invest in the UK

[djavaman]

I have about 8,000GBP in a UK savings account. I'd like to leave most or all of it in the UK so I can access it when I visit (rather than change money when I need some GBP and the rate in unfavourable), buy gifts for family, etc. I also like the idea of having a few months of accessible spending money in each of the countries where I am likely to land if I'm out of work. However, I don't want all of that just sitting in the account without making any interest. Any thought on what I should do with it? My best idea right now is to put most of it into HSBC mutual funds, but I don't like the fact that they have a fee. Any other ideas?

[RetireJapan]

Welcome to the forum!

There aren't many options for non-residents to open new accounts in the UK. I have even had existing ones closed due to Japanese government pressure. But there are a couple of reasonable options:

1. if you are eligible and are not doing so already, paying into the UK state pension on a voluntary basis is the best investment I know of. It is an incredible deal. More info on the blog and here in the forum.

2. Nutmeg (robo advisor) allows non-residents to open accounts. They charge 0.45% for passive portfolios. More info on the blog.

Anyone else?

[RetireJapan]

Some of the new online banks may also allow you to open accounts with slightly better interest rates...

[adamu]

Some thoughts:

1. If the money is for spending in the short-term, like you said for trips etc., then I don't think investing it is a good idea. The markets can go down and you can lose your money when you need it.
2. As RetireJapan said, opening new accounts as a non-resident can be difficult/almost impossible due to money laundering regulations to verify your UK residency.
3. Exchange-rate risk goes two ways. It could be that by not keeping your money in yen, you lose out on potential beneficial exchange rates to the pound.

I don't have a solution, but I would at least keep some of it in cash despite the depreciation, and maybe look into something like a fixed-term fixed-interest account for the remainder, if you are able to open such an account.

[djavaman]

RetireJapan, Adamu,
Thanks for your thoughts.

The money is already in a UK HSBC savings account, so opening one isn't an issue. I'm certainly not planning to invest it all, but most of it can go away someplace with some risk and potential earnings. It's going to take a long time to burn through 8000 pounds on visits and trips and that is too much money to leave sitting earning less than 1% in a fix-rate account.

It is interesting you raise the UK pension. We've never paid in and been out of the UK for more than 15 years. I was planning to do this, but I understood the latest post on this topic to say that they are not longer accepting new pay-in from non-resident. Did I misunderstand that post? If this option is available, I'd use this money to seed that investment.

Thanks for the tip on the robo-investor. HSBC only charges .35%, so their funds would seem a slightly better option. I just hate paying them anything, since I don't when investing our USD money through our American bank.

Do you happen to know any UK-base fixed rate schemes paying more than 1-2%?

[RetireJapan]

The UK state pension voluntary payments are very confusing. So much so that the pension office doesn't seem to understand them either. I believe the new (existing?) rules say that you have to have lived and worked in the UK for at least three years (paying NI) to be able to make voluntary contributions. If you have you should be okay, but it will still be a struggle to sign up.

I haven't, and managed to sign up last year.

If you have never worked in the UK it might be worth trying to sign up anyway, and seeing what they say. This has a good chance of not working though.

This is a good site for checking UK money stuff: https://www.moneysavingexpert.com/savin ... -interest/
As is this: https://www.which.co.uk/money/savings-a ... 9zh3c1qkqg

[adamu]

Sorry getting off-topic, but I think it's relevant to djavaman's interestes.

