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Near-term market sentiment: Confident, with risk assets still in demand. The S&P500 continues to reach new highs and U.S corporate bond yields are touching new lows. In the ‘real’ economy Doctor Copper – so called because moves in the copper price have historically foretold changes in global output and GDP- is giving a positive prognoses, with the copper price at a two-year high. A weak dollar is currently supportive. However, investors should remain diversified with exposure to both defensive assets (eg, government bonds and cash) as well as risk assets (eg, stocks and high yield bonds), given the unpredictability of market movements. The model portfolio below offers a guide as to how to achieve this.

Why have markets defied expectations? The year-to-date returns from global stock markets have exceeded the cautious expectations posted at the start of January. The MSCI World index of developed stock markets is up 13% in USD and 10% in local currency, with gains evenly spread by geographical region. The MSCI Emerging Markets index is up in 25% USD and 20% in local currency terms, reflecting investors’ appetite for risk.

Gains have been driven by relief that some of the bad things forecasted have not materialised. For example, nationalist parties did not take power in the Netherlands and France. Instead investors in continental Europe were delighted when the centrist and pro-E.U Macron won the presidency and then a parliamentary majority. Trump did not announce 40% tariffs on Chinese imports on taking office and has not done anything too damaging as yet to the domestic or global economy, and the Chinese financial sector has not collapsed under the weight of bad debt. Perhaps of greatest impact, the Fed has been more cautious over the outlook for future interest rate hikes, suggesting that cheap money may be around for longer than previously expected, so adding impetus to the ‘search for yield’ that has driven the rally in risk assets since 2009.

There have also been surprises: U.S and global corporate earnings growth has been stronger than expected, reflecting solid growth in global demand. The recovery in demand within the euro zone continues, with euro zone GDP now running at a touch above 2% year-on-year, which is comparable with the U.S and above the 1.7% recorded for the U.K. By the end of last week 56% of the S&P500 had reported their second quarter earnings results, representing 70% of the index by market capitalisation. 73% of these companies had exceeded expectations.

Can stock market gains persist? The world’s largest market -the U.S, which currently makes up 59% of the MSCI World index – is richly priced, both on a forward price/ earnings multiple and using cyclically adjusted earnings. But mispricing – if that is what it is- can persist for a long time. As long as bond yields remain low, and the Fed remains cautious, the search for yield will continue to support global stock markets. The Fed’s own valuation model shows stocks attractively priced compared to bonds: 10-year inflation linked bonds yield 0.47%, while the S&P500 dividend yield stands at 1.9%. The lack of progress by Trump and Congress in passing fiscally-simulative policies will continue to lead to downgrades of future GDP growth forecasts for the U.S, but this has probably been already priced into the most affected stocks as well as into the dollar.

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deVere Group is the top global financial consultancy with over 70 offices worldwide and over $10 billion dollars under asset management. Established in 2002 by our CEO, Nigel Green, deVere Group prides itself on the success of our clients. Our proactive vision constantly strives for improvement and we aim to support our clients in creating, growing and safeguarding their wealth. Expanding our global services in electronic money and a single card, multi-currency app supports our clients and new Vault users by ensuring they receive the best currency exchange ratios. Vault allows you to exchange currencies at interbank rates and Vault users also have complete control over their account, so no more transactions being blocked by the bank.

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The increase to the retirement age from 67 to 68 will be put into force seven years earlier than previously planned, the UK Government has announced.

The announcement, made on Wednesday, means that the increase to the state pension age will now take place between 2037 and 2039, as opposed to 2044. It also means that around six million men and women in their 40s will have to work one extra year before retiring to claim their state pension.

The changes affect everyone born between 6 April 1970 and 5 April 1978. Anyone born after that period will have to wait for future announcements to learn what their precise pension age will be.

The announcement was made by David Gauke, the Secretary of State for Work and Pensions, who said that there had to be a balance reached between funding the state pension and being fair on future generations of taxpayers.

Gauke told MPs: “As the Cridland Review makes clear, the increases in life expectancy are to be celebrated, and I want to make clear that even the timetable for the rise that I’m announcing today, future pensioners can still expect on average more than 22 years in receipt of the state pension.

“But increasing longevity also presents challenges to the Government. There is a balance to be struck between funding of the state pension in years to come whilst also ensuring fairness for future generations of taxpayers”.

Gauke said the new timetable would reduce the rise by 0.4% of GDP in 2039/40, equivalent to a saving of around £400 per household.

However, the UK’s Labour party have come out in stark criticism of the move. They said that, given recent reports suggesting increases in life expectancy were beginning to stall, the decision was an “astonishing” one. They also cited existing and long-standing health inequalities between different income groups and regions in retirement as a reason to oppose to the increase.

Shadow work and pensions secretary Debbie Abrahams told MPs that many men and women were beginning to suffer ill health in the early 60s. “Most pensioners will now spend their retirement battling a toxic cocktail of ill-health,” she said.

“The government talks about making Britain fairer but their pensions policy, whether it is the injustice that 1950s-born women are facing, or today’s proposals, is anything but fair”.

In these times of ultra-low interest rates and high inflation, more and more people are seeking low-cost financial solutions.

Indeed, the asset management industry and investor requirements are evolving considerably. Cost is now much more of a future performance predictor than was ever perhaps realised before, and investors require an extensive choice of cost-efficient, diversified financial solutions to reach their long-term objectives.

Naturally, there is an extensive range of model portfolio services available, each bearing a different level of risk depending on the risk appetite of the investor.

That said, a model that balances the cost-efficient advantages of a passively-managed investment, whilst at the same time allowing access to a greatly-diversified actively-managed portfolio, in effect, combines the ‘best of both worlds’.

Of course, there are many advantages and disadvantages to both investing styles.

Passive investing can boast ultra-low fees and transparency, but can be considered too limiting and with small returns.

Whereas active investing offers flexibility, hedging options and tax management, but adversely can be costly and very high risk.

Consequently, many advisers are of the opinion that the optimum strategy is to blend active and passive investments. There is no necessity for an either/or in this case. Combining both can help to further diversify portfolios.

Not surprisingly, it’s widely regarded that failure to properly diversify a portfolio is one of the biggest investment mistakes. Spreading money around over asset classes, geographical regions and industrial sectors is an essential tool to manage risk.

In addition, savvy investors are aware that a frequent portfolio review is vital to make sure that investments remain on track, and any modifications can be made should the markets or personal circumstances alter.

Robo-advice

Furthermore, blending robo-advice with the human element overlay of an actively managed solution, allows clients to greatly benefit from the industrialisation of the asset management industry.

As you might expect, robo-advisers are set up to ensure accuracy is at a maximum, but certain investors can still raise concerns over a lack of human contact. Therefore, a robo-adviser platform that includes a human connection could be the ideal alternative.

