5000 on the FTSE100. The investor chose shares on the basis of his experience, the astrologer based her decisions on the 'birthdate' of companies and the child chose her shares randomly. The child lost the least amount of money and the financial astrologer made the largest losses. NEWS expatinvestor.com 2 EXPAT INVESTOR November 2007 SCI entices 'silver' savers Fast Facts 9 9110 Fast Facts 9 9111 Fast Facts 9 9112 SCARBOROUGH Channel Islands (SCI) has launched an easy access savings account aimed specifically at over-60s. The Lifestyle Sixty-Plus account is available to investors aged 60 or ove r. The account can be opened with a minimum investment of £5,000, and depositors can invest up to a maximum of £1 million. Many savers concer ned about the security of their deposits following the credit-crunch fallout w ant to know more about the market used by the banks to borrow and lend to each other. And, so here's a guide to The British Banker s' Association London Interbank Offered Rate (BBA LIBOR). Investors should take note that 'LIBOR'is a generic ter m,which refers to an individual bank's rate. BBA LIBOR is the benchmark index of London interbank lending. BBA points out the term LIBOR has been used erroneously to describe this industry standard, but as individual banks may calculate their own Libor rates, the term BBA BBA LIBOR explained Halifax launches first multi-currency ATMs BBI launch online savings account Halifax has launched multi- currency ATMs that will allow customers in the UK to withdraw euros and US dollars. The ATMs, believed to be the first of their kind Withdrawals are allowed without notice or loss of interest, subject to a minimum withdrawal of £1,000. The account's interest rate tracks and matches the Bank of England Base Rate (base rate less 0.20% fo r monthly interest accounts). SCI confirms Lifestyle Sixty-Plus can be opened by post and then operated and managed by post, telephone, fax or e-mail. Details of the account, together with an application form,can be obtained online. Tony Burdin, Managing Director, tells Expat Investor he is keen to appeal to the growing population of British expatriates, as well as people approaching retirement who are looking to maximise their savings retur ns. "The number of people in this age group who are choosing to live abroad is growing, and we are trying to cater for their needs with this dedicated account." LIBOR should be used to distinguish them. What is BBA LIBOR? The British Bankers' Association London Interbank Offered Rat e closely reflects the real rates of interest being used by the world's big financial institutions. Central banks (such as the Bank of England, the US Federal Reserve and the European Central Bank) may fix official base rates monthly, but BBA LIBOR reflects the actual rate at which banks borrow money from each other. BBA LIBOR figures are issued daily on more than 300,000 screens around the world. Rates are quoted for a range of borrowing periods, ranging from over night loans to 12 months, and a range of world currencies. How is it calculated? The BBA uses Reuter s to fix and publish the data daily, usually before 12 noon UK time. It assembles the interbank borrowing rates from 16 contributor panel banks at 11am,looks at the middle 50 per cent of these rates and uses these to calculate an average, which then becomes that day's BBA LIBOR rate. This process is followed 150 times to create rates for all 15 mat urities (ranging from ove r night to 12 months) and all 10 currencies for which a BBA LIBOR rate is quoted. What should I be looking for? Dramatic changes in the over night BBA LIBOR rate mean that there is short-term volatility in the markets. The overnight rate is the rate which is most often quoted in the financial press. The banks' longer-term expectations for the markets are more clearly evident in the 12- month figures. from a high street bank in the UK, will accept Visa and MasterCard debit and credit cards and will dispense euro and US dollar banknotes. Brits' top holiday destinations are Europe's holiday crime hotspots Nearly one in six Brits (14%) has been a victim of theft while holidaying in Europe. Research by online insurer swiftcover.com reveals that over a third (37%) of those who had their possessions stolen were in Spain, and nearly a fifth (19%) in France. The warning from swiftcover.com comes as many Brits are reportedly fleeing the rain soaked UK in search of sunnier climes. Craig Staniland, Director of Underwriting, comments, "For years Spain and France have been the top holiday destinations for Brits, but unfortunately they are also the top holiday theft hotspots. "Who says that holidays are relaxing? On top of possible flight delays, lost baggage and double- booked rooms, our research shows that nearly one in six (14%) Brits have been a victim of theft while holidaying in Europe." HOLIDAY CRIME HOTSPOTS RATING Country Percentage of Holidaymakers Spain (and Spanish Islands) 