How to benefit from a little extra knowledge

What do the following statements have in common?
1. Fish have no memory.
2. You consume on average 8 spiders in your sleep.
3. Cracking your knuckles causes arthritis.
4. We only use 10% of our brains.
5. You have to pay into the Spanish social security system for 15 years to be eligible for a Spanish state pension.

The answer?

None of them are strictly speaking true. As I am close to clueless when it comes to biology, I will focus on the final point, state pension eligibility.

You will read on numerous websites that, in order to qualify for a Spanish state pension, you have to have paid into the Spanish system for at least 15 years and that two of these years must be within the 15-year period immediately preceding the pension claim. However, what is generally omitted from the text is the fact that years of contributions in other countries, including the UK (despite Brexit), can be added to the years in Spain. In order to pounce on any uncertainty which might be created by my statement, I will illustrate my point with an example:

– Years in the UK system – 22
– Years in the Spanish system – 10

Although 10 is less than 15, the 22 years of UK contributions takes the total number of years over 15, i.e. 32 (10 + 22). This does not mean that one claims 32 years from the UK, or even Spain, but, in this example, there will be an entitlement of 22 years’ worth of state pension from the UK and 10 years of Spanish state pension (as long as contributions were made to the Spanish system in 2 of the 15 years prior to claiming the pension).

In order to find out more about pension entitlement, it is extremely helpful to be registered on Gateway for UK pensions and have a digital certificate to access information about the Spanish system. The digital certificate is also useful for other legal and tax enquiries, including SUMA and cadastral enquiries. It sits on your computer and allows immediate access to your information.

Although you can access projections as to your future pension entitlement, the story does not end there. Certain assumptions are made with these online facilities and you may not be provided with a completely accurate assessment of your entitlement. In the same way that accumulating years of contributions from different jurisdictions can solve the 15-year minimum term problem in Spain, it might also be the case that you can receive your Spanish state pension earlier than expected. The state retirement age in Spain in 2024 is 66 years and 6 months. This will gradually increase to 67 by 2027. However, if someone is able to show (in 2024) 38 years and 3 months of contributions, the retirement age is 65. This limit is increasing to 38 years and 6 months by 2027 and, presumably, there will be changes after that.

So let us take an example of the person who also paid for 22 years in the UK but, this time, an additional 17 years in Spain. Their default projected state retirement age is 67 in both the UK in Spain. Although the number of years paid overall will have no effect on the UK state pension age, it will do in Spain. As 22 plus 17 is 39, the person expecting to retire at 67 could actually receive their Spanish state pension at 65.

There is so much information on the internet but not all of it is accurate. We make every effort to filter out the wheat from the chaff as we know how important it is to know the facts before committing to something. People have made bad choices in the past because they did not have all of the relevant information. The decision by the Scots to invade England during the Black Death was not one of the best.

I was on one of Spain’s magnificent high-speed trains the other day, coming home from Madrid. We were travelling at over 300 kph across the spectacular wild scenery, a complimentary glass of white wine on my table with not a ripple on its surface.

I was lucky enough to be travelling Preferential (1st class) as Economy was full up. But the price didn’t matter because I have attained the age where I am entitled to a Gold Card which reduces train tickets by as much as 40% – I was travelling First for the price of Second!

Opposite me sat a kindly looking fellow and soon we began to chat. He was a senior airline executive with one of the Arabian Gulf airlines and was soon to retire. He was on a looksee mission as he and his wife had decided to move to Southern Spain where the climate is similar to Dubai’s, their home for over 15 years.

The thought of moving back to their native damp grey Britain was daunting.

Personal Finances
Taxation: I was able to present him with a copy of our Spanish Tax Guide which shows the different tax obligations and, once you become a tax resident (living here for more than 183 days), that you’ll need to pay taxes on your global income. I also advised him to check the details of the double taxation agreements between Spain and the UAE. It is very important to engage a licensed and regulated (in Spain) financial adviser to assist you with all these matters.

Spanish Bank Account: You’ll need a Spanish bank account to pay rent, utilities, and other expenses. It is also advisable to have an offshore bank account where the bulk of any cash should be kept as some Spanish institutions have the habit of raiding one’s account without permission!

Visas and Residencias
It seemed he wasn’t fully aware of the options available to him in legally securing his residency here. As a UAE resident, you’ll need to apply for a Spanish visa unless you hold citizenship of an EU country. There are several types of visas. Non-Lucrative Visa: if you plan to retire or live off savings, this visa allows you to stay without working. Golden Visa for individuals investing in property or businesses in Spain (minimum investment of €500,000). Work Visa: If you have secured a job in Spain. Student Visa if you are moving for educational purposes. Residency Permit: once you have arrived in Spain, you’ll need to apply for a residence permit, if none of the above apply.