This could be a robo-advice program with contactable client service support, or alternatively, advisers who predominantly rely on computer programs to offer investment advice.

Indeed, robo-advisers are advancing all the time. As such, they can be more likely to offer personalised investing advice to clients. The investment advice given is founded on details including age, family status, retirement ambitions or investing preferences. These details are then plugged into algorithms to offer the most personalised portfolio available.

However, robo-advisers are unable to ‘ad-lib’. Should an investor have unique circumstances that are not considered in the initial question stage, these will not be taken into account.

This is predominantly why merging robo-advice with human interaction can circumvent such issues, and takes into consideration investors’ individual lifestyle, personal financial situation and long-term ambitions.

Indeed, the financial services industry is evolving and developing at lightning speed. Client expectations and monetary policies are continually advancing, hence the need to provide for each one of these mutable needs and requirements going forward.

Near-term market sentiment: Confident, with the S&P500 holding on to last week’s new highs thanks in part to yesterday’s release of stronger than expected China second quarter GDP data.

Janet Yellen’s testimony to Congress last week demonstrated a more dovish view on future interest rates than we have seen of late, which was justified later when U.S inflation data showed CPI stuck at 1.7% y/y. Consequently the interest rate futures market is now suggesting no further hike in Fed rates this year. Therefore, whichever risk free rate we use as investors will remain low and relatively unattractive compared to the expected total returns from stock market investments and other risk assets. As I have said before, any market correction over the coming months is likely to be met with investor buying and a swift recovery thanks to three on-going supportive themes: rising corporate earnings growth, a reduction of geopolitical risk, and continuing very loose monetary policy from central banks.

Sterling appears trapped between a falling dollar and stronger euro, as explained below. This situation likely to persist over the coming months. Weaker U.K economic data will reduce the likelihood of rate hikes from the Bank of England, perhaps putting downward pressure on the currency, but the ever-softening position of the U.K government on Brexit negotiations is supportive (eg, a growing acceptance of the need for a transitional arrangement to be in place from April 2019).

Dollar/ Sterling. The GBP fell after the U.K election result, but has since been stronger than expected against the USD, currently trading at $1.310 (on the 18th July). This is a little more than a cent and a half than before the U.K election in early June. There are several political themes helping sterling. First, the U.K election reduces the risk of a hard Brexit because it has delivered a much reduced majority for the ruling Conservative party. The majority of MPs are thought to be ‘remainers’, who now have the ability to vote down Brexit-related legislation in the House of Commons. Furthermore, the risk of Scottish independence is now reduced, after the Conservative party won 12 seats in Scotland (from one in the 2015 election) after running a strong campaign against a second Scottish independence referendum. Currency traders, gilt investors and other investors in sterling assets are not by definition pro-E.U and pro-Union, but they dislike any political and economic disruption that carries risk.

Second, having peaked at a multi-year high on 28th December, the dollar has been steadily falling this year on a trade weighted basis and is now down 5.5% since that peak. This reflects lower U.S economic growth forecasts, as it appears that Trump may struggle to get both his supply side measures through Congress (eg, tax simplification and business de-regulation), and his Keynesian fiscal ‘pump priming’ measures of tax cuts and infrastructure spending. GDP rates of 3%-4% over the coming years now look unrealistic, and with that inflation and Fed rate hike expectations have been reduced. Indeed, Yellen last week pointed out that ‘normal’ interest rates in the future may be only a percentage point, or less, than the Fed’s current target rate of between 1% and 1.25%.

Euro/ Sterling. The GBP has fared worse against the euro, which is currently at EUR 1.137, a euro cent lower than before the U.K election. This reflects a run of relatively strong euro zone economic news, efforts by the ECB to convince the markets that its bond purchase program may be curtailed in light of rising inflation, and a sense that French President Macron will help promote fiscal union within the euro zone, which is needed for the long term future of the single currency. The ECB’s nominal effective exchange rate is up 4.0% since 28th December.

A balanced fund for the long term.  A typical long-term balanced portfolio based around 60% global equities and 40% global bonds. Financial history shows this combination to offer good returns relative to risk (ie, volatility). Investors should try to be as diversified as possible, perhaps using the 60/40 model as their guide. Multi-asset funds based on this principle are available, often with different ratios of bonds and equities depending on the level of risk suitable for an investor. Note that the neutral weightings for the long-term investor, it does not incorporate the near-term weighting suggestions of the previous paragraph.

Near-term market sentiment:. Nervous. The VIX ‘fear index’ is up from recent multi-decade lows, standing at 11.18 on Friday’s close, and reflecting last week’s slip in market confidence that saw global stock and bond markets weaken and the dollar slip 1.6% on a trade weighted basis. The trigger was fear that central bankers -particularly at the ECB- are looking to ‘normalise’ interest rates as a policy in itself, irrespective of the economic data. Since much the valuation of all assets ultimately rests on the ‘risk free’ rate (often taken to be the 10 year bond yield for professional investors, and bank account cash rates for retail investors), any upward move in interest rates by definition upsets stock and bond market valuations, and prices.

However, fear of central bank policy error is probably overdone and interest rates are unlikely to see meaningful increases over the next few years. A closer reading of statements last week from the Bank of England’s Mark Carney and the ECB’s Mario Draghi shows a continued commitment to using loose monetary policy to foster growth, they simply acknowledged the growing risk of inflation. Perhaps they should have reminded their audience in Portugal that global deflationary pressures persist (eg, demographics, automation, low productivity gains, weak private and government investment). Of the major economies, only is U.K CPI inflation actually ahead of its target (of 2%), and that is likely to be temporary once sterling’s devaluation of last summer falls out of the year-on-year CPI data.

Once last week’s market squall passes attention will re-focus on other market risks: the overvaluation of the FAANGs – being Facebook, Amazon, Apple, Netflix and Google (aka Alphabet)-  and the risk of a credit crunch in China, as the authorities try to ween the economy off debt.

But there are three supportive themes for investors in risk assets such as socks to bear in mind, and if they can be maintained I suspect that any market correction over the coming months will be swiftly met with investor buying. These elements are rising global corporate earnings growth, a reduction of geopolitical risk (the turning back of right wing populism in continental Europe, and an apparently neutered President Trump unable to exert control over Congress), and continuing very loose monetary policy from central banks despite the flurry of worries last week.

Broad economic and political assumptions for rest of this year:

Trump’s failure to push through Congress simulative tax reform and infrastructure bills means investors cannot expect the 3% or 4% real GDP growth this year and next that such policies might have led to. Instead the consensus is for around 2.2% this year, still up on last year and helping to contribute to perhaps 7% corporate earnings growth in the second quarter. Japan and the euro zone are enjoying solid recoveries, with perhaps mid-teen earnings growth for euro zone regional stock market indices in Q2. All of which helps support stock market valuations.

