Viewing posts categorised under: Financial Planning

Comment prendre sa retraite à 50 ans?

By Cedric Privat
This article is published on: 30th September 2020

30.09.20

Qui n’a pas rêvé un jour de pouvoir arrêter de travailler avant l’âge légal de la retraite? 50, 40, 30 ans? Et si ce rêve était réalisable?

La question peut faire sourire, surtout si vous résidez comme moi en Espagne à Barcelone, avec un prix de l’immobilier exorbitant et des salaires souvent moins élevés qu’en France.
Pourtant, de plus en plus de personnes y arrivent, alors pourquoi pas vous?

Le Frugalisme :
Le mouvement FIRE (Financial Independance, Retire Early), né aux Etats-Unis dans les années 2000, défend le principe de vivre simplement et de faire fructifier son argent pour pouvoir vivre de ses rentes.
Il s’inscrit dans un mouvement économiste du Frugalisme “Qui se nourrit de peu, qui vit d’une manière simple.” (Larousse)
Pourquoi ne pas s’en inspirer?

Comment?
• Économiser : s’acquitter de toute dette (surtout celle de votre bien immobilier), réduire son train de vie, éliminer les frais superflus, supprimer certains loisirs, épargner davantage dès le 1er du mois.
• Définir un budget : il sera indispensable de bien calculer vos besoins mensuels afin de définir votre patrimoine retraite et ainsi fixer votre objectif.
• Investir : en plus de votre résidence principale vous devrez investir judicieusement l’argent épargné dans des placements financiers, des actions ou de l’immobilier.

Les frugalistes suivent une « règle d’or » dite des 4% : disposer d’un patrimoine au moins 25 fois supérieurs au montant de ses dépenses annuelles. Si elles s’élèvent à 2.000 euros par mois, il faudra par exemple un patrimoine de 600.000 euros, permettant de vivre des 4% de rendement généré.

Quand commencer?
Bien évidemment, le plus tôt possible. Une retraite anticipée deviendra vite un rêve oublié si on débute trop tard, mais tout dépendra également de votre implication à la cause.
Les nouvelles générations se soucient de plus en plus tôt de leur retraite et pour cause; les prévisions des pensions publiques de retraite sont à la baisse et l’âge légal de départ à la retraite ne fait qu’augmenter.
Le frugalisme demandera une forte réduction de vos dépenses, il est souvent accompagné par une conscience écologique afin de se tourner vers un mode de vie décent et responsable.
Nos sociétés capitalistes amènent de plus en plus les individus à se poser des questions sur le rapport qu’ils ont à l’argent et au travail.

Qui peut appliquer cette méthode ?
Bien évidemment, toute retraite anticipée sera plus facilement accessible aux classes moyennes et supérieures. Pour beaucoup, il est déjà suffisamment compliqué de mettre un peu d’argent de côté.
Une recherche Google rapide vous permettra de lire les expériences de nombreux “jeunes retraités” à travers le globe.
Les méthodes divergent, mais la discipline est de rigueur. Certains retournent vivre chez leurs parents quelques années et économisent 70 % de leur salaire, d’autres travaillent pendant 10 ou 15 ans à un rythme à la limite du soutenable, certains vont compter des années chaque centime possible et enfin les plus privilégiés qui reçoivent un salaire confortable vont tout simplement faire plus attention, s’organiser et investir malin.

Cette méthode vous intéresse mais vous vous posez des questions ?

N’hésitez pas à prendre conseil auprès de professionnels à votre écoute.

Le groupe Spectrum à Barcelone vous propose d’effectuer un audit sans frais ni engagement afin de mieux vous organiser dans la préparation de votre retraite, anticipée ou non.

Nous vous aiderons ensuite à comparer et choisir le placement financier le mieux adapté à votre situation et préférence.

Who wants to be a millionaire?

By Victoria Lewis
This article is published on: 3rd June 2020

03.06.20

Some people are prepared to cheat in order to become a millionaire. Charles Ingram famously cheated on the UK television game show ‘Who wants to be a millionaire’ and was subsequently found guilty along with his wife and friend who coughed during the programme to indicate the correct answers.

Frank Sinatra and Celeste Holm sung ‘Who wants to be a millionaire’ in the film High Society. Frank Sinatra was certainly a multi-millionaire even though he sang that he didn’t want to be!

Incidentally, the word millionaire was apparently first used in French in 1719 to describe speculators in the Mississippi Bubble who earned millions of livres in weeks before the bubble burst.

