Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Question for the expats
Old 08-29-2011, 09:30 PM   #1
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
Question for the expats

My time in South America included two complete economic cycles of boom-bust. In US$ terms, prices and income were low but they both increased substantially in local currency - until the economy busted, a major recession followed and local currency lost most of its value, along with one’s savings. Sort of a rich-poor-rich-poor cycle.

Emerging countries, where most expats go to live, are in a boom cycle right now. Local currencies have appreciated and the value of the US$ (and Euro) is low – meaning the cost of living, expressed in US$ terms, is higher than ever. My question is, what are expats doing? Are you moving your assets into local currency and local bank deposits paying much higher interest rates? Or keeping your money in US$ or Euros, lowering your standard of living, but keeping your funds safe? Or do you have a different approach?

I imagine some folks thinking about relocating abroad are asking this question, as are others already facing this. Hopefully some will share their experiences.
__________________

__________________
MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-29-2011, 11:51 PM   #2
Full time employment: Posting here.
 
Join Date: Mar 2004
Location: No Where for Very Long
Posts: 747
Nine years in Thailand and 98% of my net worth remains in the USA.

Had I transfered more funds, I would have enjoyed a rise in USD terms due to the rising strength of the Thai Baht...
__________________

__________________

Lancelot is offline   Reply With Quote
Old 08-30-2011, 12:54 AM   #3
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Most of my income-producing (financial) assets are in the US while most of my non-income producing (real estate) assets remain in Europe.
__________________
FIREd is offline   Reply With Quote
Old 08-30-2011, 12:58 AM   #4
Thinks s/he gets paid by the post
DangerMouse's Avatar
 
Join Date: Jan 2007
Location: Silicon Valley
Posts: 1,812
We have most of our cash in Australia in the bank earning 7%. We also have investments in the UK in Sterling plus others in the US. For us it was a lot to do with us not really knowing where we would end up and hedging our bets. Our funds did end up in this distribution pattern in part because these are the 3 countries we have been moving between the last 16 years.
__________________

I be a girl, he's a boy. Think I maybe FIRED since July 08. Mid 40s, no kidlets. Actually am totally clueless as to what is going on with DH.
DangerMouse is offline   Reply With Quote
Old 08-30-2011, 01:30 AM   #5
Dryer sheet aficionado
lovinglife1's Avatar
 
Join Date: Sep 2010
Posts: 36
Kept as much salary as possible in India investing in one year CDs paying 10 to 11%, greatly offsetting the exchange movement. Had cola in Japan with no investments.
__________________
lovinglife1 is offline   Reply With Quote
Old 08-30-2011, 03:52 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,577
Nearly 20 years in Hong Kong.

It took me a few cycles to get used to the boom-bust cycles and learning to throw money at the market when its all doom and gloom. Buying a home in the local market has (so far) been a good move.

Since I anticipate being here long term, most of my/our assets are invested locally (greater China) with smaller allocations to Aus/NZ where I expect to spend reasonable amounts of time after retirement.

I put very little directly into the US because of the 30% withholding taxes and the need to pay an accounting firm to amend my tax retruns.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 08-30-2011, 04:44 AM   #7
Full time employment: Posting here.
 
Join Date: Jun 2008
Location: Hua Hin, Thailand
Posts: 523
Currently have about 2 years living expenses in Thai baht. I came to Thailand 18 months ago knowing about the currency flucuations relative to the dollar. I've transferred far more than needed for short term expenses, timing the market and making transfers when the dollar was stronger. All my equity investments are in US mutual funds.