In the U.K, sterling, stocks and the gilt market face domestic policy issues: first, there is the increasing risk that chaotic Brexit negotiations and a bias towards a hard Brexit inhibits investment and contributes to a shortage of skilled labour from the E.U, accelerating an economic downturn. Bad for sterling and U.K-focused companies, but good for gilt prices and FTSE100 multinationals whose overseas earnings will be flattered in sterling terms. Second, that the weak government abandons austerity in order buy itself popularity, and so loses the confidence of investors in gilts as they fear inflation and an oversupply of debt will reduce prices (and raise yields). But more fiscal largess would boost growth, and support the earnings of domestic-focused companies. Sterling would probably weaken as overseas investors sell gilts. Real GDP growth for 2017 is likely to come in at around 1.6%, but decelerating sharply over the second half as weak consumer confidence and negative real wage growth take their toll.

From the euro zone’s perspective, forecasted real GDP growth this year of around 1.8% represents a triumph of sorts. The region last grew at this pace in early 2011. Politics have become investor-friendly, helped by the pro-E.U and reform-minded President Macron’s convincing win of seats in the Assembly National, and Angela Merkle’s positive -if guarded- response to Macron’s call for greater fiscal unity. Polls across the region report an increase in support for the E.U, it seems that the trauma caused by Brexit, migration from Syria, the half-built euro project, and terrorism can be contained. There is even progress with cleaning up the balance sheets of Italian banks, long overdue.

A balanced fund for the long term. The chart below shows a typical long-term balanced portfolio based around 60% global equities and 40% global bonds. Financial history shows this combination to offer good returns relative to risk (ie, volatility). Investors should try to be as diversified as possible, perhaps using the 60/40 model as their guide. Multi-asset funds based on this principle are available, often with different ratios of bonds and equities depending on the level of risk suitable for an investor. Note that the chart shows neutral weightings for the long-term investor, it does not incorporate the near-term weighting suggestions of the previous paragraph.

Sharp moves and sudden reversals in European bond and currency markets last week highlighted investors’ acute sensitivity to any possible withdrawal of central bank stimulus measures.

The euro surged to a 52-week high against the dollar as investors took comments from Mario Draghi about the region’s pivot from “deflationary forces” to “reflationary ones” as a sign that he was preparing to taper the ECB’s bond-buying programme – once senior figures made it clear that he had been misinterpreted, the euro fell back a full cent.

The pound jumped 1.2% (ending the week above $1.30) after the governor of the Bank of England said he was prepared to raise interest rates if UK business activity increased – just a week after saying “now is not the time” for a rise.

Staying in Europe, the state-backed rescue of two regional Italian banks was criticised for failing to adhere to the nascent EU banking union. Under the deal, Intesa Sanpaolo, will absorb the prime assets of two failed lenders, but the Italian government is using €17 billion of taxpayers’ money to protect senior creditors from losses.

By contrast, in the United States, the Federal Reserve said that all 34 financial companies passed its latest round of stress tests, leaving banks free to provide shareholders with increased dividend pay-outs and share buy-backs.

The IMF lowered its growth forecasts for the US economy to 2.1% for this year and next as a result of slow progress on tax reform and fiscal spending – it also said that the Trump administration was unlikely to achieve its goal of 3% annual GDP growth over a sustained period of time, partly because the labour market was close to full employment.

In other news;

• Prosecutors in Brazil filed corruption charges against president Michel Temer
• India replaced numerous federal and states taxes with the Goods and Services Tax at a special midnight session of parliament
• Oil prices climbed for a seventh consecutive day, but still fell 14% during the first half of the year
• South Africa’s central bank challenged a recommendation that it should replace its mandate of maintaining price and currency stability with one that seeks “meaningful socioeconomic transformation”

A new report from YouGov has shown that a large proportion of the UK’s millennials have no pensions savings, with many saying they don’t have a good enough understanding of pensions to make an informed decision.

The Bridging the Young Adults Pension Gap study found that 44% of 18-34 year olds admitted to having no pension savings at all, compared to 22% of 35-54 year olds and 20% of over-55s.

A lack of knowledge is clearly an issue for many, with three in ten under-35s (27%) confessing they simply don’t have enough knowledge of pensions in general.

Indeed, even millennials that do have a pension admit that they do not have a clear picture of what is involved, with 14% not able to confirm which type they hold.

It’s a picture that is causing concerns to the age group, with well over half (58%) anxious about their ability to support themselves when they stop working to enjoy a long and fulfilling retirement.

The state pension is not seen as a sufficient answer by over a third of 18-34 year olds, with 35% agreeing with the statement: “If government spending for pensions continues as it is, the state pension will cease to exist at some point due to funding pressures”.

The place of pensions among the priorities of the UK population was also revealed by the report – with putting cash away for retirement a top consideration for 21% of adults, compared to saving for a holiday (32%), ‘stashing case for a rainy day’ (29%), buying a property (14%) and saving for house improvements (14%).

Research executive for YouGov Kate Fillery, said: “With a large ageing population eating into the government’s ability to provide a state pension, and many young people unwilling or unable to feed into pensions of their own, these figures again suggest a tricky retirement for many”.

Whether you’re saving for a new home, a dream holiday or simply for a rainy day, savings plans need to be as individual as you are. We will work with you to create an investment strategy that suits your needs. We intend to do this by: utilising the best fund managers in the world, whilst operating from a secure and tax-efficient, offshore location. This ideal combination will help you reach your savings goals. With most companies here in the UAE not providing adequate pension and retirement needs for employees is widespread. This is why it’s crucial that as a non-tax paying expat, you take full advantage of the time that you have here. Particularly as pensions and retirement planning can be difficult and convoluted. This is why professional planning should be prioritized so you can possess financial freedom later in life. Moreover, the products we recommend will produce the sort of returns that will not only exceed your expectations but will not affect the quality of your lifestyle when you are no longer working.

Goals: having goals in place is a vital part of any client’s future financial plans and it is our job to ensure we provide that required focus and freedom to assess where they want to be today – and more importantly in the future. Crucially, we will re-address all of your goals, every quarter, to identify progress and to monitor if objectives are being met.

Planning: this is the crux of achieving your financial optimum. With our guidance this will become effortless; empowering you to plan for your retirement, education plan or lump sum; our methodology is organised in such a way to gather pace at the right time thus reaping the maximum monetary benefits.

Investing: a lot of people come to us without any knowledge of ‘how’ and ‘where’ to invest and this is something we are always able to adapt to. Regardless of your experience, we will coach you to understand the markets whilst remaining fully focused on the long-term goals.

Review: each quarter we will sit down and review all of your plans and take an holistic view of your whole portfolio, including every aspect of total investments.