You may already be a millionaire or you may be planning to become one in the future through hard work, inheritance or good luck. Whatever your current financial situation, it is interesting to consider the millionaire ‘secrets’ of how you can become one.

Of course, millionaires aren’t privy to knowledge and information that no one else has access to. The ‘secrets’ are simply sensible financial habits which we can all use.

Click the headings below to find out more:

[cq_vc_accordion contentcolor=”#333333″][cq_vc_accordion_item accordiontitle=”Decide what you want in the future, set a target and stick to it”]Have you calculated when and how much money you need to retire? Perhaps you want your children/grandchildren to have a university education – have you calculated how much this will cost?[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Shift your focus from spending to investing”]Most millionaires take advice from investment professionals – tax advisers, lawyers, financial planners and asset managers. Don’t be afraid of them; use them.[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”The 24-hour rule”]If you can’t resist spending, apply this rule that many millionaires use. Even if you can afford an expensive purchase, give it a day’s time before actually making the decision. Impulsive shopping occurs from an emotional trigger and is often unnecessary. Do you want it or do you need it?[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Set a budget (yes, even the rich have a budget!)”]Look at your monthly bank statement and categorise everything into the following groups:
Essentials, Personal and Savings. Generally speaking, the split should be 50%, 30% and 20%.

Living essentials – allocate 50% for monthly expenses such as mortgage/rent, transport, utilities, food etc.

Personal spending – allocate 30% of your income for holidays, entertainment, shopping, hobbies – anything that makes you happy.

Savings – 20% of your earned income should go straight into an investment or savings account.

If your own allocations are different, analyse why and consider how changes could be made.[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Cash over credit”]We are living in a near cashless society and credit cards are easy to come by, but this environment is not advisable for people who struggle to keep within their budget. Many millionaires prefer cash over a card for this reason.[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Control”]People who are good at saving and investing are generally also good at controlling their urge to spend. Many people have completed a Dry January or a Meat Free Monday, how about trying a regular ‘no spending’ day – call it Frugal Friday![/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Bills first, the rest later”]Most banks offer the facility to choose the date you want your regular standing orders to be paid. Choose the day after your income/pension is paid in, so you know exactly how much is left for everything else.[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Invest in something that makes you happy”]This could be a classic car, a piece of art, perhaps you have a hobby that you enjoy investing in. Happiness can also be found in the investment arena, as more and more investors are choosing ethical or socially responsible funds. These are funds that have positive social impacts or are involved in climate change solutions. You can now express your values in the financial world.[/cq_vc_accordion_item][cq_vc_accordion_item accordiontitle=”Invest in services that save you time”]Many millionaires don’t hesitate in paying for services that save their time – food deliveries and laundry services for example. The same can be said for investment research – a financial advisory firm will do that for you.[/cq_vc_accordion_item][/cq_vc_accordion]

For more detailed information on these financial habits, please contact me on
M: 06 62 50 70 21 or email Victoria.lewis@spectrum-ifa.com

Can we learn from the past?

By Jeremy Ferguson
This article is published on: 24th April 2020

24.04.20

Long periods of growth in the world, followed by a creeping in of greed, have normally caused previous stock market ‘tumbles’. This time, however, something completely unprecedented has caused it, wiping large fortunes from people’s pensions and savings, for the short term at least.

This latest situation is another great example of the fact that no one really knows what lurks around the corner. Investment managers may be clever people, but it’s simply impossible to accurately predict the timings of markets taking a tumble when events such as this take place.

‘Investing is for the medium to long term’ is something you will always hear about from people like myself. If you have a time horizon that’s very short, it’s normally fraught with danger; investments need time for you to reap their rewards. So my question is, how has the world faired on this front over the last century, and what we can learn from the past?

The first ‘event’ was the Great Depression in the US, which started in the late 1920’s. What caused it?

The early part of the decade was full of exuberance, people borrowing money to buy cars, new houses, and even borrowing to make investments in the new world of the stock market.

Everyone was doing so well, then the whole thing fell apart and nearly 13% was wiped off stock market values. For those people who had borrowed heavily to invest, it was enough to wipe them out. They lost everything, as they couldn’t repay their debts, and then followed the Great Depression. This lasted roughly 12 years until the massive manufacturing effort of WWII kick started the recovery.

Next up, after many years of growth following the end of World War II, was the famous 1987 crash. This was the largest fall in stock market values at that point in history, with a 23% fall. So what caused this? It was similar to the 1929 crash, with the addition of the speed at which people could trade shares in the modern world.

