Yes. It is official. I have got to the age where I talk with friends about mortgages and finance over coffee. Now, apparently, I even blog about it. The issues in this area are complex for everyone. But I wonder if other people working in the humanitarian aid sector find this topic a little overwhelming. Let me provide an overview of the complications I personally find make my head sore.
Long term plans. I have no idea what mine are. I do not know when I will be at “home” and I am not sure how long this will be for when it does happen. This makes personal finance complex in many many ways as many financial planning and investment plans and tools are geared towards resident nationals of one country.
Pension. I don’t currently have a pension, I am not sure where to get one. I want one as I want to make sure I am financial planning for my future. However, I have currently lived overseas for 3 years and am not sure if I will retire in the UK. My husband to be is from New Zealand and we have not quite worked out a long term plan, nor do we plan to in the near future. It is nice to keep the conversation open. So a state pension or work pension is not an option, as these are country specific. Only a savings scheme is a good option for us. I have sat down with a couple of “personal finance” companies recently to discuss investments (e.g. investing in stocks and shares or simply putting funds in to an overseas savings account) but the conversation always ends up getting complex for me because I want to understand the full impact of where these funds will be and what this ethically means.
Ethics. For 12/13 years now I have worked with charities in one way or another. When I sat down with a personal financial management firm for the first time to discuss how to manage my personal finances alongside my international lifestyle they talked a lot about investments in tax free zones and questionable stocks. There were some options labelled as “ethical” they could discuss with me, but the exact criteria used to define an investment as ethical could not be clearly described to me. I have done more in-depth research but still have not found an investment I am comfortable with yet.
I don’t want to invest my time in working for charities just to invest my savings in (potentially) creating the issues that I or other charity workers are developing strategies of how to target. I want my savings to further my goals, not to undermine them. It seems this is difficult to guarantee even with savings schemes named as “ethical”.
I have started to look at peer to peer lending schemes as a fun (but risky) option. This is when through organised services you can choose to invest your money in certain businesses that are asking for capital. A repayment plan is agreed upon but some commentators say that there is little security for funds. I like the idea of choosing directly what business my funds would go to.
On moneysavingexpert.com there are some great resources about how to make decisions on investments and even guidance about ethical investing and what this means. The whole site has a multitude of different pages with different advice.
Home from home. Many many international workers buy property as a longer term investment. This is what I have done. I am now the proud owner, well 1 of 4 owners, of an apartment in Auckland. This was my choice, as with 4 people investing it is a short term investment but the result will be a small pot of money (from rent) being saved in New Zealand that I can use when I travel there. Many people I know have done the same and own property at home. I think this serves both the investment purpose and also creates a link with “home”… but as with almost all investments this creates some kind of geographical commitment (or does it? see below).
Others are choosing to buy properties abroad. More and more expats in Phnom Penh, Cambodia are choosing to buy property rather than renting. The cost of buying property is still relatively low and many forecast great growth. There are lots of risks associated with these options, all location specific, which need to be questioned and researched thoroughly before making a decision.
Geographical commitment. All financial decisions seem to create ties and commitments. Even transferring funds from our two home countries would result in a loss of 5% or so, in our savings, which would be a difficult decision to make. Imagine sacrificing 5% of the value you have just sold your house for, just to re-invest in your new home. For me and my partner this means that whenever we transfer funds to one of our home countries we have mentally committed to having that money stay there for the foreseeable future.
There are some amazing new options starting to pop up in the market for fee free or low free transfers. One company that has started is TransferWise a website that claims to allow people to transfer funds at a fee of 0.5% by matching people in different countries who are transferring funds opposite ways (e.g. I live in London and want to transfer funds to New Zealand, and you live in New Zealand and want to transfer funds to London, why don’t we both just not transfer and deposit funds locally in each others accounts?).
This blog piece is obviously not me saying what the right decisions are, as I haven’t found them, but I wanted to outline some of the complications I have experienced when making decisions about my own personal finances within this blog and see what ideas you have had or solutions you have found to these same complexities.