Strategy: personally, it is paramount that everyone we take on has a main, strategic aim in regard to investments; be it long or short-term, we only work with clients who are serious about saving money alongside planning for their, and their family’s future.

Independent: this is just one of the ways we are unique, what’s more, we work for a company that is independant, allowing access to all of the major banks and institutions; this is crucial and allows us to make sure we give all of my clients a prioritised and tailor-made solution. Objective: the priority is to establish a mutually agreed target, hence, each time we sit with new or existing clients it is to confirm an objective and how we will achieve it.

Tax Efficiency: we all work in a Tax-Free environment therefore we’d prefer to preserve what we have and not pay tax on any current assets. What we seek to do is make every product, for all of my clients: tax efficient and profitable.

Security: something that is often taken for granted is the security of money in banks, so it is one of our jobs to make sure that not only it is secure in the investment banks, but also in any funds and stocks held.

Near-term market sentiment: Confident. The S&P 500 closed last night on a new all-time high, and global stock markets are in confident mood. In the near-term, the weakest link in the chain are perhaps the FAANGs stocks (Facebook, Amazon, Apple, Netflix and Google (aka Alphabet), whose share price wobble last week is a reminder to investors that valuations on risk assets are at historical high levels. But there are three supportive elements to the current rally, and if they can be maintained I suspect that any market correction over the coming months will be swiftly met with investor buying and a swift recovery. These elements are rising corporate earnings growth, a reduction of geopolitical risk, and continuing very loose monetary policy from central banks.

Broad economic and political assumptions for rest of this year:

1)     Global economic data remains robust, supporting corporate earnings growth

Sure, the outlook for the U.S probably isn’t as strong as the Fed maintained last week when it raised rates by 25bp. One senses the policy committee was talking about another country given the weak inflation data, tax receipts and other anecdotal evidence of recent weeks. But the consensus estimate is still for GDP growth this year of 2.2%, compared to 1.6% in 2016, which means continued real year-on-year growth in American corporate earnings is likely. Japan and the euro zone are enjoying solid recoveries, with perhaps mid-teen earnings growth for euro zone regional stock market indices in Q2. All of which helps support stock market valuations.

2)     Geopolitical issues worries of earlier in the year have somewhat dissipated

For investors with U.K assets, the principle variable in respect to Brexit negotiations is sterling. This has fallen since the inconclusive U.K general election a fortnight ago, but many would argue that a loss of three U.S cents (to a current $1.267) is quite modest given the media talk of political chaos in Britain, the possibility of a Marxist in No10 by the year end if another election is called, and the now fashionable talk amongst some senior Conservative politicians about the need to slow the pace of deficit reduction. But sterling is supported by a belief that Prime Minister Theresa May’s political weakness will lead the government to tone down its Brexit demands, opting for a ‘soft Brexit’ (ie, perhaps remaining in the customs union). This, the currency markets belief, will be less damaging for the U.K economy and for sterling than a hard Brexit. We will see.

From the E.U’s perspective, the uncertainties over the future of the organisation that haunted European leaders earlier in the year are now banished. Helped by the pro-E.U President Macron’s convincing win of seats in the Assembly National, and Angela Merkle’s positive -if guarded- response to Macron’s call for greater fiscal unity. Polls across the region report an increase in support for the E.U, it seems that the trauma caused by Brexit, migration from Syria, the half-built euro project, and terrorism can be contained.

While some investors will be disappointed that Trump is struggling to get a unfunded tax cuts and infrastructure spending bills through Congress, other – saner- heads will be relieved. An unwarranted Keynsian boost to the economy, which must surely turn to bust as inflation, interest rates and the dollar all march upwards together, has so far been avoided. This is not to argue against funded (ie, fiscally neutral) tax reform and infrastructure spending, but not to argue for deficit financing when the budget deficit is already 3.5% of GDP. Meanwhile in China, perhaps the Achilles Heel of the global economy given its over-leveraged economy, the renminbi has risen slightly against the dollar this year -against expectations- and this has helped to reduce capital flight and to keep money in the domestic economy.

Third, central bank policy will remain loose

Just as 2015 and 2016 began with investors bracing themselves for tighter monetary policy from the Fed than was actually delivered, so 2017 looks increasingly likely to follow in the same vein. One further rate hike this year is possible. A second, as hinted by the Fed last week, is improbable unless we see a sharp acceleration in growth and inflation data. Meanwhile the Fed’s cautious approach to reducing its balance sheet (ie, unwinding the quantitative easing policy) suggests it will focus on not disrupting the bond market. The ECB, Bank of Japan and the Bank of England show little inclination towards policy tightening (Regarding the U.K, CPI inflation of 2.9% in May is likely to be followed by a poor number for June, but after that year-on-year price data should fall as the post-Brexit refendum drop in sterling falls out of the data).

Therefore whichever risk free rate we use when making investment decisions (perhaps government bonds, or bank account deposit rates) will remain low and relatively unattractive compared to stock market investments.

The world’s largest economies are sitting on a $70 trillion (£54 trillion) pensions time bomb that will expand upwards of $400 trillion within four decades, unless policymakers take quick and decisive action, the World Economic Forum has warned.

Analysis by the WEF revealed that the six countries with biggest pensions – the US, UK, Japan, Netherlands, Canada and Australia – as well as China and India – the two most highly populated countries on the planet – faced a retirement savings gap of $428 trillion in 2050, up from $67 trillion in 2015.

The findings are based on the Organisation for Economic Co-operation and Development’s (OECD’s) recommendation that savers should aim for a retirement income of 70% of earnings when they stop working.

The gap is forecast to widen to the equivalent of $300,000 per person by 2050, adjusted for wage inflation, which is larger than the size of the global economy. In the UK, the current shortfall of $80 trillion is expected to rise by an average of 4% per annum to $33 trillion in 2050.

A study by the OECD in 2015 found that state-funded pensions in the UK didn’t live up to expectations, with savers on average expected to receive just 38% of their working-age income when retired – a dismally lower amount than any other major advanced economy.

Across the 35 big economies in the OECD, the average was 63%.

But while the think tank has praised the UK Government’s shake-up of the pensions system, which is now linked to life expectancy, it described the notion that it had found a “beautiful balance between affordability and sustainability [as] some sort of Panglossian fantasy”.

Many are not saving enough into private pension schemes, it warned.

Under current UK Government plans, the state pension age will rise to 66 by 2020 for both men and women, and possibly even higher. Official forecasts show 26.2% of the UK population will be aged over 65 in 2066, compared with 18% last year and 12% in 1961.

The WEF warned that under the current state system, many workers will face the shock of their lives, as the policy is “not aligned with individuals’ expectations for retirement income – putting at risk the credibility of the whole pension system”.

