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Saturday, 29 March 2014

The 5-year expat master plan for UAE residents

Aside from the lure of sunnier climes many individuals are drawn to live and work in other countries for increased pay, better benefits, even lower tax, and in some cases no tax at all.

Becoming an expatriate can carry with it many financial benefits and the notion that one could come back to their home country not only more tanned, but somewhat richer too.

And so…. the plan is hatched!  The usual time scale considered is five years and many expats will spend time conjuring up their five year plan master plan – one of accumulating as much wealth as possible before moving back to their country of domicile or moving to another location.

But how many expats actually stick to this five year plan? Is it really possible to make a significant injection to your overall net worth in this period of time and what is the best way of going about it?

The sad truth is that thousands of expats have dreams of making big pots of cash, only to end up totally broke with hardly any savings, after years spent living the high life.

So how do you make sure you don’t return broke and how do you make your plan as effective as possible?

Starting to save

Well let’s start with the basics. A good rule of thumb is to try and save at least 10 – 20 per cent of your income. But you must budget for this. Don’t just do it because you have money left over at the end of each month. Consider it a monthly out-going as standard - just like you would pay for your mortgage or your car insurance.

Think twice before you upgrade your car or your villa in the sun and make sure that you are regularly putting money away. It is advisable to always keep at least 3 month of salary readily available in a cash account. Anything over and above this should be considered medium to long-term savings.

Ask yourself: What am I saving for?  Then set yourself an achievable target over this five year period.

Where to save?

But what to do with your money?

Well, if you remember investing in the 1980s, you probably remember when deposit accounts paid a handsome rate of return. Nowadays we are all too familiar with rock bottom interest rates. With inflation in most countries being higher than bank interest rates your money is standing still at best. So even if you are earning more or not paying tax you are not safe from inflation.

So sticking your money in a standard deposit account is going to get you nowhere. But there are still powerful planning tools available, which can be used creatively to help you make your newfound wealth grow. In the offshore market space regular savings vehicles and offshore portfolio wrappers/bonds via large insurance companies are commonly used.

Regular savings

A regular savings vehicle provides a disciplined approach to wealth creation while also providing insurance protection.

It provides a secure platform to save regular amounts, usually monthly in a disciplined manner with the opportunity to earn greater interest than you would get from a standard savings account.

Each time you make a contribution to your pot, your money is invested in a range of chosen funds that will be selected based on your situation, objectives and attitude to risk. Many of the advantages derive from the fact that the investment is structured as a life insurance product.

There is a small amount of life insurance built into the product - usually 101 per cent of the total value of the portfolio, which will be paid out to the chosen beneficiary.

Offshore bonds/lump sum investment

An offshore bond is essentially a secure place to park your money whilst enjoying protection and growth from it. A cash lump sum is placed into the bond, and this is then placed in an agreed range of funds. Commonly used jurisdictions are places like the Isle of Mann, Guernsey and Jersey.

Probably, the main advantage of an offshore bond/wrapper is the fact that they are only ever taxed when a taxable event takes place, such as redemption, not on an annual basis. The only tax to which funds may be liable is that which is deducted at source, e.g. from a dividend. This is known as withholding tax.

Of course, the specific benefits of investing in an offshore bond will always depend on an individual’s circumstances but there are many advantageous elements that may be used. Two of which we will consider below. Time for the science!

A key tax benefit for a UK expat who at some stage may return to the UK is Time Apportionment Relief. This is where a chargeable gain from the bond is reduced for tax purposes if the bondholder was not UK resident throughout the policy period.

So how is this calculated? Well, if the gain is made on/after 6 April 2013, then the gain is apportioned by offsetting the number of days in which you were not a UK resident during the policy period against the total number of days in which the policy/bond was held.

Assignment is another benefit. It is also possible to assign an offshore bond to another person, so that the assignor will not be subject to any UK income or capital gains tax charge. Thereafter, all future UK income tax is charged at the assignee’s tax rate. Therefore, the overall UK tax payable on the offshore bond can be reduced if the policy is assigned as a gift to a non-taxpayer, for example a child or a non-working spouse.

Currency hedging

Although it can sometimes feel like monopoly money, earning a different currency to that earned in your home country, this can be used in your favour. In Dubai, for example, where the majority of people are paid in dirhams (fixed against the US dollar), a practical approach is to save in USD. You can then always switch to your base currency in the future when the currency exchange rate is to your advantage.

Stick with it

Five years is a reasonable amount of time to save. You can see the horizon ahead of you so stick with it. Set yourself that goal and don’t veer away from it. Whether it is to accumulate a lump of cash by disciplined regular saving or to give up that swanky new villa and put aside a lump sum for greater growth - prioritize and think about what it is you are saving for, so that you have an end goal in mind. Don’t waste the opportunity you have and take advantage of your expat status.

