Are You Afraid of Investing Your Money?

The previous blog was aimed at those who are contemplating life as an expat. This blog is dedicated to those well-heeled (hopefully) veterans of the suitcase, airport waiting lounge, visa hang-ups and dodgy taxi drivers. What is an expat veteran? For me, he/she has to have at least 15 years of experience as an expatriate under the belt. So, bearing that in mind, we’re talking people who have built up a palpable nest egg over the years. They have money to spend, perhaps who’ve gone on lavish vacations, aren’t afraid to invest in a decent wardrobe of accoutrements, and change out the automobile every couple of years. But underlying much of this ostentatiousness can be a fear of investing.

The fear of losing money is the main reason a huge percentage of the public struggles financially. But fear isn’t the real problem. It’s how people handle fear that matters. The much-celebrated investor, Robert Kiyosaki, tells us that the primary difference between rich people and poor people is how they handle the fear of losing money. Some people, when hit with a financial loss, give up. Others transform the loss into a win. As John D. Rockefeller said, “I always tried to turn every disaster into an opportunity.” Losers are defeated by failure. Winners are inspired by it. And I must confess to having come across many winners in my travels abroad. It’s very much like a game of chess; it’s 95% in the mind and 5% in making the move!

As mentioned above, many expats do tend to go over the top with buying big houses and posh cars rather than big investments. This is down partly to the fact that the vast majority of expats are contract workers who work from one job to the next - they enjoy the money so much that they get caught up in the ‘expat trap.’ Their overheads (and debts) force them into working abroad chasing the higher salaries to keep their ‘heads above water’.

Kiyosaki goes on to say that, “The primary difference between rich people and poor people is how they handle fear.” From my own point of view, the best way out of this fear of investments and, to a certain extent, the fear of money, is to diversify. Having a financial plan for security and comfort first are important. But if you have any desire to become rich, or just simply better off, then diversify. Better you put a lot of eggs in a few baskets rather than putting a few eggs in many.

As a one-time successful sports trader, I took the attitude that if the prospect of failure inspires you to fight and win, maybe you should challenge yourself to change your financial habits. Educate yourself and take some financial risks. The more education you have, the less risk there will be. It’s all down to market research. People in general are just too lazy to be bothered with investment diversification tending to keep their money in banks and building societies. I should point out that as I write this blog the Bank of England interest rate is stagnating at 0.5%. Nothing is going to fall onto your lap. You’ve got to work for it and when you do, the burden of fear will disappear by itself. The fact that the banks are paying such a low rate should be enough to strip off the vest of fear and invest prudently and diligently.

One should start with investing in mutual funds and unit investment trust funds (check it out here: http://fitzvillafuerte.com/mutual-funds-and-unit-investment-trust-funds-whats-the-difference.html) and then move on to a riskier type of investment – the stock market. If you start buying and selling stocks, then you might want to progress into Forex (foreign exchange) trading. And for those who are approaching retirement, and assuming you are of that ilk, you might want to contemplate moving into the hospitality industries: pubs, bars, restaurants, eateries, small hotels/motels or guest houses.

But, as I hopefully have explained clearly, it is all about overcoming one’s fears of investing your hard-earned cash to secure one’s future security and lifestyle.

You can be young without money but you can't be old without it.
Tennessee Williams

So You Wanna be an Expat?

Here are the pluses and the minuses . . .
Are you cut out to be an expat? Expat, in case of those who came into this world from a foreign planet, is short for ‘expatriate’. Expatriates are those fine breeds of bohemian spirits who decide to work in foreign climes. And it has been my experience of the expat life that you’re either suited to it or you are not.

I recall back in mid-1980 when I was working in Saudi Arabia, our flight landed sometime around 8:00pm – it was dark and as always the heat seemed to wrap itself around you like an electric blanket as soon as you stepped out of the plane. Anyway, we moved into the immigration area, and formed orderly queues to have our passports and visas checked. Behind me was this petulant, crabby Brit who, after listening to his diatribe of discontent for the previous 15 minutes, was entering the Middle East for the first time; in fact it was his first working trip abroad. To cut a long story short, and such was the utter disdain he had for the Saudi immigration process, that he decided there and then that he was gonna try and get the return flight back to Heathrow that very night. He had only been in Saudi less than an hour but he’d had enough! He hated the place!

Okay, this is an extreme case of a budding expat who obviously wasn’t of the mindset to face working abroad and who obviously did not do his homework before leaving Blighty. But remember, this was 1980, and back then there was no Internet, no e-mail, no SMS texts, in fact very little resources to check. So, to a certain extent, one was taking an even bigger gamble back in the 80s – you were either suited to life abroad or you weren’t.