This comes just a few weeks after the OECD suggested scrapping state pensions for the rich in an effort to keep the troubled system afloat.

Here are my top tips to help attain financial security; moving forward and onwards to surpassing your financial aspirations.

Goals: having goals in place is a vital part of any client’s future financial plans and it is our job to ensure we provide that required focus and freedom to assess where they want to be today – and more importantly in the future. Crucially, we will re-address all of your goals, every quarter, to identify progress and to monitor if objectives are being met.

Planning: this is the crux of achieving your financial optimum. With our guidance this will become effortless; empowering you to plan for your retirement, education plan or lump sum; our methodology is organised in such a way to gather pace at the right time thus reaping the maximum monetary benefits.

Investing: a lot of people come to us without any knowledge of ‘how’ and ‘where’ to invest and this is something we are always able to adapt to. Regardless of your experience, we will  coach you to understand the markets whilst remaining fully focused on the long-term goals.

Review: each quarter we will sit down and review all of your plans and take an holistic view of your whole portfolio, including every aspect of total investments.

Strategy: personally, it is paramount that everyone we take on has a main, strategic aim in regard to investments; be it long or short-term, we only work with clients who are serious about saving money alongside planning for their, and their family’s future.

Independent: this is just one of the ways we are unique, what’s more, we work for a company that is independant, allowing access to all of the major banks and institutions; this is crucial and allows us to make sure we give all of my clients a prioritised and tailor-made solution. Objective: the priority is to establish a mutually agreed target, hence, each time we sit with new or existing clients it is to confirm an objective and how we will achieve it.

Tax Efficiency: we all work in a Tax-Free environment therefore we’d prefer to preserve what we have and not pay tax on any current assets. What we seek to do is make every product, for all of my clients: tax efficient and profitable.

Security: something that is often taken for granted is the security of money in banks, so it is one of our jobs to make sure that not only it is secure in the investment banks, but also in any funds and stocks held.

Moving abroad is the culmination of a lot of planning and preparation and also, for many people, the result of lots of dreaming to land the job they really want. The expat may have landed a fantastically well paid position but they still need to prepare thoroughly to avoid serious financial problems since they will need to manage their money between two countries with differing economies and currencies. Indeed, one of the main motivations for expats to move overseas for work is to earn substantially more than they would do otherwise which should, in theory, give them a great opportunity for saving money. However, that is not always the case and financial experts in the Middle East say that many expats moving there get drawn into the expat lifestyle of spending everything they earn, driving expensive cars, having a large house and eating out in fine restaurants every night. That’s not the best way to go about saving. So, here’s the Expat Focus guide to saving oodles of money.

1. Make a budget Sometimes the best advice is the simplest. We should all really make a budget to plan how we are going to spend our income regardless of whether we are expats or still working in our home countries. To make a successful budget, write down every expense and ensure these have been paid before spending money on anything else. This will force the reality of a financial situation because you’ll appreciate where your money is being spent. By not spending money on unnecessary items, it’s easier to regain control on spending; and that creates a surplus which means saving is more likely. A budget also enables the setting of priorities so if there is a particular financial goal, for instance, that you are aiming for then this particular process will enable the saver to reach their goal more quickly. Another piece of advice when setting the budget is to allocate an amount of money to save every month so that the practice of actually saving money becomes a habit and the saver is creating what is effectively a rainy-day fund which may then pay for travelling or help pay for studies, for instance. Another aspect when it comes to an expat saving money is to appreciate the local taxes you will be subject to. If you are unsure what these are, then get expert financial advice; most firms sending employees overseas will offer a financial expert with their relocation package which should include the provision of money advice. This means the expat is not just budgeting on what they think they will be paid but on the actual amount, i.e. net, which is their income after tax so their budgeting is not only accurate but will enable the savings process to be easier. Expats should not believe that by working overseas they will not be liable for local income tax because they will be making a huge, and probably very expensive, mistake in this instance. Finally, on this tip of making a budget, it’s important that the expat keeps records of their expenses so they can track spending patterns. This way, when they need to create accurate budgets, which will vary through the year because of seasonal demands on their wallet such as Christmas, for instance, then they will be able to budget accordingly.
2. Compare prices Again, a tip that is crucial for expats and non-expats alike is for them to compare prices for just about everything they need to buy. This is a particularly good tip for expats who are new to their country because their lives are still disorganised and complicated and they are still really finding their feet. However, this doesn’t mean that they should simply accept the first offer for things like mobile phone providers. This process is made much easier by using online price comparison websites which cover most needs including toiletries, cars and utility provision in most countries. One good way for comparing prices is to speak with other expats, so networking could be crucial. The other expats may have saved lots of money on something an expat is about to spend a small fortune on. Don’t be shy about asking since they will usually be proud about how much they saved and how they managed to do it. Networking with other expats also leads to other money saving ideas which can be easily applied and will help boost the prospect for saving money while working overseas. In addition, many countries now have their own expat online forums where long-term residents exchange ideas freely to help save money and boost the enjoyment levels for the expats staying there. Moving overseas also brings with it other expenses that some expats may not be prepared for; for instance they may be legally required to take out private healthcare insurance cover. Some employee relocation packages will provide this but it’s always wise to check since the expat may be left with a hefty medical bill if they do not have cover.
3. Change your lifestyle We’ve already mentioned that many expats are drawn into an expensive lifestyle because they believe that is what’s expected of them but they don’t just work overseas to further their career as saving money is important so they shouldn’t turn their back on this opportunity. This means that by living a simple lifestyle the expat should be able to save money on everyday living costs. Indeed, just because an expat is working overseas does not mean they should not be living within their means. Even if they have moved to a country that has a higher cost of living than their own, they should make lifestyle changes if they want to save money and enjoy their posting. One of these ideas may be to live closer to work so the expat has a short commute time with little cost. It also means they don’t need a car, which can be very expensive in some countries, and they can walk to work or use public transport. They will also be saving time. Indeed, in some towns and cities it may make more sense to ride a bike to work; these can be bought or hired in many places. For instance, in Zürich cycling to work is the cheapest option for a commute and other European cities also have hefty public transport costs and make driving and owning a car expensive to deter people from doing so. Also, expats who move to the Netherlands will appreciate that the Dutch cycle everywhere and most cities are geared to delivering a safe cycling experience so the expat will save money and get fit as well. Again, there are lots of second-hand bike outlets with cycles on offer at a range of prices. Some expats may be given a travel allowance by their employer and they may not insist on it being spent just for that purpose which means, effectively, the money can be saved.
4. Find cheaper housing The previous tip of changing an expat’s lifestyle also means they should consider the subject of housing. This is likely to be the largest expenditure for all expats. Finding affordable housing is going to be challenging if the expat has not been helped by their employer, but the struggle to find a cheap home also extends to the local people as well. And because the expat is new to the country they may use an agent who might not be cheap and will offer relatively expensive properties. However, if the expat could compromise on the type of property they want to live in and save a substantial amount on the rent, their living costs are much lower and they will save more.
5. Buy second-hand This tip will not be at the forefront of most expats’ plans when they are thinking of moving overseas but there are two considerations why it should be; do they really need to take their belongings with them to a new country and do they really need to buy brand-new items for their new home? Let’s be honest, having to buy furniture, a bike or electrical items is not going to be cheap so it makes sense to buy second-hand goods which are probably fairly new anyway. It may also help to make contact with other expats, particularly those who are leaving the country, and offer to buy their belongings (May and June are, apparently, popular months for expats to move on and many will be looking to sell their goods before starting life in a new country). Once in the new country, an expat can find out where the best places are for buying second-hand goods. However, it may be a good idea to take along another expat who’s lived in the country for some time or a local person to ensure that the expat is not being fleeced with higher prices or with dangerous goods. This is also a good opportunity to visit things like flea markets which offer a wide range of quality items at a very cheap price. Most countries also have the equivalent of charity shops or dollar stores.
6. Shopping It may sound trite but expats can save lots of money by choosing carefully where they shop for their groceries and clothes. Many Pacific-region countries have supermarkets dedicated for expats but they are much more expensive than those used by local people. Indeed, even in Europe expats can save a small fortune by using discounters such as Netto or Aldi rather than larger, better known supermarket chains. This may mean eating food the expat is unfamiliar with but this is part and parcel of moving overseas. This idea of saving money on shopping also extends to saving money on clothes; lots of cheaper retailers offering decent quality clothes at a much lower price than many better known chain stores. Expats should always consider shopping for cheaper items so they can save money. Also, when out shopping, expats should regularly use markets where the produce is fresh and cheap and offers a great insight into how local people actually live.
7. Offshore bank accounts There are lots of reasons why expats working and living overseas should get themselves an offshore bank account but the main ones include having easy access to cash and managing transactions more easily. There also various tax advantages for holding funds offshore while working overseas and most accounts enable an expat to manage their investments and savings in a tax efficient way. Offshore bank accounts also enable the expat to convert currencies easily and cheaply when sending money home. However, expats should also open a local bank account which will help with day-to-day banking needs. Also, those expats who may not meet the criteria for an offshore bank account need to sign up with a forex platform so they can exchange currency at better rates or at least for a smaller fee. Many forex broker platforms also enable clients to choose when the best time for exchanging currency is, which helps bring down fees so changing money is much cheaper. To help deal with the currency fluctuations, it may be worthwhile for the expat to consider having their savings in US dollars which may be a better long-term option for expats who believe they will be overseas for several years, particularly in the Middle East. They will save money in currency transactions and the stability of the US dollar may save them a small fortune compared to if they had been transferring their money into sterling, for instance. We all know that saving money as an expat is not always an easy task but financial experts will tell their clients that saving is an important habit to fall into even if the amount being saved is not very large. It’s also important to start saving early and to begin investing in pensions and other long-term investments to pay for an expat’s retirement. Saving early also gives time for the money to grow and help smooth out market volatility; there’s no doubt that by saving a small amount over a long period time will grow into an effective and significant nest egg for an expat’s retirement plans. Essentially, those are the best practical tips for saving oodles of money as an expat and help ensure that a lucrative overseas posting becomes a lucrative savings plan too. Good luck!