People were borrowing money, leveraging investments with the money, and then things started to go wrong. This time fear took over, with panic selling ensuing, and people lost fortunes very quickly. At that point it was the single biggest one day fall in history.

This was then followed by a 12 year recovery period, with everything being a little more controlled, until the Dot-Com bubble started to inflate. It was a frenzy of over valued companies,

people buying shares they would never have normally bought. It was all so easy to make money. Everyone was involved. Greed fevered a frenzy of madness! Then it all fell apart. The bursting of the Dot-Com bubble in 1999/2000 pushed stock markets down 23% again, but many shares fell almost 100% in value.

And off we went again… over the next 8 years, behind the scenes there was the growing greed that always seems to be lurking. Easy borrowings, people buying houses they couldn’t really afford, remortgaging the ones they had to buy more ‘things’. Banks were selling on loans to other banks.
Easy money was everywhere, seemingly fuelled by greed again. And then, you guessed it, bang! The start of the 2008 Financial crisis as it became known. The American banking system almost collapsed entirely. Never before had greed almost toppled a country. 12 years of recovery followed (sound familiar?) and 2020 is the next focal point! What more is there to say? Another large ‘tumble’ in values again.

So where am I going with this? Every time this has happened in the markets before, afterwards there ensues a protracted period of recovery and growth. The important thing is the ‘line’ keeps going up, albeit in a rather rugged manner.

The below graph is an example of 50 years growth of the 500 largest companies in the US up to the 2008 crisis. It is all over the place, but if you were invested for the medium to long term, the ‘line’ goes up and up, which is why people invest their hard earned pensions and savings. To profit!

This recovery is going to be tough, and in a new and changed world. It will come from companies that are agile, well financed with flexible long term objectives, and who are able to adapt quickly to the ever changing world.

Never has this been so obvious as it is now. If you have money invested, make sure as best you can it is exposed to investments that are most likely to be part of the recovery. A recovery that history has taught us always happened in the past.

Lockdown is a great opportunity to dig out your files to see what you are invested in, and if you need any assistance or a second opinion, I am happy to help. I can be contacted at :

Jeremy Ferguson
The Spectrum IFA Group
Sotogrande, 11310, Spain
Office: + 0034 956 794409
Mobile: + 34 670 216 229

jeremy.ferguson@spectrum-ifa.com
spectrum-ifa.com

Guardianship for your Children

By Katriona Murray-Platon
This article is published on: 11th April 2020

11.04.20

Being the mother of two small children and the aunty of several more, like many parents, the issue arose quite early of what would happen to my children if something were to happen to my husband and I and what would happen to my sisters’ children should something happen to them. Whilst I don’t need to make a will from an inheritance tax point of view, because I have two children with the same father (my husband) and French law states that my half of our assets would go to my children as bare owners (nu propriétaire) and my husband as beneficiary (usufruitier), I do need to make a will regarding my wishes for my children’s guardian.

The first question is a personal one. Who, in your family or friends, would be best placed to be able to raise your children, in the country you want them to be raised in, in their language, in the way you want them to be raised? Do(es) this person(s) have children of their own? There are a range of different questions that are all particular to your situation. If you intend to appoint someone to be a guardian, then you should talk to them about it and maybe, if possible, talk to your children about it.

The second issue is the legal aspect. There are two ways to appoint a guardian in France. Firstly, you can appoint them in your will, or you could appoint them using a special declaration. Either way a notary needs to be involved. If no guardian is appointed by the parents, under aged children will be put under the protection of the court. A “Family council” will be appointed by the Guardianship Court (Juge des tutelles). This Family Council, made up of a minimum of 4 people, will have the responsibility of appointing a guardian (if one hasn’t already been appointed) who can be a member of the family or someone outside the family. Even if a guardian has been appointed but this person is unable to either adequately care for the child or properly manage the child’s assets, the matter can be referred to the court and another family member can chose another guardian.

If a child loses one parent then it is the other parent who will have parental responsibility. This parent can either care for the child themselves or appoint a guardian, who can be a member of the family or a close friend. If the parent is unable or incapable of looking after the child, then another guardian can be appointed by the court.