Driving
It is important to check if you can exchange your UAE driving licence for a Spanish one, or if you’ll need to undergo a test. You have six months to drive on your foreign license once you’re a resident here.

Accommodation
Many people moving here begin by renting to see where they would like to live within a certain area. An alternative to this is to retain a Relocation Agent who will line up properties to your specification before you come over. This saves time and money and can be very rewarding. You can also use this service if you wish to rent instead.

Lawyers and Gestors (Para Legals)
It is important to retain a lawyer or Gestor who specialises in immigration or real estate to help you navigate legal requirements such as contracts, taxes, and residency permits. A good reputable relocation agent can also provide this service.

Healthcare
Spain has an excellent public healthcare system and is available once you obtain your residency permit (Residencia). Many expats opt for private health insurance and there is a wide choice here. In some cases, it is mandatory for gaining residency.

General Insurance
If your UAE general insurance company does not have an EU entity, then you will need to reinsure here. This is required for your car(s) and highly desirable for your purchased property and its contents. The easiest route is a general insurance broker (of which there are many here) and who will also organise your medical insurance, if needed.

Shipping and Moving Services
If you have furniture, cars, or other personal belongings to move, the relocation agent can arrange this as there are many excellent international removals companies with branches here. They will be familiar with customs formalities and on used personal belongings, note there is no import duty. However, on a personal vehicle, you will have to pay IVA (VAT) if you decide to keep hold of it after 6 months.

Schooling
If you have children of that age, Spain offers free public schooling but classes are conducted in Spanish. There is a wide choice of Private/International Schools which offer international or UK curriculums.

Lifestyle
The lifestyle in Spain can be quite different from Dubai’s. The pace of life tends to be more relaxed here, with emphasis on family time, meals, and socialising.

The Spanish are a very hospitable people and many speak sufficient English to make themselves clearly understood. But to make life easier and to fully appreciate the wonders of Spain, it is advisable to learn Spanish as early as possible after arrival.

On arrival in Malaga, we parted company full of bonhomie and he was now armed with sufficient information to get started quickly and effectively with his search. He also has my contact details and so he might even become a client! He certainly indicated he wanted to meet again.

If you are contemplating such a move from the Gulf or from any other jurisdiction, do please contact me for a no obligation and complimentary chat on my below details:

Sources: Integrated Relocation Services, Keystone Propery Finders

As always, I am here to help ensure that the last phrase above stays with you for life, by helping you manage your assets using highly tax efficient, well-invested methods, and offering you sound advice as the years go by.

This month I thought I would really get you thinking and organised by providing, from my experience and professional opinion, in the order of importance, a list to get you financially efficient and enable you to change your wealth and financial outcome in life. Pick out those areas that apply to you and get working on that personal financial health-check now, so that over the years you maximise your assets and wealth:

1 – Taxes
Review your tax situation, making sure all your assets are as tax efficient as possible and that any monies you have are not subject to unnecessary tax, both now and later in life. For me, this is the FIRST task to tackle with your finances, and working with a good tax adviser here in Spain is rule number one. Having a ‘leaky bucket’ where any gains you make are ‘dripping’ away to hacienda is not managing your money effectively.

2 – Debt – Review and Reduce
Pay off high-interest debt as quickly as possible, starting with credit cards and other loans with high rates. Consider refinancing options if rates drop or consolidating debts for lower rates.

3 – Prioritise Building an Emergency Fund
Aim to have at least 3 to 6 months of living expenses in a high-yield (good luck with that in euros!) savings account. With economic uncertainty, having a buffer can provide peace of mind and protect against unexpected expenses.

4 – Have short, medium and long-Term financial plans
Set clear, realistic financial goals (short, medium and long-term) to develop a comprehensive plan and achieve them. Regularly review and adjust your plan to adapt to life changes and financial circumstances.

5 – Consider Inflation
With inflation remaining a concern, explore investment options that can hedge/work against inflation, such as inflation-linked government bonds, commodities, real estate or well-designed investment portfolios.

7 – Automate your savings and investments
Set up automatic transfers to savings and investment accounts. This helps ensure you save regularly and take advantage of compounding growth without needing to remember each month.