The British pound has fallen farther than the dollar against the baht in the last five years. Many British pensioners in Thailand have involuntarily led the way to establishing expat communities in the country's Isaan region where the cost of living is much lower.
__________________
ER Oct 2008 at age 54. An expat mostly settled in Thailand.
ItDontMeanAThing is offline   Reply With Quote
Old 08-30-2011, 09:02 AM   #8
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
When I move to the UK I'll keep my cash in a UK bank account and the UK equivalent of CDs. I'll keep my mutual fund investments in the US because a lot of them are in retirement accounts and also because of the PFIC tax laws that make it a bad idea for US citizens to hold foreign mutual funds. I could buy individual foreign stocks, but I hate doing all the accounting that requires.
__________________
nun is offline   Reply With Quote
Old 08-30-2011, 09:56 AM   #9
Recycles dryer sheets
 
Join Date: Jun 2011
Location: SW Florida
Posts: 65
My pension is in Euro and deposited in my bank in Europe. 98% of my investments are here with VG in the US. I just transfer across to the US whenever I need funds here. I only own real estate in Italy only.

Queenie
__________________
Queenie is offline   Reply With Quote
Old 08-30-2011, 10:04 AM   #10
Recycles dryer sheets
 
Join Date: Mar 2011
Location: Dallas
Posts: 458
I'm new to this game, but I'll throw out what I'm thinking. My largest expenses will be housing & utilities & food. I'm pretty sure the peso is the way to go on payment, so I'll withdraw / transfer $$ to pesos when the USD is higher and pay for most things in pesos.

I'll look into opening an account there in the future and also into the CD equivalent, but I'll keep most in the states, investing in stocks, cd's & mm's. I just want to average 4% after inflation in a perfect world as we are still younguns...
__________________
Surewhitey is offline   Reply With Quote
Old 08-30-2011, 10:14 AM   #11
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,154
I have a UK bank account and savings account into which my UK pensions and UK SS will go. (I have been receiving one of the UK pensions for 5 years now, the other will start at age 65).

All our retirement investments and US pensions are in accounts in the USA. I transfer money back and forth when needed.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 08-30-2011, 10:30 AM   #12
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
Good feedback so far. When we lived overseas it was during my working years and my income was in local currency, so it tracked inflation. US taxes were an issue when the local currency strengthened because my tax liability grew but my real salary did not.

My bigger issues came when we began to accumulate real savings via deferred income and the local version of an IRA which I had to leave in local currency. It was painful and stressful to see it lose value.

Now, however, my friends in Brazil and Venezuela (just as examples) are seeing their currencies heavily appreciated and local interest rates sky high. In the past this led people to bring assets back to local currency - and then lose badly. It is very much like the stock market. Is this time different?

Those folks now in Asia and Latin America right now, are you keeping your assets in local currency or some $$/Euro combination?
__________________
MichaelB is offline   Reply With Quote
Old 08-30-2011, 10:49 AM   #13
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
Quote:
Originally Posted by traineeinvestor View Post
Nearly 20 years in Hong Kong.

It took me a few cycles to get used to the boom-bust cycles and learning to throw money at the market when its all doom and gloom. Buying a home in the local market has (so far) been a good move.

Since I anticipate being here long term, most of my/our assets are invested locally (greater China) with smaller allocations to Aus/NZ where I expect to spend reasonable amounts of time after retirement.

I put very little directly into the US because of the 30% withholding taxes and the need to pay an accounting firm to amend my tax retruns.
You've already been there 20 years but you anticipate being there long term? I'd say you've been there long term and plan to make it a lifetime

A few cycles - that's what happened to us. Now, from my vantage point in the US, it is easier to see the boom bust there - and the bargains. I remember when currency controls were announced in the early 90's we went out and spent a bundle buying things we normally wouldn't, but taking advantage of prices that would soon adjust upwards by 2x or 3x, which they did. In retrospect, we didn't buy nearly enough, although at the time we were horrified at our spending.
__________________
MichaelB is offline   Reply With Quote
Old 08-30-2011, 11:11 AM   #14
Full time employment: Posting here.
NYEXPAT's Avatar
 
