Expat retirement savers have an eternal dilemma when considering the big switch from investing in their UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS).
Whatever their personal financial circumstances, making the transfer offshore should be a fairly simple decision in most cases, but many are stuck in a savings rut because they feel they can never be sure the time is right.
In these days of global markets and instant changes, making the decision to invest always seems a risk because funds and shares are volatile and hanging back might just give a better result.
That procrastination is flawed, because whenever the change is made, the investments in a QROPS will follow the markets – building up the cash in the QROPS which is growing tax free.
Conquering the fear of change
Fear of rising and falling markets is the main reason that puts investors off moving their money.
To help, here are four investment tips –
- Forget the headlines – Watching TV and reading the financial pages will not help. Pundits may have a greater detailed knowledge of the markets than ordinary investors, but they have personal crusades, opinions and can get caught in minutiae. They live for the day, the news of the day and try an impart meaning, but for investors, the long term is the most important factor. Pensions are the culmination of decades of investment and will ride out blips and trends.
- Do your own thing – Everyone has investment advice but few of them put their money where their mouth is and fewer are rich enough to retire. Listen to what they have to say, but have your own strategy as their tips are likely to be out-of-date and common knowledge.
- Put together a portfolio – Diversify investments so market volatility does not knock you sideways. Look for growth early on and income will follow. A lesser reliance on equities will reduce volatility. Trying to win by predicting the market is a gamble not an investment
- Keep your nerve – The easiest way to lose money is to buy high and sell low. Look at your strategy over years not days or weeks. You want to be an investor not a speculator chasing quick profits. Watch portfolio performance and by all means take some profits or cut loose some poor deals, but spring clean rather than clear out.
Best time to switch to a QROPS
The trouble is fear is inside the investor’s head and does not exist in the real world. The markets will carry on regardless and time lost is often a chance missed to make a profit.
The answer is to conquer that internal chatter, still assess the risk and to invest anyway.
Don’t forget that a QROPS offers a wider range of flexible investments than an onshore pension – including more markets, commodities and currencies – that give more options for diversifying and growing a retirement savings portfolio