1. Not having a pension at all
2. Delaying your pension saving
3. Thinking your home is your pension
4. Being too cautious
5. Stopping contributions in a bad market
6. Failing to review your pension regularly

An offshore portfolio bond is a tax efficient wrapper that can hold a variety of assets like stocks and shares or mutual funds. This is a bond that adds the legal and tax shield of a life insurance policy to an investment portfolio. It is structured to simply combine a life insurance policy and a portfolio to create a wrapper that investors can buy, manage and sell their assets through.

A flexible investment that works with you

You may decide that you want to start taking it easy by retiring early or reducing your working hours. The advantage of an offshore portfolio bond is that you can start taking your money before your pension income becomes available at age 55. Plus, usually you’ll only pay tax when you take a withdrawal*, and being able to decide when you take your withdrawals gives you more control over the timing of any tax due. Furthermore, you can change the setup of the investment portfolio as your needs change. For example, you might want growth in the first phase of your retirement and then choose to change the assets to generate an income from your portfolio. And because your funds are invested in a bond, you don’t need to worry about triggering any tax liabilities when switching between funds.

* Tax benefits depend on your personal circumstances and may change in the future.

Flexible tax-deferred withdrawals

You can withdraw up to 5% of your initial premium each year from your offshore portfolio bond (plus any additional premiums from the year when they are added) without any immediate UK tax charge until you have

withdrawn the original value of the premiums paid. So, for example, you could withdraw 5% each year for 20 years, without incurring a tax charge.

Virtually tax-free growth

Our International Portfolio Bond are based in the Isle of Man, Jersey, Guernsey  respectively. Being based in either of these jurisdictions means that you will not pay income tax on any gains until you take money from your offshore portfolio bond. The amount of tax you pay will be based on your circumstances at that time. You can change your investment portfolio within the bond as your needs change, without having to worry about capital gains tax.

Control on how you take your money from the bond

You have the option to divide your offshore portfolio bond into many segments. This gives you greater control of how you take money from the bond. You can choose to either cash in just some of the segments or take money

from across all of the segments in the bond. These two options can give quite different results for tax purposes. We can advise you on how to take money from your bond in the most tax-efficient way.

Top-slicing relief

You won’t normally pay tax on the investment growth of your bond until the funds are withdrawn or the policy comes to an end. However, this may distort the tax you need to pay, as the whole gain may be taxed in one tax year. Top-slicing relief is a way of addressing this problem, by finding your ‘average’ gain over the period of the bond and using this figure to determine the amount of tax you will pay. Your financial adviser can give you more guidance on top slicing relief.

A SIPP is a Self-Invested Personal Pension (SIPP) is a UK-registered pension scheme established as a personal arrangement. Compared to standard UK pension schemes, a SIPP offers greater choice of investments, and additional flexibility at retirement.

Who can benefit?

Anyone can set up a SIPP. Individuals residing in the UK can make new tax-relieved pension contributions to the scheme or transfer in an existing pension arrangement. UK non-residents would establish a SIPP to transfer an existing pension arrangement held in the UK or elsewhere. SIPPs provide a convenient and flexible way to save for retirement. While most UK non-residents say they will not return, in reality many do for career or personal reasons. SIPPs are fully interchangeable with its award winning range of Qualifying Recognised Overseas Pension Schemes (QROPS).