The third aspect is the financial aspect. If something were to happen, would the guardian have the financial means to look after the child(ren)? One thing you can do is make sure you have life insurance (called death insurance in France) which will pay out a lump sum and/or an annuity to the children for the rest of their childhood. Often when you purchase a house there is loan insurance that will cover some or part of the value of the house upon death of one or both parents. However, it may not be convenient or possible for the child to be raised in the family home and property as an asset is difficult to manage. Other liquid assets can be kept in bank accounts like Livret As or LLDs, but large lump sums (like the proceeds of a house or the lump sum from insurance upon death) should be placed in an assurance vie in order to protect it from inflation.

Luckily it is uncommon that a young child would lose one or both parents, but it is something that plays in the back of the mind of many parents so it is better having things in place to decide, who, how and with what means someone would look after your child in the best possible way.

Moving to Spain – When should I take financial advice?

By David Hattersley
This article is published on: 2nd March 2020

02.03.20

For the majority of those who move to Spain, speaking to a qualified financial adviser, who is regulated where you plan to live, is something which happens after you have made the move. But, talking to one before you embark on the journey can help avoid some of the issues that expatriates can find themselves encountering.

Many UK based advisers are not fully regulated to offer advice for Spain and may not be aware of the most current regulations or tax efficient solutions for your needs. A Spanish regulated adviser can ensure you are financially prepared for your move in terms of any investments, savings and taxes which can be due on both income and windfalls you may be expecting after your move. A local adviser will also be able to clarify the potential impact of Spanish succession tax.

An additional complication in Spain is the variety of laws in each autonomous area. The classic example is the differing laws between Andalucia, Murcia & Valencia, so it makes sense to deal with a regulated adviser who is based in or near the autonomous area you are moving to.

Many people buy in Spain with plans of using their new Spanish property to retire to, either now or eventually. If it is the latter, in the interim period the property may be used to produce rental income, either via summer rentals or long term rentals, so there will be tax considerations. Depending on how long you are planning on living in Spain each year, residency may also become an issue. When holding property both here and in the UK, “Cross Border” regulations and differing types of tax are applicable to each country. Having a “Partner“ relationship brings its own complications.

Everyone’s situation is unique and there is no single ‘recipe’ that we can give to navigate buying a property in Spain. A regulated local adviser has no vested interest in which property you buy, yet will have a long history of experience of the path you are undertaking and will be able to help you create a plan to fit your own specific circumstances.

Investing an hour of two of your time to go over your project with an adviser before you make the move to Spain can provide direction, peace of mind and financial comfort when planning your new adventure. Rules and regulations can change. The potential impact of Brexit provides an example of how quickly this can happen, so consider taking action sooner rather than later.

Why don’t you contact me to arrange a free, no obligation discussion of your plans – either you will get confirmation that everything is in order, or perhaps some points will come up that you hadn’t thought about. Please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations that we provide.

One kind of hangover is enough………

By Chris Webb
This article is published on: 2nd December 2019

02.12.19

If you´re anything like me, you´ll be busy planning Christmas. Anything from where to see the best festive displays in Madrid, to trying to get your family EVERYTHING they want.

Christmas is an exciting time of the year for all of us. As a parent I still love that my children think Santa will make a personal appearance to our house and that he will be parking his sleigh right in the back garden (I have some doubts that they´re now just stringing me along, but I will continue to enjoy it while I can).

We´re all busy fitting in lots of social occasions, handing out gifts and cards and trying to squeeze in a party or two. However, there is also a serious side to the festive season: it’s very easy to overspend and overindulge and end up paying for it well into the new year.

Statistics show that most of us use credit cards to fund Christmas present purchases and to attend occasions we might not normally attend. Unfortunately, many people have problems paying back that debt after Christmas.

I have put together some tips to make sure you start 2020 on the right financial foot, and hopefully this will help you get through the festive season without a financial hangover.

1. Plan your shopping
Always write a list! My wife will laugh aloud at this as I am useless at writing lists BUT it is one of the most important things to do. Never just hit the shops; always write a list of who you want to buy for, an idea of what you want to buy and how much you want to spend. Without your list you´ll shop aimlessly and make purchases on a whim. You´ll lose track of your budget and spend unnecessarily.

Planning and making a list also means you can do some internet research to see what shops have the best sales, or if you could buy the gift online cheaper and save some money.
Research shows that people spend more than they can really afford on Christmas presents each year and end up with a credit card debt they didn’t anticipate after the ¨silly season¨ ends, so it is important to plan and make sure you know how much you can afford to spend.

2. Establish some ground rules
This is an important tip. Too many people get caught up gift giving. It’s nice to give and receive gifts, but it’s helpful to have ground rules. Have the conversation up front with family and friends to make sure everyone is on the same page. Agree on spending limits and who you will and won’t be buying for. This avoids offending anyone or any awkward moments at the Christmas table.