37% Fr ance 19% United Kingdom 9% Italy 8% Greece (and Greek Islands) 5% Mr Staniland adds, "Most of us now holiday abroad frequently, so it is possible that we are becoming too relaxed about looking after our possessions properly. How many times, for example, have you gone for a swim, leaving your bag with all your valuables in full view on the beach or by the pool? "Try and make sure your possessions aren't on display in your car or hotel room, and keep an eye on your belongings at all times. Try not to take valuables with you on holiday, but if you do, most hotels have a safe you can use. Som etimes, despite taking all possible precautions, you can just be unlucky, so it is important to make sure you have the right insurance to cover you for all eventualities." The first multi-cur rency ATM has been installed at Halifax's Old Broad Street branch in the City of London, and more machines are to be rolled out across the UK before the end of this year. Halifax and non-Halifax customer s will be able to use the machines, which offer euro and US dollar banknotes in denominations of 20. The ATMs will charge 0% commission. Nigel Turkington, Head of Travel Money, says, "Our customers have told us that the immediate availability of foreign currency would be a valuable addition to the wide range of services we already offer, and we plan to roll out more of these multi-currency ATMs in the near future." BRADFORD & Bingley Inter national (BBI) has launched a new online savings account. The eSaver account offers an interest rate of 6.50% gross pa for savings offers the same attractive rate to everyone regardless of their balance. "It's ideal for regular savers or people wanting to put aside a lump sum,for expatriates or those in the Isle of Man or Channel Islands. When you compare the eSaver account to other accounts in the offshore market no notice category, the combination of the attractive interest rate and low opening balance makes it a market leader." from just £1. This rate includes a 0.50% premium for making no more than three withdrawals in the year (1st April -- 31st March). The rate is guaranteed until 31st December 2008. BBI confir ms that eSaver is available exclusively online. Lynette Byrne, Acting Managing Director of BBI, tells Expat Investor, "The eSaver account is a great savings product. It's easy to open, has a very low opening balance, can be accessed and managed 24 hours a day from anywhere in the world, and Ser ving expats for more than 16 years J In this issue The UK's Financial Services Authority (FSA) has increased the limit on Financial Service Compensation Scheme (FSCS) cover for deposits to 100% of the first £35,000 of each depositor's claim. The previous compensation limit was £31,700 -- 100% of the first £2,000 and 90% of the next £33,000. Clive Briault, FSA Managing Director of Retail Markets, says, "At a time of market uncertainty it is important for consumers to know their deposits are properly protected. The action we have taken is designed to help reassure depositors with accounts up to £35,000 that they are 100% covered. The Gover nment has indicated that it will propose further changes relating to financial services compensation arrangements in the UK designed to give consumer s confidence that their savings and deposits are safe and secure." The UK's Chancellor of the Exchequer, Alistair Darling, has disclosed that he is looking at further ways he can revamp the savings protection scheme. Mr Darling has announced that his department is looking at a US-style system of protection which covers savers' deposits in a collapsed bank by moving the assets into a reserved account and reimbursing savers the full sum within days of any such Compensation upped to cover first £35,000 Investor EXPAT £4.95/ 7.50/US$7.50 Nov 2007 Bringing advisers and investors together Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Online banking Banks get excited about their online banking developments and projects. Expat labels A chance to bone up on your expat labels and pension rights. Meet the regulators An insight into the finance centres' supervisory role in looking after your money. It pays to bare all Insurance claim disputes and how to win them. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investment 22 Offshore mortgage market Next issue Offshore savings Best money tools Healthcare forum Currency watch 6 14 16 18 4 www.expatinvestor.com Onshore savers, having already proved they can vote with their wallets, have been rewarded by the UK's Chancellor with an improved depositor compensation ceiling. Meanwhile, Expat Investor asks if money market funds are about to have their day? For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Fast Facts 99000 www.expatinvestor.com "There are those that you know you should read, and then there's the magazine you will read." To register for Expat Investor digital edition, visit the website at www.expatinvestor.com Ser ving expats for