…but it sure helps keep misery away!
FOR EVERY expression we hear claiming that money can’t buy love or happiness, we hear another reminding us that money makes the world go round.Regardless of how materialistic you may or may not be, we all need to know we have enough money to live on for the rest of our lives, and to remain living in the style to which we are accustomed.
Whether we like it or not, money plays a huge part in our lives and, in order for us not to have to worry about it, we need to know our finances are set up in the best way to suit our lifestyles and needs.
When you go through a lifestyle change, it is sensible to talk to a financial adviser to check that your financial planning is still suitable for your current situation, and then make changes where necessary.
Both a move to Portugal and retirement are significant lifestyle changes, and both should prompt the use of a financial adviser – yet many people retiring abroad do not seek out appropriate professional advice. As a result, they do not make adequate financial arrangements and encounter difficulties down the line.
In this situation the internet is actually a double-edged sword. It contains an incredible amount of information on moving to Portugal, living in Portugal, setting up your finances in Portugal and so on. This, however, can lead many people to believe that they are fully informed on everything they need to set up their financial planning. However, facts on the internet can be incorrect or out-of-date. Also, it will not tell you what important information you have missing. In other words, you will only research the issues you already know you need to consider, but there may be other aspects which are just as important but which you are not aware of.
In my opinion there is no substitute for a face to face meeting with an adviser. He or she will make sure you have – and understand – all the relevant information, as well as provide an objective viewpoint. Many people find it hard to look at their financial planning clearly (even if they do not realise it) and an expert’s objective opinion can prove invaluable… not to mention profitable.
It is not as easy as you may think to look after your own finances in Portugal.Portuguese regulations can be very different from UK ones, and in many ways more complex. Even if you have successfully managed your own UK finances, you may be both surprised and caught out by intricacies in the Portuguese rules. You may also not be fully aware of how, where possible, you can use them to your best advantage.
Have you seen those TV programmes where people believe they can renovate or do work on their houses, without the help of professional builders and craftsmen? Many come to regret their decision when they realise they do not have all the skills or energy needed.In the end, they have to call in the experts to finish off the work and correct the mistakes made as a result of lack of knowledge.
It is the same with one’s finances. I have met many retired expatriates who believe they have enough knowledge and time to do it themselves. Many achieve their goals.Most, however, do not.
The world of almost infinite investment choices and the tax environment of Portugal have two key things in common. Changes can happen frequently and without warning and the complexity of a different financial culture, combined with the language difficulties, can easily trip up many do-it-yourself (DIY) enthusiasts.
While it is not impossible to research and implement investment opportunities, the real problem in optimising results lies in the difficulty in integrating tax, legal and investment considerations, in order to get the best overall results.
Tax expertise is now as crucial as investment awareness for successful wealth management results. What matters to every investor is after tax return; a good investment return can be eradicated by inappropriate tax structuring.
Sometimes it pays to take advice from the experts and then work with them to decide what part you can play in dealing with certain aspects of your affairs.I have met a number of expatriates who told me they wished they had understood local tax and investment issues more clearly from the outset. Often, it is less costly in the long run to get it right from the start, than to make mistakes that later have to be rectified.
Another aspect to consider, when selecting the best way to manage your finances in Portugal, is where your financial adviser should be located. For obvious reasons, many expatriates prefer to keep using their UK adviser, especially if they have had a long relationship with them.However, bearing in mind how important the Portuguese tax and investment regulations are, it is essential that your adviser is both knowledgeable on the Portuguese rules and is kept up-to-date on all the changes. It is rare to find a UK adviser in this position.
A locally based adviser will have all the necessary knowledge and will help you select the best investments for a Portuguese resident, plus ensure you both avoid the tax pitfalls and use the rules to your best advantage. He or she will be in the best position to constantly monitor all the changes and advise you about them where necessary.
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