Being part of a big family, we decided to make it about the kids. If we didn’t it would mean buying a lot more presents and spending a whole lot more. When the whole family do get together for Christmas, which is rare due to the geographical situation of our family, then we do a Secret Santa for the adults where limits are set so everyone is on the same page.

3. Focus on personal value rather than financial value
All too often, people get caught up in spending money on gifts at Christmas and focusing on the financial value of those purchases. Instead, focus on the personal value.

From my own experience, I´ve had many a ¨nice¨ item bought for me, but the one present that means more to me than anything else is a framed picture where my kids used their hand prints to make a picture of two robins sitting in a tree (it has a very personal meaning). It has pride of place in my office and is appreciated far more than anything new, shiny or tech related.

Remember, it’s the thought that counts.

4. Avoid the financial hangover of festive season events
Festive season events can cause more than one hangover and let´s be honest, we don’t really enjoy any hangover.

Additional and sometimes unexpected events can really hurt the finances, as we never tend to factor them in to our regular spending habit´s but everyone thinks it’s ok to do it because it’s Christmas. Its amazing how these additional costs add up. Tickets to events, food & drinks, transport, new outfits…the list goes on and on.

If you are planning on being a social animal, think about the event before you go. Plan your whole evening and understand the whole cost of the event, not just the ticket price.

If your budget is a bit tight, be selective and choose the events you can afford to go to. You don’t have to go to everything. Don’t be pressured into attending something just because it’s Christmas. And remember, it’s ok to say no and you don’t need a new outfit for every event!

Finally, if you´re the host don’t be afraid to ask people to bring something to share. Whenever we plan an event, we always ask people to either bring a plate or bring a bottle. People are more than happy to help and generally aren’t expecting a free ride.

5. Make room for the new by getting rid of the old
This is probably more important when kids are involved. Why? Because they seem to have everything already and as they get older it becomes a struggle to know what to buy them. Generally, kids are going to get a lot of gifts. If you have children, you´ll know exactly what I mean. Don’t be afraid to ask them what they don’t play with anymore or what they don’t want anymore.

Look to see what you can dispose of. That’s a harder job before Christmas but can help financially if you can offload unused toys to offset new toys. I had this exact conversation with my daughter, Christmas 2018. All she wanted was a new iPhone, so after first agreeing with the wife to splash out on a new model, we then agreed that the old one was ours to do what we wanted with. A quick online sale gave us €200 which made the new purchase a lot less painful.

We also donate some items to charity; whilst that doesn’t help us financially, it makes a huge difference to others.

6. January sales
Post-Christmas sales can be a great opportunity to get a bargain, but they can also be a good opportunity to get sucked in and enhance the Christmas hangover. Do you really need to go out splurging cash just because there´s a sale? If so, then it’s important to go into the sales with a plan, just like in tip 1. Have a list of what you need so that when you go to the sales you go looking for specific things.

And remember, if you’re planning on hitting the shops with your credit card, you have already put pressure on that pre-Christmas.

7. Survive the school holidays with budget-friendly activities
This is important throughout the year but is still a big part of the silly season. Kids are about to start school holidays and it’s important to budget for entertaining them during that time.

There are so many free things to do with kids in and around Madrid. Most of this can be researched online and within our many local Facebook groups. You don’t need to spend a fortune. We´re lucky enough to have some fantastic parks nearby, some amazing countryside within a short drive and all at no cost.

Planning is crucial. If you plan the money you have available for the period it needs to last, you are less likely to feel the strain of not having enough money.

No Financial Hangover!

8. Plan now for 2020
Planning for 2020 and next Christmas is very important. Talk to your family early about the plan for next year and get the ball rolling straight away so you can be prepared well in advance. Plan birthday and Christmas presents so you can buy in advance and save spending more on less just because it was last minute.

The most important thing to take away from all our tips is to PLAN. Planning plays an important part in being in control of your finances and aware of what you can afford and how much you are spending.

I make no apologies for writing a sensible guide to avoiding the Christmas hangover. Most of us are too focused on the here and now, ensuring we have a great time, only looking at the implications of that good time when the bills start to roll in come January. I hope this will help you to enjoy the festive season, allow you to spend what is right and celebrate without any financial regrets.

Wishing you all a great Christmas and a prosperous New Year!

To book your personal financial review call me on 639118185 or drop me an email at chris.webb@spectrum-ifa.com

Is Financial Planning Different for Women?