8 – Re-evaluate insurance coverage
Review your insurance policies, including health, home, auto, and life insurance, to ensure you have adequate cover without overpaying. Consider policies like umbrella insurance if your assets have grown significantly.

9 – Maximise retirement contributions
Contribute as much as possible to a retirement plan, especially if your employer offers a matching contribution. With inflation and increasing life expectancy, building a larger nest egg is crucial.

10 – Stay informed about tax changes
Keep up with any new tax laws or changes that could affect your personal finances. Look into opportunities for tax deductions or credits, like contributing to tax relief investments or making charitable donations.

11 – Rebalance your investment/asset portfolio regularly
Review your investment portfolio at least annually to ensure it aligns with your risk tolerance, financial goals, and market conditions. Rebalancing can help maintain the desired asset allocation and also changes in your life as the years go by.

12 – Plan for major expenses in advance
If you anticipate major expenses (like buying a home, car, or funding education), start planning and saving early. This can help you avoid high-interest debt or dipping into long-term savings.

13 – leverage technology and financial tools
Use budgeting apps and financial management software to help track expenses, plan investments, and manage your portfolio efficiently.

If you would like to discuss any of the above topics in more detail, or you would like to have an initial consultation with Chris to explore your personal situation, you can do so here.

Click here to read independent reviews on Chris and his advice.

If you would like any more information regarding any of the above, or to talk through your situation initially and receive expert, factual based advice, don’t hesitate to get in touch with Chris.

There was a time not so long ago when the BRIC markets were the darlings of the investment world. Certainly many of our Balanced risk and Adventurous risk clients were recommended to hold funds of such renowned investment houses as HSBC and Jardine Fleming. So what has happened since?

The Brazil economy has been destroyed by poor leadership and corruption; Russia has been banished to the outer fringes of the civilised world; democratic India is developing into a first world giant economy which is forecast to match China by the mid 30’s; and China? The communist Chinese economy has certainly had its share of problems since the beginning of the ‘20s, which persistently drag its markets down. They have continued to underperform due to a combination of economic, regulatory, and geopolitical factors.

Here are some key reasons:
China’s economic recovery post-COVID-19 has been slower than expected. Domestic consumption remains sluggish, and growth in key sectors like real estate has faltered. This has weighed heavily on investor confidence.

The manufacturing sector, traditionally a pillar of China’s economy, has faced challenges due to weakened global demand and supply chain disruptions. This has further dampened economic growth, impacting market performance.

The ongoing crisis in China’s property sector, exemplified by the struggles of major developers like Evergrande, has led to significant financial instability. The property market, which constitutes a large part of China’s economy, has seen declining prices and sales, eroding wealth and further depressing consumer spending. Many property developers are heavily indebted, and their financial troubles have rippled through the economy, affecting banks and other sectors linked to real estate.

The Chinese government’s regulatory crackdown on the technology sector has created significant uncertainty.

Major tech companies have faced fines, restructuring orders and other regulatory actions which have spooked investors and led to a sell-off in these stocks. Beyond tech, the government’s broader regulatory agenda, targeting education, gaming, and other industries, has increased investor caution. The unpredictability of regulatory interventions has made both domestic and foreign investors wary.

Foreign investors have been pulling capital out of China due to concerns over economic prospects, regulatory risks, and geopolitical uncertainties. This capital flight has further weakened stock prices. Domestic investors are also hesitant, with many preferring safer assets due to uncertainty about the direction of the economy and government policies.

There seems to be little immediate relief in sight unless there are significant improvements in economic conditions, regulatory clarity and geopolitical stability. The Spectrum IFA Group, along with many other advisers, are wary of our clients holding positions in the Chinese market through collective funds. But if you are a fan of Asia and other Emerging markets or just simply want to diversify your portfolio further, then one should perhaps look at India rather more closely.

For more information on this and keeping your portfolio safe within efficient and effective tax structures, please contact me, Charles Hutchinson, via the form below.

Sources. Morgan Stanley, Wall St. Journal

Many of my clients have expressed their worries to me in recent weeks. The axiom “When Wall Street sneezes, the world catches a cold” has never been truer than now. Fears with the US economy sent global markets cascading overnight.

This was followed by a modest recovery as investors bought in at lower levels and the debate ensued as to exactly how well founded were these fears. Markets are still down and will probably remain so until some of these fears are addressed or diminish.

Rising Government Debt Levels: The U.S. national debt has continued to grow, raising concerns about long-term fiscal sustainability. High debt levels may limit the government’s ability to respond to future economic crises.