Specifically designed for internationally mobile individuals, QROPS accommodate multi-currency investments and payments, flexi-access or phased drawdown and segmentation, and the ability to pay full pension income to a partner and leave residual funds to nominated beneficiaries.

Which pensions can be transferred to a SIPP?

Any UK registered pension scheme(s) can be transferred to a SIPP with restrictions on transferring a defined benefit scheme or pension annuity once payments have commenced. It is not possible to transfer a state pension entitlement.

A SIPP can also accept transfer payments from overseas pension arrangements, including QROPS, provided that the overseas pension provider is willing. Financial advice should always be taken prior to any pension transfer.

The Lifetime Allowance

Total UK pension funding is capped by the Lifetime Allowance (LTA). This is currently set at £1 million (2016/17). Pension benefits are tested against the LTA when a benefit crystallisation event (BCE) occurs. BCEs include: the commencement of retirement benefits; death before drawing benefits; reaching the age of 75; or a transfer to an overseas pension arrangement.

If the value of UK registered pension savings exceeds the LTA, then a tax charge will apply. Members who have previously saved into a UK pension scheme and have applied for transitional protection, may be permitted a higher LTA.

Access to retirement benefits

Pension benefits may be accessed from the age of 55 or earlier in the case of ill health.

Flexibility of Drawdown

A SIPP allows the member to draw retirement benefits when they choose, as a lump sum or an income stream, commencing after the age of 55. The rules allow 25% of the fund (capped at 25% of the LTA) to be paid free of UK income tax. The balance will be subject to UK income tax at the member’s marginal rate. The International SIPP offers both Flexi-Access Drawdown (FAD) and Uncrystallised Funds Pension Lump Sum (UFPLS) payments.

For most of us expats, the state pension is a welcome income when we retire that provides a boost to company and private pensions. However, is working abroad stopping you from receiving as much state pension as you could? Do you understand how the new state pension works?

The new state pension was introduced for people reaching pension age from 6th April 2016 onward. It is normally calculated on your personal National Insurance (NI) contributions and you will need to have paid a minimum of 10 years of NI contributions to qualify for any state pension and 35 years to receive the maximum pension of roughly £8,000 per year. These years can be spread out over your life and don’t have to be consecutive. You can make up for the missing years to your NI record by paying voluntary contributions while you are abroad. This is usually done though Class 2 voluntary National Insurance contributions.

Let’s look at it this way:

Typical NI contributions are often as little as £11.20 per month, which equals £134 per year. To receive maximum pension allowance, these contributions are made for 35 years, therefore total you pay in is £4,704. This in return will provide you with an annual pension of £8,000 from retirement to death. Let’s say you retire at 67 and pass away at 84, your investment of £4,704 has provided you with a huge £136,000.

Track down lost pension pots 

As the number of jobs we have in our lifetimes increases, it is easy to lose track of pension pots accrued over the years. Financial advisory companies, such as deVere, provide a complimentary service to help you to track down any lost pension pots. Providing you have the name(s) of your previous employer or pension provider and national insurance number, we will be able to provide you with a full report on any UK pensions you hold. It can be well worth it if you find you’ve saved several thousand pounds that could be put to good use. One advantage of being an Expat is the options you then have with your previously frozen pension pots

Options as an Expat:

1.Death Beneficiary – this is the biggest advantage of for anyone who is married or has children. A UK pension is subject to 50% death tax when you pass away before the money moves to your spouse. Usually a UK pension cannot be passed onto children unless they are under the age of 18 at the time of death. A pension as your asset a can be passed on, in its entirety to beneficiaries of your choice. This is a massive advantage!

2. Access from 55 – should you wish to access money from your pension at any time from the age of 55 you can, this is in comparison with most UK pensions which are now age 65 and some are even higher at 67 in line with the State Pension Age.

3. Full control – It is possible to give you full control over where the pension is invested. One of the benefits of using deVere is the fact we have strategic alliances with Goldman Sachs, Morgan Stanley and UBS, three of the biggest investment banks in the world who design exclusive products for our clients.

4.25% Lump Sum – should you need access to capital you can take a tax free lump sum of up to 25% at any time. Why pay expensive loan fees/rent property when you can take a lump sum from your pension.

5.Potential Tax Benefits – as above should you want to withdraw a 25% tax free lump sum from your pension at age 55 you can. In addition, income from your pension can be taxed locally so if you are taking an income in the UAE for example, there is 0% income tax. This is a huge advantage for an expat and would save you huge amounts of UK income tax.

6. Multi-currency – should you decide you are not returning to the UK to live you may wish to flip the currency of your pension. For example, if you decide you would prefer to retire in Spain there is no point leaving your pension in GBP which would leave you vulnerable to a falling exchange rate which would impact how much you can withdraw every year

Pensions can sound a bit dull and dreary and it can be very tempting to put off properly saving into them.

When you’re young it’s easy to dismiss them as irrelevant to you, as retirement seems a long way off.

When the expenses of life encountered in your thirties and forties arrive – such as buying a home, paying for a wedding and raising children – saving for retirement can feel a long way down the list of priorities.

Then in your fifties – with retirement approaching fast – it can be all too easy to decide that as you haven’t saved enough yet, there’s no point bothering now.

But making the most of a pension is your best chance of securing a decent income when you retire.

After you finish working you will still need to pay for bills, accommodation, food – and the occasional treat. How will you be able to afford to live if you don’t plan ahead?

What is a pension?

A pension is a financial product that you put money into so that you can build up a fund to use when you retire.

The idea is that a retirement pot is built up by investing over a number of years. The money that you save into a pension gets a boost from tax relief, so effectively you are saving out of untaxed earnings.

In retirement, you can then access your pension to buy yourself an income or draw on it. Alternatively, if you are lucky, you will have a defined benefit scheme – often known as final salary – where your employer promises you a set income in retirement for life and picks up the tab.

Most people usually start their pension through their workplace, but you can also set up and manage your own through a personal pension.

The two types of work pension you need to know about

There are two main types of pension that you will hear mentioned, defined contribution and defined benefit schemes.

These names sound like jargon, but simply describe how each pension works.

Defined benefit schemes pay you a set annual income in retirement. The name comes from the fact that the benefit you receive is defined.

These are often called final salary schemes, as they can pay an income based on your earnings at the end of your employment with a company. However, defined benefit pensions can also include career average schemes, or other methods of setting the income paid in retirement.

The crucial thing to remember about defined benefit pensions is that the employer has promised to pay out a certain amount of income every year on retirement and must take responsibility for funding that.

When you contribute to a final salary scheme your money goes into a pot with that of other members. The promises made to workers by defined benefit pensions have proved very expensive to fund and any shortfalls have to be made up by the employer. As a result these have become rare in private businesses and are now more commonly offered in the public sector.