more than 18 years crisis. A consultation and study process would examine the following regulatory points. First, what would be the effects of a further increase in the amounts guaranteed? The overall compensatory sum guaranteed for savers, using a US-style system of ring-fencing savers' deposits in the event of a bank's crash, could be as much as £100,000. The Chancellor also wants to introduce changes that would offer depositors greater transparency and prevent financial institutions from obscuring high risk investment on their balance sheets. In addition, any improved regulations would ensure savers understood the risks involved. Until such time as a new regulatory structure and compensation scheme are in place, Fidelity International believes anxious savers could steady their nerves with a money market fund. Money market funds offer similar security and rates of return to cash deposits, says Fidelity Inter national, and allow savers to protect themselves against the risk of a single bank collapse or default by spreading their money across a range of financial institutions. The manager of the Fidelity Cash Fund says he is charged with pur suing the best rate of interest on the highest quality notes issued by banks and other financial institutions. The fund is managed in a treasury style with an AAA rating, the highest credit rating in the market, and, stresses Fideltiy Inter national, has no exposure to riskier investments such as US sub-prime paper. "Money market funds, like any other UK mutual fund, are covered by the Financial Services Compensation Scheme." This scheme differs from the depositors compensation rules, in that it provides each saver with a total maximum payout of 100% of the fir st £30,000 invested and then 90% of the next £20,000, should the company managing the client's investments go into default. Richard Wastcoat, UK managing director of Fidelity International, tells Expat Investor,"Money market funds should also appeal to those savers who have been unsettled by the credit crunch. These funds spread a saver's money across highly liquid cash-like securities issued by a wide range of financial institutions and top companies and so provide some protection from the collapse or closure of a single financial house." Savers have grown canny over the years, however, and know how to chase a good rate. To which end, long-ter m savers are aware that rates offered on the money market do not always better the rates offered on ter m accounts from offshore deposit- takers -- we've even seen cases where no notice account rates are appreciably higher than any rate offered on a money market account comparing a like for like minimum deposit sum. It is worth noting that all Isle of Man deposit-takers comply with the Island's depositor compensation scheme which offers considerable peace of mind to expat savers. Tu rn to page 12 to compare the best rates cur rently on offer in the offshore market place. OUT NOW! *THE ANNUAL INTEREST RATE QUOTED IS VARIABLE, GROSS AND EFFECTIVE FROM 1ST OCTOBER 2007. THIS RATE IS PAYABLE WHERE NO MORE THA N 3 WITHDRAWALS ARE MADE IN A BONUS YEAR (1ST APRIL -- 31ST MARCH) WITH A RATE OF 6.00% PAYABLE WHERE 4 OR MORE WITHDRAWALS ARE M ADE IN THIS PERIOD. THIS ACCOUNT IS ONLY AVAILABLE ONLINE TO INDIVIDUALS AGED 18 OR OVER AND IS NOT AVAILABLE TO UK RESIDENTS. Maximum balance is £1,000,000. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ Br itish Isles. Registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA . With share capital and reserves in excess of £266 million. Copies of our most recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle of Man legislation, eligible deposits made with an Isle of Man office of Bradford & Bingley International Limited are covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). This advertisement d oes not c onstitute an invitation to make deposits in any jurisdiction to any person to whom it is unlawful to make such an invitation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your pe rsonal circumstanc es and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business. %* GROSS P.A. 6.50 eSaver Internet Savings Account . Minimum balance £1 . No hassles . Helps you save . Manage from home 24/7 Available now at www.bbi.co.im/esaver Rising mortgage rates Problems in the UK mortgage market stemming from the so-called 'global credit-crunch' inevitably suggest an imminent rise in the costs of borrowing . Alistair Darling says slowing of house prices will ensure they are based on more realistic financial foundations. He stressed that it is in no one's interests that house price inflation go on rising year in, year out when there is no justification for such rises. To find out more about financial regulations, super vision, protection and compensation on the offshore islands of Je rs ey, Guer nsey and the Isle of Man, tur n to pages 16 and 17. To register for the digital edition, go to www.expatinvestor.com