Brexit is still big news, despite there being no certainty about when it will begin or what will actually happen when it does. We probably won’t know what’s in store until Prime Minister Theresa May kick-starts the official negotiation process – at this stage it looks like this will be early 2017.
In the meantime, what can you do to protect your savings and investments?
Avoid overexposure to UK investments
Brexit has and will continue to bring periods of uncertainty for the UK economy. You should review your portfolio to check if you are overexposed to UK assets or any other one area. An adviser can help you improve diversification over countries, asset classes, companies, sectors and currencies to reduce risk in a way that suits you and your particular circumstances.
Look for currency flexibility
Many UK nationals keep their savings and investments in sterling. Once you no longer live in Britain this brings extra risk as you are so dependent on exchange rates. With the fortunes of the pound and the euro so tied up with Brexit developments, it is a good idea to reconsider the best currency mix for you. One solution is to choose investment structures that allow you to hold investments in more than one currency and convert when rates are favourable.
Consider your approach to risk
Uncertain times like this can bring opportunities for those willing to widen their investment horizons. Prolonged low interest rates are unwelcome when it comes to bank savings, but generally have positive effects on share markets. Although volatile markets can be unsettling, those invested for the medium to long-term in a well-diversified portfolio should not have cause for concern. Your financial adviser should undertake an objective assessment of your risk appetite so that your portfolio offers the right balance of risk and return for your peace of mind.
Review your pension arrangements
Based on current law, Brexit should not affect how you can take out or transfer your UK pension funds. However, there is speculation that the government could introduce an ‘exit tax’ for pension transfers by non-UK residents. If you have a defined contribution pension and are concerned about this potential outcome, you could consider transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS). Another benefit of QROPS is that you could choose the currency to protect your pension income from fluctuating exchange rates. However, as with any decision about your pension, it is crucial to seek professional guidance to establish the right option for you.
Keep your finances in shape
Regardless of Brexit, your circumstances and objectives can change over time, so it is important to regularly review your financial planning. Now has never been a better time to talk to a locally-based financial adviser who can keep you informed of developments that affect you. They can explain the cross-border implications and help you plan if and when you need to take action so you can continue enjoying your life in Portugal, whatever Brexit brings.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com
By Gavin Scott, Senior Partner, Blevins Franks
T: 289 350 150
E: portugal@blevinsfranks.com
W:https://www.blevinsfranks.com/