By Spectrum IFA
This article is published on: 28th October 2019

28.10.19

In a recent global poll by UBS, they found that women are ‘acutely aware’ of their financial needs in the long term. The top three needs were identified as follows:

Retirement planning – 76%
Long term care – 72%
Insurance – 68%

Considering this, you would think that the figures would be similar for women taking the lead in managing their own long term financial planning; and you would be wrong. As, in the same report, only 23% took charge of long term financial planning, with 58% deferring to their spouse for criti-cal long term decisions.

Reading this report, I was not surprised. The majority of my clients are men or couples (where the man takes the lead on major financial decisions. However, he will defer to his wife for the house-hold budget), with single women (and I include those who are in relationships but not married) in the minority. The reasons for this range from the perceived understanding that men typically know more about investing, to women thinking they are bad investors. Let me tell you this, some of my best clients are women, as they are less likely to want to sell underperforming funds than men, and therefore are more likely to take advantage of compound interest.

Though it is easier said than done, women need to take a more active look at their own financial planning. The reasons being:

1. Women still live longer
On average, women tend to live four and a half years longer then men; this figure can widen when based on lifestyle and family history and therefore they have to put aside more for their retirement.

2. The earning gap
Whilst great steps have been made in shrinking the earnings gap in some fields, in other fields they have either stayed the same or even widening. Women are also more likely to work part time as well. This obviously means that women have less to put away for their retirement than men.

3. Career breaks
Women are more likely to take a career break than men – whether it is maternity leave or time off to take care of an elderly relative. The outcome is the same. Your earnings potential can be seve-rely affected.

4. Divorce
Regardless of what you may see in the media, on average, women are more severely impacted financially as a consequence of a divorce, than men. This may be a result of men either being the sole breadwinner, or earning significantly more than his wife.

5. Conservative Investors
When investing, women are more risk averse on what they do invest, than men. Potentially mis-sing out of greater gains.

6. Involvement in Financial Decisions
Research shows that when women are involved in financial decisions, 91% report that they are less stressed about their finances and an even larger amount report that less mistakes are made.

Clearly, having the confidence to speak to either your partner or a financial adviser about your fi-nancial planning can greatly alleviate the stress and confusing options that are ahead of you.

To discuss further how to start your financial planning, please contact me either by email emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72 to arrange a no obligation meeting

Spanish Resident Services

By Jeremy Ferguson
This article is published on: 10th September 2019

10.09.19

I was recently with someone whom I have known for quite a while, having met him regularly at business events in and around where I live. I knew what he did for a living (chef) and he knew what I did for a living, or at least I thought he did!

Over dinner one evening, I was asked “Jeremy, I know you are a Financial Adviser, but what exactly do you do?”

It actually took me by surprise, thinking everyone would know what I did if I had told them my job title. The discussion continued; “ I would get it if you said you were a chef, you cook food; if you were a car mechanic, you repair cars; if you were a pilot, you fly planes; but what exactly do you do as a Financial Adviser?”

Wow! My answer actually took a little longer than I thought, explaining all of the different aspects I deal with. That got me thinking, I do need to explain a little more about what I do, but not bore people to death.

With that in mind, I put together a small ‘flyer’ showing the areas I deal with, which then pushed me to write this article with the objective of giving people a little more detail around all of the areas I can help with.

So this is what I do for people who live here in Spain:

Retirement Planning / Pension Management
If you haven’t got to that age yet, have you tucked enough away to get you through retirement? Is what you have saved so far suitably invested now things are changing? If you have got to that age, is what you have expensive and suitable for your current lifestyle? We can review your plans and help with managing your finances in retirement.

Pension Transfer Advice
QROPS is a complicated area. What does it even mean? Qualifying (it qualifies as a pension) Recognised (it is recognised by HMRC in the UK) Overseas (it is outside of the UK) Pension Scheme. It simply means it may make sense to move your pension away from the UK to gain more control, for example to choose Euros instead of Sterling. Quite often it makes no sense to move it. What is important is that we can provide you with all of the information you need to make an informed decision. Brexit may mean there is a limited time to do this.

Tax Efficient Investments
If you have ISA’s you will be taxed on these in Spain. Are you invested in policies you bought in the UK holding UK funds that are being taxed on the profit? We can take a look at what you have and see if there are better options out there for living in Spain from a cost, tax and administrative perspective.