You reminded me to check my old information from a PDF dated 2015 entitled NI38_CF83.pdf (the latest one is dated 2017). There it says:

Class 2

You can pay Class 2 NICs if you are employed or self-employed
abroad and if you satisfy the following conditions:

• you have lived in the UK for a continuous 3-year period at any
  time before the period for which NICs are to be paid - (if you
  have lived or worked in another EEA country or in Turkey, time
  spent there may help you to meet this condition)
• before going abroad you paid a set amount in NICs for 3 years
  or more (this will be checked when you ask to pay Class 2 NICs)
• immediately before going abroad you were ordinarily an
  employed or self-employed earner in the UK

Class 3

You can pay voluntary Class 3 NICs to protect your right to
State Pension and, if you are married or in a civil partnership,
your spouse’s or surviving civil partner’s right to bereavement
benefits. Although these benefits are payable anywhere abroad,
they are not normally increased when pension rates go up in
the UK. In addition, these NICs do not count towards
contribution-based Employment and Support Allowance or
Maternity Allowance.
You can pay Class 3 NICs whether you are working abroad or not,
but not for the period you are liable to pay Class 1 NICs.
You can pay Class 3 NICs abroad:

• if you have paid Class 1 NICs for the first 52 weeks of your
  employment abroad
• if you satisfy either of the following conditions
  • you have lived in the UK for a continuous 3-year period at
    any time before the period for which NICs are to be paid.
    (If you have lived or worked in another EEA country or
    in Turkey, time spent there might help you to meet
    this condition)
  • before you went abroad, you paid a set amount in NICs for
    3 years or more (this will be checked when you ask to pay
    Class 3 NICs)

So it appears the 3 year rule has always been there, at least it was at the time you got set up, RetireJapan. I wonder which of those rules applied to you?

[RetireJapan]

Sorry getting off-topic, but I think it's relevant to djavaman's interestes.

You reminded me to check my old information from a PDF dated 2015 entitled NI38_CF83.pdf (the latest one is dated 2017). There it says:

Class 2

You can pay Class 2 NICs if you are employed or self-employed
abroad and if you satisfy the following conditions:

• you have lived in the UK for a continuous 3-year period at any
  time before the period for which NICs are to be paid - (if you
  have lived or worked in another EEA country or in Turkey, time
  spent there may help you to meet this condition)
• before going abroad you paid a set amount in NICs for 3 years
  or more (this will be checked when you ask to pay Class 2 NICs)
• immediately before going abroad you were ordinarily an
  employed or self-employed earner in the UK

Class 3

You can pay voluntary Class 3 NICs to protect your right to
State Pension and, if you are married or in a civil partnership,
your spouse’s or surviving civil partner’s right to bereavement
benefits. Although these benefits are payable anywhere abroad,
they are not normally increased when pension rates go up in
the UK. In addition, these NICs do not count towards
contribution-based Employment and Support Allowance or
Maternity Allowance.
You can pay Class 3 NICs whether you are working abroad or not,
but not for the period you are liable to pay Class 1 NICs.
You can pay Class 3 NICs abroad:

• if you have paid Class 1 NICs for the first 52 weeks of your
  employment abroad
• if you satisfy either of the following conditions
  • you have lived in the UK for a continuous 3-year period at
    any time before the period for which NICs are to be paid.
    (If you have lived or worked in another EEA country or
    in Turkey, time spent there might help you to meet
    this condition)
  • before you went abroad, you paid a set amount in NICs for
    3 years or more (this will be checked when you ask to pay
    Class 3 NICs)

So it appears the 3 year rule has always been there, at least it was at the time you got set up, RetireJapan. I wonder which of those rules applied to you?

They seem to have changed that 'satisfy either of these conditions' to 'satisfy both of these conditions' for paying Class 3s. I have lived in the UK for three years before moving abroad, but hadn't paid three years of contributions.

[djavaman]

Thank you both. Yeah, I guess there is a enough confusion surround the UK pension scheme its worth trying. Or maybe, their is enough confusion that I shouldn't try because to multiple the political risk that the UK might default (or more likely reduce) the payout with the bureaucratic riks that British civil servants won't be able to execute the payout. I say that only half in jest. Neither my wife nor I worked fulltime in the UK since coming to Japan in the 90s. Since then we've worked elsewhere, but still not back in the UK.

Appreciate the links. I'll check that out.

[robster]

You might try opening an investment account with Degiro (based in Netherlands).
Super-easy to open and pay in/out, fees negligible, access to vanguard, etc.