Are you time poor and cash rich? Some might think this is a great problem to have, but in reality, it can become a burden. Many expats here in Switzerland are so busy building their careers, enjoying the wonders of family life in Switzerland that they barely notice their savings pot bulging at the sides.
If you’re an expat working hard, taking advantages of the higher incomes and low taxation, you may find you have no time or energy to figure out how to best utilise and maximize these growing monies. And yet you know you need a guaranteed fund to ensure your children’s education is taken care of in the future.
You should be doing something about the growing pot, but it’s overwhelming to think about where to start. It’s one of those ‘important’ but not ‘urgent’ tasks on the long list. And lack of time and knowledge leads you to either head to your local bank, hoping they will solve this problem or you put it off, postponing what could be a simple and painless way to guarantee your future wealth.
This is a situation we hear about often. Time constraints are a very real problem with expat executives who have challenging and ambitious international careers, yet find themselves with surplus cash every month and a nagging knowledge that they should be making more of it.
Our clients Peter from Holland and Tiina from Finland were in exactly this situation. They have been married for 16 years and moved to Zug, Switzerland 3 years ago along with their very active three boys aged between 7 and 12. Peter works for a blue chip pharmaceutical company in a global role and Tiina is a consultant in Zurich. They are happy with the relocation as work is giving them new challenges to keep them motivated and higher income combined with lower tax rates means they have surplus money leftover each month.
With active boys who excel at sports, they find themselves travelling most weekends either for football or rugby commitments in the summer or skiing during the winter. Peter also travels midweek, leaving them with little time to figure out what to do with their surplus cash which is now building up in their bank account to a reasonably large amount. Combined with the annual cash bonuses they both receive, they began to feel the pressure to do something with these savings.
But what? Neither of them has knowledge of financial markets and they were feeling confused, overwhelmed and daunted by the time required to investigate the different products available. The little spare time they did have, they wanted to enjoy with their family.
Sound familiar?
Feeling under pressure Peter went to see his local bank to discuss their situation. He was offered a couple ‘off the shelf’ products but he quickly realised his money would not be actively managed and he wouldn’t get the much-needed advice he required.
He felt uncomfortable as he was left to try and decide alone what to do with the sizeable lump of cash. Worse still the bank was giving him around 0.1% interest on the sum.
This is where we at Fern Wealth stepped in.
As independent wealth managers who only deal with expats, we wanted to get to know Peter before offering solutions. In our first meeting we discussed him, his wife and his children’s current situation, and then we explored their goals for the future.
We learned that Peter and Tiina were primarily looking for a way to protect and guarantee their children’s future education, they wanted a way to diversify a company share plan and they wanted freedom to know that if they moved from Switzerland their financial plans would not be penalised.
They needed a savings scheme which would enable them to save a lump sum of €150,000 for each child which would be available when they reach the age of 21.
Peter’s company had a generous Long Term Incentive Scheme (LTIS) that enabled him to receive company shares after 3 years – these were beginning to build up, in size and value as the share price had performed strongly in the previous 5 years. He wanted to diversify these because of their volatility.
As an expat, there are three areas we suggest you think about to ensure flexibility and performance:
- Your level of risk comfort
- Your future location
- The level of service you require
How comfortable are you with risk?
In Peter and Tiina’s case, we provided a solution that suited their financial comfort levels and which made use of Peter’s LTIS scheme and it’s subsequent sale of shares each year.
The risk profile of the portfolio was decided in advance taking into account Peter and Tiina’s attitude to risk so they could be comfortable with the investments within the plan. The plan was flexible and allowed for a lump sum to be withdrawn when each child was 21 if required. (Always bear in mind that the final decision on this point is left with you as your circumstances in the future may change and the money may be required earlier or even not at all.)
Where will you be living in the future?
Peter and Tiina’s savings scheme was designed specifically for international workers so that if they relocated to another jurisdiction within the 15 years they could continue the plan without interruption, allowing for compounding of the investments which aids the return on investment. And we chose a multi-currency savings scheme to give them complete flexibility.
What level of service would you like?
From an investment perspective we know how important it can be to have a constant point of contact – and for Peter and Tiina’s case, we manage the scheme continually, providing peace of mind long term.
Their monthly cash amount is transferred into the plan where it is automatically invested in a bespoke chosen portfolio advised and agreed by us. We continually monitor the plan and advise on any adjustments to the portfolio.
At Fern Wealth we also think beyond your goals and advise you on additional areas for growth. Peter and Tiina had not considered how a weakening CHF currency could affect their investments over a medium to long term period. But by this stage they knew for sure they were in the right hands and our suggestions would be in their best interests.
If you want simple solutions to guarantee your wealth is growing, bypass the local big bank and talk to an independent financial advisor who is prepared to take the time to understand you and your goals and provide simple but tailored savings solutions to help you achieve those.
So that despite your time pressures, you maximise your surplus cash to ensure a bright future for your child.
Book in a call with us, and discover how we can help you invest sensibly, strategically, and with confidence
Photo by Vasily Koloda on Unsplash