General Financial Overviews
Savings in banks in the UK and here, ISA’s, personal pensions, state pensions, general investments, shares, and the list goes on. Are all of these suitable now things have changed and you have retired in Spain? Do you know where all your monies are? Have you forgotten a small pension you may have paid into when working for a company many years ago in the UK? Are you being charged too much for what you have? Is everything all kept together in one place? We can help manage all of this.

Cash Flow Planning / Long Term Plans
How long are you going to live? (I’m afraid we cannot answer that one). How long will what you have last? What effect is inflation having on everything. Can you reduce your outgoings? We can help you take some time to look at all of these things in detail and maybe tweak things to help your money go a little further.

Succession Planning
Who do you plan to leave your assets to when you pass away? (Please don’t say the Taxman!) Where are the likely beneficiaries living? Where are your assets based and is everything in place to make sure things go as smoothly as possible when the unthinkable happens? We can help you with all of this and give guidance on wills, taxes and everything associated with succession plans.

Mortgages
Are you looking to buy a property here in Spain but worried about the poor exchange rate when you have sterling to pay for it. Have you considered borrowing as much as you can in Euros so you can keep your pounds and maybe exchange in years to come if the rate has improved? Mortgages are at all time lows with regard to interest rates at the moment, so maybe now is the time to take advantage and lock those low rates in? Do you understand the mortgage offer you have from the bank? We can help expats with mortgages and all of these questions through our mortgage division.

So now you can understand why my friend needed a little more explanation about what I do. I hope this has given you an insight into all of the areas I can help people with and if all has gone to plan, next time someone asks me exactly what I do, my answer will certainly be a little more polished!

Are You British, And Have You Recently Become An Official Resident Of Spain?

By Jeremy Ferguson
This article is published on: 9th April 2019

09.04.19

If The Answer is Yes,
What’s Going to Change For You?

Last night I attended a presentation hosted by the British Consulate covering the issues of living here post Brexit. Well, I am not sure how informative it was, as there seemed to be lots of ifs, buts and maybes. One thing I did conclude from it all however, and something I have always maintained, is if you live here, why not just get in to the system properly rather than constantly ‘wondering’ about it, or simply avoiding the issue.

Many people have been here in Spain for years without ever becoming officially resident. Differing circumstances cause this, varying between lots of time spent travelling, working away in another country or just being told not to worry. These tend to have all created a ‘meaning to get round to it tomorrow’ situation for many people.

This has quite often been the case when I have met with people during the 20 plus years I have been here, until along came this Brexit situation. It has resulted in more and more talk about what to do in the press, on the TV and radio, in bars, at family gatherings; basically everywhere.

EU membership has led to the feeling of it being very easy to live here in oblivion to all things official. But that looks like it is now changing. Or is it? One thing we do know is that the Spanish have seized the opportunity to entice people to become official residents of Spain, and if you want to avoid any doubt going forward, it is by far the most sensible option.

In the build up to the 29th of March deadline, the British Consulate and local Spanish town halls have actively encouraged people here to take up official residency in a series of talks like the one I attended last night. It’s amazing how quickly this has all become reality in what seems such a short time since the original referendum in June 2016. Now we are looking down the barrel of a possible no deal Brexit on the 12th of April.

Or are we? Who knows as I write this.

All of this aside, the sensible thing, without doubt, is for people to become officially resident here in Spain. For many, since the Brexit situation it has felt like a fait accompli and therefore something they simply have to do. Whatever the reason, if you have made the decision, then what does it actually mean for you going forward? Things seemed to be absolutely fine before, so surely not a lot will change?
Well, that is not exactly true.

The first thing to stress is how nice it is to know that now you won’t need to worry about ‘sort of knowing’ you probably should be resident and in the system. Things can certainly now be 100% clear. I call it ‘the sleep easy factor’, and it’s amazing the amount of people who say how good they feel when it’s all done.

There are a number of things that you should now consider, not necessarily in this order.

Do you have Spanish will?
You should already have a Spanish will if you own a property here, so that’s not changed. If you haven’t done that, you must, and it is very easy to do. It can be in both English and Spanish so you will understand everything.

And it’s not expensive. A lot of lawyers I know will do it for a couple of hundred euros if things are all quite straightforward. That will be another box ticked!

Once resident, currently some say you have up to two years to change your driving license to a Spanish license. There are others who say you have three months, others who say 9 months. The UK Government advice site says two years.