Rising Interest Rates: To combat inflation, the Federal Reserve has raised interest rates several times. While this is intended to cool inflation, it also increases borrowing costs for consumers and businesses, potentially slowing economic growth.

Housing Affordability Issues: High mortgage rates, combined with rising home prices, have made housing less affordable for many. This has led to a slowdown in home sales and construction, affecting related industries.

Persistent Inflation: Inflation has been a significant challenge, with the Consumer Price Index (CPI) rising at rates above the Federal Reserve’s 2% target. This has eroded purchasing power for many Americans, particularly those on fixed incomes.

Recession Fears: There is ongoing concern about a potential recession. While not inevitable, some economic indicators, such as inverted yield curves and slowing manufacturing activity, have raised alarms.

To balance these, there is some GOOD news:

Robust Corporate Earnings: Many companies, particularly in the tech sector, have reported strong earnings, driven by innovation, digital transformation, and global expansion

Resilient Consumer Spending: Despite challenges, consumer spending has held up, supported by strong job growth and wage increases. This is crucial since consumer spending drives about 70% of U.S. economic activity.

Low Unemployment: Unemployment has remained low, hovering around 3.8% as of mid-2024. Job creation continues in several sectors, reflecting a resilient labour market.

For further information on discretionary managed or advised portfolios within extremely effective tax structures, please contact me, Charles Hutchinson, via the form below.

Sources: Morgan Stanley, The Economist and the London FT

I have recently had to deal with the passing of one of my clients, and this really brought home the importance of an article I wrote over 5 years ago now.

My client was single and read my article about making a folder containing all of the important things someone may need to deal with in the event of her demise.

We did this together, and I am so glad we did. For her heirs, dealing with Probate has been so much easier than it would have been (importantly saving a huge amount in additional legal fees) and the distribution of the estate happened very quickly.

I keep reminding people, we all spend time every year making sure the ITV for the car is sorted, house insurance and car insurance policies are up to date, tax returns are filed etc. so please put some time aside to create ‘ THE Folder’ as I like to call it?

So what is THE Folder?
It is a single file (digital or physical) where you keep all of your important personal and financial information together. It allows easy access to these documents in the event that you are no longer around to help. It is really important to have it in place when one family member takes the lead on the family finances; this includes paying bills, managing accounts and storing documents. Even if that is not the case, it is an important exercise.

So what should be in THE Folder?
All documentation that is relevant to running your household with regards to finances, such as:

• Birth, marriage and divorce (if applicable!) certificates
• Bank account details, including online login details
• E-mail and social media account details and logins
• Life assurance policies
• Funeral plan policy
• Pension documentation and statements
• Investment documentation and statements
• Wills
• House ownership deeds

THE Folder can be very simple, and I always suggest contact details for each of the relevant policies etc. should be clearly marked as well. Also, make sure that when THE Folder is complete, you sit down together and explain all of the information it contains, as it will be as useful as a chocolate tea pot if you don’t both know exactly what is there.

Is it worth the effort?
Well, I think it is worth the effort. At a time of loss it can be stressful enough, without having to try to piece together the deceased’s financial affairs. This can be a really difficult time for family members, even more so if your support network, typically children, is back home in the UK.

However, preparing THE Folder is much more than just avoiding stress; if you leave behind an administrative nightmare, you could delay access to inheritors’ funds and potentially cost a small fortune in legal fees.
To give you an example of this, the UK Department of Work and Pensions estimates that there is currently more than £400 million sitting in unclaimed pension pots in the UK.

Which is best…..physical or digital?
This comes down to personal preference. It can be done by either creating an electronic file that survivors can access in the event of death, or an actual paper file. An electronic file can be stored on your main computer, in the cloud or on an external hard drive. Make sure everyone knows how to access the computer, cloud or hard drive though!

Alternatively, if you use a physical folder to keep all of the important information together, make sure it is large enough to keep everything together. The good old shoe box has been a long time winner in this department, although a well organised file does make life a lot easier for everyone.

For what it’s worth, I find lots of people prefer paper and are happier with hard copies of everything. I personally prefer digital, which I have shared with some trusted family members. It may even be worth considering asking your legal advisers to hold the folder on your behalf (electronic is much better for this reason), so a simple visit to them if anything happens means they can assist you far more easily with everything.
Typically they will want all of the information it contains anyway, so by saving time when it becomes relevant, the small annual charge they may make for holding the information will normally be offset.

And finally…
I have already stressed this, be sure to tell someone about it! There is little point going to the effort of creating such a folder if no one knows of its existence or where to find it…..