Defined contribution schemes do not promise any set payouts in retirement. Instead you must invest to build up a savings pot that can eventually be used to provide an income. The name comes from the fact that it is your contributions that are defined.

With a work defined contribution pension, people are usually able to decide how much they want to pay in as a percentage of their salary and their employer will match some or all of the contributions.

The money saved into the pension is invested, typically into funds that hold shares or bonds, and grows over the years to deliver a retirement pot.

With these pensions it is your responsibility to build up the pot you need for retirement. You can track which investments your money is going into and how they are performing and change them if you wish.

Personal pensions 

Pensions don’t just come through work. You can also set up your own personal pension and invest through that too.

You can do this in addition to – or instead of – a work pension. There are different types of personal pension ranging from a cheap and basic stakeholder pension, which limits where you can invest, to what is known as a self invested personal pension, or Sipp, where you can access many different types of investment.

These are also defined contribution pensions – building up the pot is your responsibility.

When should I start a pension?

When it comes to saving for retirement, time is your friend.

The earlier you start investing the more you are likely to get when it comes to retirement.

Even starting with just a small amount at first can make a difference.

Investing £100 a month for 20 years with 5 per cent growth per year would deliver £41,000. Save for just ten years longer at the same rate and your pot will be worth more than twice as much at more than £83,000.

This is because your pot will have benefited from compounding, where your returns build up on returns that you have already received. It allows your retirement pot to grow like a snowball rolling down a hill, picking up extra little bits as it trundles along.

The other great advantage is that with time on your side, you have more breathing space to regain lost ground if your investments fall in value.

Over the short-term, this is likely to happen throughout your retirement saving lifetime.

Near-term market sentiment: Solid, justified by improving U.S and eurozone economic data and first quarter corporate earnings results. Friday’s strong April employment data (+211,000 new jobs) appears to confirm the Fed’s comment earlier in the week, that weak U.S first quarter GDP growth of 0.7% at an annualised rate was a temporary blip. The prospect of U.S tax reform and infrastructure spending policies being passed by Congress has increased, following the House of Representative’s passing last week of a new healthcare bill that abolishes Obamacare. S&P500 first quarter earnings are ahead of expectations, at 11% growth over the same period last year. In the euro zone, stronger growth and inflation are leading to improved business and consumer confidence. Macron’s likely victory in the second round of the French election reduces regional political risk leading to perhaps a good week ahead for European stock markets, and a narrowing of French and peripheral euro zone bond spreads over bunds. The Stoxx 600 pan-Europe index has seen a 12% increase in first quarter earnings over the same period last year. Yet bond markets remain stable, with a modest tightening of U.S monetary policy priced in.

Broad economic and political assumptions for rest of this year: World GDP growth continues to accelerate, from 2.9% last year to a forecast of 3.5% in 2017 (IMF estimate), which is feeds through into solid corporate earnings growth. If Trump succeeds in getting his healthcare policy through the Senate, and into law, opposition by Republicans in Congress on other policies is expected to weaken and the outlook brightens for tax cuts and infrastructure spending policies. Consensus estimates for GDP growth remain around 2.3% will still be respectable. Another two rate hikes from the Fed this year remain likely, with markets pricing in a 94% chance of the next one being in June. But weak wage growth keeps inflation expectations down and bond yields stable. Dollar to be flat, metal prices remain highly sensitive to China growth data. Oil trades $50-$55 a barrel.

A large increase in the Conservative Party’s majority in Parliament after the 8th June election should allow the U.K government to negotiate a smooth transitional arrangement for a softer Brexit than previously expected, but it is unclear whether either side in the negotiations want talks to go smoothly. Sterling to remain sensitive to Bexit negotiations. Within the E.U, it is the Italian election (to be held no later than next spring) that appears most likely to deliver the next populist government after those of Hungary and Poland. In France, Macron will struggle to push through reform policies given the lack of a parliamentary majority for his party, but his support for the E.U helps the organisation deal with Brexit and progress with a banking union. Angela Merkel to remain Chancellor in the autumn German elections.

Taking the above assumptions into account: Remain fully diversified, with perhaps a bias to the Europe ex UK region funded through an underweight position the U.S. European political risk is likely to continue to fade and growth to accelerate, while in Japan Abe will continue with his ‘third arrow’ of structural reform despite recent personal political setbacks. Dividend yields in the euro zone, the U.K and Japan remain comfortably higher than those of comparable government 10 yr bonds, but in the U.S the S&P500 yield is less than that of the 10yr Treasury – which suggests stretched valuations. Investors in large cap U.K stocks may be hoping for a hard Brexit. The prospect of a softer Brexit, should the post-election U.K government choose to pursue it, is good for sterling and so negative for the FTSE100 index due to its international exposure. Neutral emerging markets: corporates appear vulnerable on account of the burden of dollar-denominated debt taken on over the last decade, and an over-reliance on the Chinese and U.S economies with domestic demand growth having lagged export growth.

If U.S and European wage inflation remains modest, further gains may be had in fixed income but caution is advised. A bias towards short duration and limited exposure to high yield -which appears expensive- perhaps yielding the best results

I have put together a high-level summary of some of the key benefits of an offshore bond for returning to the UK as an expatriate.

TIME APPORTIONMENT RELIEF

• Any UK income tax on any gain will be reduced proportionately for time spent as a non-UK resident.
• Relief will also apply to any additional investments made into the bond, even if made when classed as resident in the UK again.

GIFT ASSIGNMENT

• No UK income or capital gains tax charge on assignor at time of assignment.
• All future UK income tax charged at the new owners tax rate (if any).
• Therefore, the overall UK tax payable can be reduced if the policy is assigned as a gift to a non-taxpayer, for example a non-working spouse/ partner or a child/grandchild of the assignor.

TRUSTS

• Easy to assign into a trust
• Possible to reduce or eliminate UK inheritance tax liabilities.
• Generation planning and asset protection advantages.
• Can remove requirements of probate.

GROSS ROLL UP

• Generally, the funds in which a policyholder invests are not subject to taxes in the insurers jurisdiction. For example, insurers in the Isle of Man do not currently pay tax on the funds held for their policyholders.
• However, investment income building up in any fund/ asset may be subject to a tax deduction in the country where the income was produced.

5% TAX DEFERRED WITHDRAWALS YEARLY

• Yearly withdrawals of 5% of the initial premium (and any additional premiums from the year in which they are added) can be taken without an immediate UK tax charge.
• 5% up to a maximum of 100%, is cumulative if not used.

TOP SLICING

• Gain is reduced by a fraction which represents the number of years the policyholder was UK tax resident in comparison to the number of years the policyholder has held the policy.
• This reduced gain is added to taxable income in the year of surrender, which could mean a policyholder will not fall into the higher rate (40%) and additional rate (45%) rates of UK income tax on very large taxable gains.