Regardless of who says what, and to avoid any embarrassing confusion, once you have residency why not just get on with changing your license? Again, there are many people around who will help you do this. You will get a temporary license while it is being dealt with and then a nice new Spanish license. A medical test will be needed, but again these aren’t that difficult to arrange. As long as you are in reasonably good health this shouldn’t be an issue.

On a positive note I have certainly found Trafico much easier to deal with showing a Spanish license when pulled over for a roadside check. The rules here are different to what you may be used to. You start with 13 points and they are deducted when you are caught being naughty. When you get to zero, then a suspension will occur!

Importantly, there will be taxes and tax returns to consider.

If this is your first time becoming a tax resident, then you will have to file a tax return for this year. The tax year here is the same as the calendar year (unlike the UK with their silly April date!). Your first return will therefore have to to be filed no later than the 30th June 2020.

Income tax will be due on income received during the year at varying rates depending on the amounts involved. This is similar to the UK with the rate increasing the greater your income level.
If you were previously a non resident, then you would pay capital gains tax when you sold your house (assuming there was a profit!). Now, as a resident, this will not apply on your main residence when it is sold, subject to certain criteria being met.
Wealth tax is due every year on your assets. This, as the words say, is effectively for people considered wealthy, and increases the wealthier you are. For most people this is not too much of an issue, but can be painful for people with a lot of assets.
Inheritance tax can be a complex area, and tax is paid by the person who receives the inheritance. The rules here in Andalucia have changed recently, meaning this should really not be so much of an issue anymore as there are now large exemptions granted which almost eradicate any amounts due, depending on the size of the estate.
At the end of each year, you will now also have to file a separate tax return from the one mentioned above, on a form known as Modelo 720. This is simply a declaration of everything you own in excess of 50k € outside of Spain (bank accounts, property, investment policies, share portfolios etc), and needs to be filed by the 31st March 2020.

Investments & Pensions
Regarding your investments and pensions, take a good look at where your income is coming from and what type of investments you hold. A simple example of the different treatment after taking residency would be holding UK ISAs. Although these are tax exempt in the UK, as a tax resident here these will now be taxable.

Also, how will your pension be taxed now? Previously, you were entitled to a Pension Commencement Lump Sum (PCLS, previously referred to a tax free lump sum). This will now be taxable here in Spain. The rate applicable will vary depending on how old the scheme is, and any benefits you are receiving will be taxed differently depending on the amount. If you haven’t started drawing from your pension yet, it may be worth looking at moving the scheme away from the UK, for a multitude of reasons. On the other hand it may not, so if you do look into this, make sure you are furnished with all of the information you need to make a well informed decision.

Having taken residency will mean you have adequate medical insurance in place, and although this can be seen as expensive, the treatment you will receive will be second to none.
Of course, as with all of these things there are the exceptions and everyone’s circumstances differ slightly. But the overriding message is that things should be fine here, even after Brexit, and as we know, the Spanish are very keen to keep us all here for many years to come.

I have covered many different aspects in this article, but please make sure you take good advice from people in the know. There are many legal, tax and financial advisers here who will be able to help you with most of the subjects covered; but as always, make sure you shop around, as prices and service levels do vary greatly, and always see if you can get a recommendation from someone who has firsthand experience of using that person before.

So, with all things considered, maybe Brexit pushing you to become a fully fledged Resident of Spain wasn’t such a bad thing after all.

Top 3 Financial questions after BREXIT

We asked Andrea Glover & Tony Delvalle – What are the current top three ‘hot topics’ with clients, particularly affecting retirees?

Comment prendre sa retraite à 50 ans?

Who wants to be a millionaire?

Click the headings below to find out more:

Can we learn from the past?

Guardianship for your Children

Moving to Spain – When should I take financial advice?

One kind of hangover is enough………

Is Financial Planning Different for Women?

Spanish Resident Services

Are You British, And Have You Recently Become An Official Resident Of Spain?

If The Answer is Yes,
What’s Going to Change For You?

Top 3 Financial questions after BREXIT

We asked Andrea Glover & Tony Delvalle – What are the current top three ‘hot topics’ with clients, particularly affecting retirees?

Comment prendre sa retraite à 50 ans?

Who wants to be a millionaire?

Click the headings below to find out more:

Can we learn from the past?

Guardianship for your Children

Moving to Spain – When should I take financial advice?

One kind of hangover is enough………

Is Financial Planning Different for Women?

Spanish Resident Services

Are You British, And Have You Recently Become An Official Resident Of Spain?

If The Answer is Yes, What’s Going to Change For You?

If The Answer is Yes,
What’s Going to Change For You?