Tax and returning home

Tax is never far from the minds of most expats, making it an essential part of money management. It is vital that expats understand the taxes they are likely to be subjected to before making any decisions - getting it wrong could prove to be very costly. Be careful as if you decide to return to your home country and bring back the money held offshore you may have an income tax liability on the gain.

Thursday, 27 March 2014

Last day today for Dubai’s safe drivers to cash in on Dh1,000

While bad drivers in the UAE are regularly penalised for flouting traffic rules, here’s a unique opportunity for the “good” drivers to cash in.
Porsche Centre Dubai has partnered with Dubai and Sharjah Police in an innovative road safety campaign that rewards safe driving.
The initiative kicked off on March 23, and was on for five days.
During the bi-annual RoadStar campaign, Dubai and Sharjah Police traffic officers are patrolling the roads during three traffic rush hours each day in Porsche Cayenne SUVs.
They instantly reward the best drivers with Dh1,000 in cash along with a ‘safe driver’ certificate.
The campaign, which will end today, will award 10 safe drivers a day.
The total amount to be given away during the five-day campaign is Dh50,000.

Missing Malaysian plane: Satellite spots 300 'objects'

Thai satellite images have shown 300 floating objects in the southern Indian Ocean during a search for the missing Malaysian airliner, an official said Thursday.

The objects, ranging from two to 15 metres (6.5 to 50 feet) in size, were scattered over an area about 2,700 kilometres (1,680 miles) southwest of Perth, according to the Geo-Informatics and Space Technology Development Agency.

"But we cannot -- dare not -- confirm they are debris from the plane," the agency's executive director, Anond Snidvongs, told AFP.

He said the information had been given to Malaysia.

The pictures were taken by Thailand's only earth observation satellite on Monday but needed several days to process, Anond added.

He said the objects were spotted about 200 kilometres away from an area where French satellite images earlier showed potential objects in the search for the Boeing 777 which vanished on March 8 with 239 people aboard.

Wednesday, 26 March 2014

UAE's first shopping mall dedicated to gadgets launched

Nice Home Real Estate on Tuesday announced the launch of UAE’s first shopping mall, fully dedicated to technology products.
Being built at a cost of Dh180 million, the three-storey iMall will house 100 shops, and showrooms will open doors in May 2015, Mounir Lutfy, Director of Nice Home Real Estate, told Emirates 24l7.
Claimed to be the first mall solely focused on tech products and services in the UAE, Nice Home will start leasing from today (March 26, 2014).
Located on the Dubai-Sharjah Road and spread over 60,000 square feet, iMall will serve as a one-stop destination for IT and communication-related products in both retail and wholesale segments.
“This is the first shopping mall of its kind in the UAE. We received a lot of inquiries but didn’t sign a contract with any company; we apologised and insisted that we have to open bookings at the same time for everybody. We’ve been keeping it on hold,” Mounir said.
“We have different sizes of shops. Our smallest shop is around 40 square metres but if companies need more space, we can provide them,” he added.
With its prime location on Dubai-Sharjah highway, iMall will cater to Sharjah and the Northern Emirates' residents looking for latest gadgets. It will also house food court and leisure and entertainment sections as well, Mounir said.
Electronics retailer Emax’s flagship project on Sharjah’s King Faisal Road is the biggest one-stop destination in the UAE.

Tuesday, 25 March 2014

Portable gym? Gadget that churns your muscles for Dh327

In what could be a dream come true to many men and women who cannot afford to spend enough time at the gym, a new device that has been listed on the crowd-funding website Indigogo just does that.

Smartmio, as the device is known, is no more about reading your steps or suggesting the ideal workout for you. It is a device that will do the task for you - it stimulates your muscles.

The wearable device is connected to your smartphone through an app and enables you to stimulate your muscles even as you sit in front of your computer working in the office.

The device, however, only complements your physical workout and will not be able to completely replace it. Also, you should never use the device while driving or while doing a physical activity.

The light-weight gadget (measuring about 25 grams) is a combination of two electrodes that stick to your skin along with a Bluetooth connector and supports both the iOS and Android OS.

SmartMio uses the process commonly known as Electrical Muscle Stimulation, or EMS (also called Neuromuscular Electrical Stimulation or NEMS). EMS – which has been scientifically proven to boost sports performance, trains muscle groups in complete isolation, which promoters say is not easily achieved through regular training.

SmartMio comes with a host of preset programmes for different workout needs aimed at athletes and sports enthusiasts of any level.

According to developers, the device can significantly improve your overall sports performance in six to eight weeks; develop extra endurance; build resistance; strength and speed for 14 main muscle groups; recover your muscles in a more efficient way as well as complement your regular workouts in a safe and comfortable manner.

Alex Pisarev is the CEO and founder of the project.

SmartMio is already available for pre-orders on Indeigogo at a starting price of $89 [Dh327] and is scheduled to ship to the US and European markets later this year.