The Pluses

So why the expat life – or not? Well, there is one simple common denominator when it comes to working overseas for a living: money, tax-free money. Let’s face it, if we were not coining in two, three or four times our salary back home, tax-free, then there would be no reason to go abroad. It’s a simple as that. So, let us put money as the Numero Uno – Number One - the Big Plus. The following positives about working abroad are deemed the same whether you are on single or married status.

The next three pluses, although not in any particular order are: free flights, free accommodation and transport. With the latter, this might come by way of a monetary allowance paid monthly, or a yearly one-off payment. Added to this, some, but not all, contracts come with a per diem, a daily living allowance. As I write this blog, a decent per diem for a single status contract would be in the region of $35 – 50 per day. If you are on a married status contract with children, then perhaps the kids’ school fees will be paid. And last but not least, you are always covered by medical insurance.

Outwith the financial side of things, other pluses are the wherewithal to indulge in new cultures, meeting the locals, learning a new language and exploring the countryside. And if your expat contract takes you to say, Singapore, well you have at your disposal a richness and diversity of cultures, conventions and lifestyles that will both thrill and amaze you!

The Minuses

Okay, so what negatives should the fledgling expat be apprehensive of? Well, it depends where one ventures. It’s been my experience that there are the ‘good contracts’ and the ‘bad contracts’; if you are lucky enough to end up in Dubai working for a bank or real estate agency on single status, then the world’s your oyster: bars, discos, classy females, great eating joints, fabulous shopping. However, should you be offered a single status contract working in a remote training centre as an Instructor in deepest Nigeria, well you are entering a different world.

Ask any expat what is the biggest downside to working abroad and most, to a man (or woman), will tell you being away from family and friends and if you are married, your wife or husband (although this is not always the case)! Irrespective of your age, this is always the biggest inconvenience or stumbling block to moving abroad. Again it would depend on your marital status and home life.

Location, location, location, a mantra touted by the estate agents when buying your first property. As with buying your first or next property, deciding on your first contract location can be daunting. These days you can pop onto the Internet and do all your own research – there are countless expat websites with which to consult. But I can tell you for sure, even this cannot prepare you for the culture shock, as you step off the plane in a foreign land to take up your first expat contract. You see you have not arrived in your new country for a two-week holiday, you are here to work for a living come Hell or high water!

So, the potential bad bits? If you are moving to a warm climate: the Middle East, S.E. Asia, sub-Saharan Africa or South America, you’re either gonna love it or loath it. Unfortunately, many of us Brits just cannot hack the kind of heat and roasting climates of, say, the Middle East. If you end up in S.E. Asia, Indonesia for instance, you have a medley of mosquitoes facing you 24/7, swarms of flies to put up with, and a mind-boggling potpourri of every kind of insect known to man.

Then maybe the workplace isn’t all that it was cracked up to be. The penthouse flat turns out to be a basement apartment in a crumbling tenement block in the worst area of the city. The transport allowance promised when you signed the contract turns out to be a ‘personal driver’ who takes you to work and back every day. The per diem doesn’t cover your daily costs. And I can add a personal word of warning here – food and other costs in many of the expat hotspots around the world are going through the roof. There was a time when it was cheap for an expat to live abroad – not any more.

There can be language barriers. For instance, here in Azerbaijan, outside of the oil industry, very few Azeris speak English and this has been and can be an on-going problem. When it comes to the social side, if it simply doesn’t exist and there are few expats of your own nationality, then life can be difficult. Part of the expat life is gelling with other expats and building a community spirit but, if you are posted on a project in the Rub al Khali desert of central Saudi Arabia, you just are not going to have a social life.

Last but not least, there are your working conditions. After your living conditions, if these are not healthy and congenial, then you will find yourself slowly slipping down the ladder of despondency. And one must always remember, you are having to commingle and integrate with, not only the local workforce, but other Western expats and sometimes this can bring unforeseen pressures.

A Word to the Wise

When deciding on the expat life I would simply ask yourself this question: do I have the motivation and the desire to further my career and provide for my and my family’s future by leaving home and work abroad. If you can definitely answer in the affirmative, then go for it. Embrace the expat life and put up with the inevitable frustrations and move forward. On the other hand, if you have the smallest doubt about what you are doing then better to stay at home. To pack up your bags and take up the expat life is a bit like having a flutter on the horses; it can be a big gamble but as long as you latch on to a firm favourite, then your quid’s in - take your winnings and run!