Expat Financial Advice Spain
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Expat Financial Planning and your Lifestyle Portfolio Construction
Are you married with a young family? Are you someone who is going to retire in Spain? Are you already an expat who is trying to claculate¨"How much pension do I need?". Or perhaps you are one of the growing band of expats who are running a business?
Whilst we all think about choosing a "good" investment that is going to give us lots of profit, financial planning and how you invest is about more than just picking the good investment. At the Spectrum IFA Group in Spain we have a great deal of experience in helping expats with their financial planning. As indepedent financial advisers in Spain we have particular expertise in financial planning for expats. With this experience we know how to take into account your Lifestyle.
Our team who help with the asset allocation (choosing which types of investments) have now applied this lifestyle element to the portfolio construction. There are four lifestyle phases that we apply as follows:
1) Accumulation Portfolio
Client Profile
- Usually young adulthood to early middle age
- Primary objectives focused on immediate needs (house, car etc.)
- Emergency cash fund is important
- Net worth is small but growing income
- Debt management primary consideration
- Some long-term goals = retirement or education savings
Any investment program likely be regular funding with long time horizon.
Primary Investment Drivers = real growth above inflation over their total time scale
How you benefit
In this style, you can afford to look for the longer term trends and invest in companies that will benefit from these changes. For example, Two BILLION people in Asia are expected to move into cities in the next ten years. This provides a tremendous opportunity for infrastructure funds.
2) Consolidation Portfolios
Client Profile
- Typically begins between the ages of 45 and 54
- Debt management gives way to asset accumulation
- Income high, net worth growing rapidly
- Primary goal is saving for retirement
- The investment horizon, may still be 20 years
Primary Investment Drivers = beat inflation with lower volatility than accumulation stage, medium time scale
How you benefit
A more diverse choice of assets can help to reduce volatility (Markowitz, Efficient Frontier Theory). Starting to include income producing assets can also help to bring more certainty to a portfolio.
3) Pre-Retirement Portfolios
Client Profile
- Typically aged 55 to 70
- Has accumulated majority of assets
- Income still high so may be able to take advantage of investment oppotunities
- Looking to the time after retirement, starts planning trips etc.
- Will want large cash fund
- The investment horizon only 5 years
Primary investment drivers - maintain capital, beat inflation if possible with minimal risk
How you benefit
The last thing you need is for your portfolio to fall in value just before you want to retire. Include some deposit based accounts and funds with capital protection. This may reduce your investment return but it substantially reduces the investment risk.
4) Income Portfolios
Client Profile
- Spending phase begins at retirement
- Professional income declines or stops
- Lower risk attitude though many still tolerate some capital volatility if income available
- Protection of real purchasing power important
- May start to gift assets (Estate planning)
Primary investment drivers - stable and growing income stream; beat inflation with low volatility, short term scale.
How you benefit
In retirement there is a need to manage the income that you draw from investments. Even if you do not need a regular income, the need to pay for the trip to see the grandchildren, medical expenses etc means cash management is important. This cash management together with capital protection and income producing investments will allow you to manage your retirement as comfortably as possible.
Which lifestyle are you in?
For a personal financial planning review and information about specific choices based on your lifestyle contact review my lifestyle portfolio .
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