Join Date: Jul 2009
Location: Miraflores,Peru
Posts: 889
i live in a dual currency economy and most people have a Dollar account and Sole account. The same with CD's although higher interest is paid in the local currency. Real estate is the same although in the city most transactions are in Dollars. Rent is the major expense in most retiree budgets and until recently was (on higher end rentals) paid in Dollars as it was common for Peruvians to transfer this money to the states for safety. This provided the opportunity for renters to offer to pay a year in advance (in Dollars) and negotiate a discount while avoiding the debasement of the USD.
__________________
NYEXPAT is online now   Reply With Quote
Old 08-30-2011, 11:20 AM   #15
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
When I'm in the UK I'll pay my UK state pension and US social security into my UK bank account and use those for the majority of my expenses. As I'll be resident in the UK they'll be no US tax on the social security. All the rest of the investments and retirement funds will be left in the USA to simplify taxes.

I'm interested as to how people handle their offshore investments and deal with all the PFIC and FBAR issues. Do you pay for an accountant or fill out the forms yourself.
__________________
nun is offline   Reply With Quote
Old 08-30-2011, 01:58 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,741
Send a message via Skype™ to kcowan
We keep all our wealth in Canada. We withdraw living expenses in pesos via ATMs in PV and transfer $8k-$10k into our peso account annually for covering automatic utility payments and the occasional check.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 08-30-2011, 03:41 PM   #17
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,154
Quote:
Originally Posted by nun View Post
I'm interested as to how people handle their offshore investments and deal with all the PFIC and FBAR issues. Do you pay for an accountant or fill out the forms yourself.
I only have a bank savings account in the UK and keep the total below the threshold of $10k to have such issues. Last tax year year we did exceed the $10k reporting threshold due to inheritances and I completed the FBAR form and mailed it in myself. Turbotax prompted me to do so.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 08-30-2011, 03:47 PM   #18
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
Originally Posted by Alan View Post
I only have a bank savings account in the UK and keep the total below the threshold of $10k to have such issues. Last tax year year we did exceed the $10k reporting threshold due to inheritances and I completed the FBAR form and mailed it in myself. Turbotax prompted me to do so.
Same here. I only have a checking account and a savings account in Europe, which I report to the Treasury every year. No other investment except real estate.
__________________
FIREd is offline   Reply With Quote
Old 08-30-2011, 04:01 PM   #19
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by Alan View Post
I only have a bank savings account in the UK and keep the total below the threshold of $10k to have such issues. Last tax year year we did exceed the $10k reporting threshold due to inheritances and I completed the FBAR form and mailed it in myself. Turbotax prompted me to do so.
I'll probably have more than $10k in the UK as I want enough cash in UK pounds to cover a few years of expenses so I'll just send in the FBAR, but no other investments as they make life too complicated!
__________________
nun is offline   Reply With Quote
Old 08-30-2011, 04:06 PM   #20
Recycles dryer sheets
 
Join Date: Apr 2005
Posts: 463
Can only speak to Mexico where we kept a few thousand dollars in the Mexican equivalent of treasuries called cetes and otherwise did the ATM thing like Keith. Peso exchange rate during the past couple of years has ranged from just under 11 to over 15 to the $. Mexico IMO is a special case because its economy is more than 70% tied to the U.S. and I don't see than changing anytime soon. With any other expat destination I'd be seriously worried about potential severe loss of purchasing power w. dollar denominated assets, but like many other expat there don't see much likelihood of a peso much under 11 to the $ for any length of time as long as foreign remittances, U.S. tourism and U.S. purchases of the lucrative products of the drug cartels keep them afloat down there.
__________________

__________________
kevink is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Question on the limits and ethics of financial liability MichaelB FIRE and Money 26 08-15-2011 02:28 PM
Question re: best way to invest "extra cash" Lisa99 FIRE and Money 21 08-10-2011 03:25 PM
Preventing hang over question My Dream Other topics 19 08-02-2011 11:33 AM
Rebalancing Question potto0213 FIRE and Money 2 07-09-2011 12:32 PM
Firecalc Inflation question frugalhen FIRECalc support 1 07-05-2011 12:48 PM

 

 
All times are GMT -6. The time now is 04:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.