Your Questions Answered: I am about to retire. How can I take advantage of international retirement plans?
Consider cross-border investments and international retirement plans for portfolio diversification and increased retirement savings.
Q. I'm Sanjay, about to retire. Can cross-border options optimise my retirement investments? How can I take advantage of international retirement plans?
Strategic cross-border investments and international retirement plans can help diversify your portfolio and potentially boost your retirement kitty. Here’s a roadmap to help you move ahead in this direction.
Understand where you stand
Citizenship and residency status: Both have a direct impact on international investment options and tax liability in respective countries.
Risk profile: Your risk-taking appetite will decide if at all you should venture to invest internationally and how much exposure you would be comfortable with.
Retirement goals: What is the lifestyle you would like after you retire? Once you are clear about this, you can determine the monthly savings you will need to support that lifestyle.
Cross-border investments and international retirement plans
Global mutual funds and ETFs: Rather than invest directly, start with a basket of international stocks, mutual funds or bonds to diversify your portfolio. Several international exchange-traded funds (ETFs) allow access to Nasdaq and other leading global indices.
Individual overseas stocks and bonds: Conduct a thorough research and pick the most promising bonds or companies. Be aware of the risk of currency fluctuations.
Real estate: Invest in overseas Real Estate Investment Trusts (REITs) that will help you generate passive rental income.
Employer plans: Qualified employer plans (QEPs) are available to employees of multinational companies. Overseas entities often provide employee stock ownership plan (ESOP) as a benefit to Indian residents employed by them in India.
Key considerations
Tax implications: Understand how investments are taxed in the country where you reside and the country where you plan to invest.
Regulatory compliance: Ensure you comply with all investment regulations and reporting requirements of both the countries.
Currency fluctuations: Make sure you have strategies in place to manage potential risks associated with inevitable currency movements.
Fees and charges: Be aware of any additional cost associated with international investments and plan administration.
Before you venture to invest abroad to fund your retirement, you must have a deep understanding of multiple factors like investments most suited to your needs, the tax laws, and regulations in multiple countries. You must always stay on top of frequent developments in all these areas.
Therefore, apart from all the investigations you must do, it would be prudent to engage a team of experts comprising cross-border financial advisors, retirement planning specialists and certified public accountants. Sanjay, while we wish you a happy retired life, we urge caution and careful planning.
International Money Matters Pvt Ltd (IMMPL) is a SEBI-registered investment advisory firm, established 22 years ago. If you have any personal finance query, click here to book a free call with our advisor.
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First Published:2 Mar 2024, 10:39 AM IST
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