Press Office

STARTING UP WITH SKIPTON GUERNSEY

In today's increasingly complicated offshore financial environment, with new products entering the market every day and pundits predicting different trends, it can be hard for offshore investors to know where to start and indeed where to invest safely. Ken Jones, Manager – Investments of SGL understands the problems and concerns commenting, “Offshore investors, especially those first starting out on a new posting or who have just moved abroad, need to maximise their savings potential and make the most of their earnings, especially if they are receiving bonuses. Navigating your way through the plethora of products available may seem complicated, but it pays to remember a few simple rules, as well as why you need an offshore account in the first place! It all comes down to peace of mind, rate, taxation, security of product offering and trust.”

Starting up, many offshore investors will just need to open an offshore savings account to run alongside a cheque account. This is usually a rate led decision, as in the vast majority of cases an account from a specialist savings institution such as a building society subsidiary will pay more interest than a similar account from a bank. However, as life becomes more complicated, most will need to look for a range of savings options to provide for short and long term needs. If you start your savings life with a company that has a range of established options, then your portfolio can grow steadily without unnecessary chopping and changing.

Ken Jones comments, “Using a deposit account of a subsidiary of a building society is an easy and effective way for expatriates to build a cash element into any savings portfolio when first starting out as they are safe and provide a good and reliable rate of return. Also, savers are not subject to the restrictions associated with other longer term insurance or equity linked investments such as heavy early encashment penalties or running the risk of being forced to sell at inappropriate times, such as when the markets are down.”

Importantly, as expatriates are often no longer UK residents for tax purposes, if you open an offshore savings account, the interest earned is currently automatically paid without any taxation deductions. For expat savers with balances of around £50,000, at today's rates this could mean nearly £500 extra interest received in a year. Rate also plays a key part, as Ken Jones adds, “Offshore building society subsidiaries, such as Skipton Guernsey, are generally low cost businesses. As management costs are lower, so companies can usually afford to pay slightly higher interest rates than are available onshore. Also, we understand that expatriates, especially those first starting out, need the double-edged reassurance of competitive interest rates and the knowledge that their investment is in safe hands. Such reassurance is easy to find in the offshore subsidiaries of building societies, such as Skipton Guernsey, who are wholly owned by the parent building society and offer all the protection of being part of a mutually owned group.”

However, when looking at rates, make sure that while you have a competitive rate now you know that it will be competitive in the future. There are many attractive rates around, but not all are maintained for the life of an account. It is harder for expat savers to keep track of rates and movements, monitoring products and what is going on. Ken Jones adds, “A basic rule is to check how long the product has been on the market, if it has been around for a while then should indicate that the rates offered are fair and the product is sound. Watch out for new products offered with especially attractive variable rates and benefits. You can sometimes find that once you invest your money, the product is withdrawn quickly to new investors and the interest rates paid can slide. Knowing you have a good rate now and when you opened the account is central to our ethos, which is why at Skipton Guernsey, we always write to customers to tell them about rate changes. That way they can see what rate they are earning and how that compares with our other accounts.”

Access too is important for the offshore saver. Skipton Guernsey suggests that savers keep some funds on immediate access accounts. Ken Jones points out that access can come in many forms, adding, “Offshore savers need to be able to know that they can take out money when it is needed and in the currency they choose. Many first time savers don't realize how easy it is to access their funds. At Skipton Guernsey, for instance, savers are able make withdrawals from their accounts in most of the world's major currencies, so it doesn't matter where they are when they need money.”

Ends

Editor's Notes

Skipton Guernsey Limited (SGL) is a wholly owned subsidiary of Skipton Building Society. Deposits made with SGL are not covered by the Financial Services Compensation Scheme established under the Financial Services and Markets Act 2000. Skipton Building Society, established since 1853, has given an undertaking agreeing to discharge the liabilities of SGL in so far as SGL is unable to discharge them out of its own assets and whilst SGL remains a subsidiary of Skipton Building Society. SGL is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 1994, as amended and conducts business only in Guernsey; it is not authorised to accept deposits elsewhere. Copies of the latest audited accounts are available on request.