Investing in the UK whilst in Aus

[mxh]

I've got a reasonable sum of money from a house sale sitting in a current account in the UK.

At the moment the exchange rate to bring it over to Aus isn't great, so ideally I'd like to invest it over in the UK for a while until the exchange rate picks up again. I'm not looking for huge returns - just something to help it keep up with inflation. However, the main stumbling block seems to be that I'm unable to open any new accounts in the UK as I'm not a UK resident.

Has anyone else been in this situation and found any options for what to do with GBP sitting in the UK, whilst they are tax resident in Aus?

And to pre-empt the likely response of 'bring it over', 'the exchange rate might not pick up' etc - yes, I'm aware of this, and bringing it over regardless IS an option that I might consider. But I'd like to know if there are any other options that I'm not aware of.

[rammygirl]

You might be able to hold Uk currency in an Australian investment. I know you can do this with super. There are also offshore accounts that will hold Uk pounds but the interest rates are not amazing. I guess it will depend how long you are prepared to invest it for. 

[Johnny Kash]

how long ago did you leave the UK?

do you have a SIPP?   If so you can still put money into that for up to 5 tax years after leaving the UK.   Youre restricted to GBP2,880 per annum as your not earning anything in pounds but do still get the tax relief on it so worth doing IMO.

If you have a stocks and shares ISA you can contribute to that, but again needs to be in the tax year you left UK.

The other thing to look at potentially is topping up UK state pension, which I look at as a form of 'investing in the UK'.   If you can get class II contributions theyre actually quite cheap to buy additional years (under GBP 200 per annum from memory), but you have to apply fairly soon after you've left the UK, again same tax year I think.  If not youre looking at class III which is around GBP750 per annum so needs a bit more calculations on whether its worth it.

[mxh]

1 hour ago, Johnny Kash said:

how long ago did you leave the UK?

 

12 years, so don't really have any of those options open to me.

But I don't really want to tie the money up in the UK, I only want to put it somewhere to earn a little interest to keep up with inflation until such time as the exchange rate works in my favour (and yes, I know that may be never!)

[Tulip1]

1 minute ago, mxh said:

12 years, so don't really have any of those options open to me.

But I don't really want to tie the money up in the UK, I only want to put it somewhere to earn a little interest to keep up with inflation until such time as the exchange rate works in my favour (and yes, I know that may be never!)

Interest rates here are so low I can’t think of any account you could open that will keep up with inflation.  Nothing will hit anywhere near inflation rates.  I assume you’ve looked at what your current UK bank provides.  You could probably open a fixed bond online with them but expect the interest rate to be about half a percent, if you’re lucky.  

[beketamun]

33 minutes ago, mxh said:

12 years, so don't really have any of those options open to me.

But I don't really want to tie the money up in the UK, I only want to put it somewhere to earn a little interest to keep up with inflation until such time as the exchange rate works in my favour (and yes, I know that may be never!)

lots of Aussie super schemes are invested into the UK and Europe...airports, shopping centres etc.  Might be a good way to get your money over and spread your investment if you're looking LONG TERM, aiming for a lot more return than a UK bank account at the moment.

https://www.ft.com/content/54fc3dcc-3798-4f4f-97de-a4b924ebd68b

 

[Marisawright]

We just put our money into Premium Bonds.

[ramot]

3 minutes ago, Marisawright said:

We just put our money into Premium Bonds.

Same

[mxh]

11 hours ago, Marisawright said:

We just put our money into Premium Bonds.

That's an interesting one - hadn't thought of that. So there's no issue with buying them from Australia, with no registered address in the UK?

[Marisawright]

33 minutes ago, mxh said:

That's an interesting one - hadn't thought of that. So there's no issue with buying them from Australia, with no registered address in the UK?

https://www.nsandi.com/help/join-nsandi/using-nsandi-outside-uk

[Tulip1]

Just remember with premium bonds, you are putting the money somewhere that earns no interest at all.  You are hoping for some wins that will be the equivalent of lost interest or much more if lucky.  It’s harder now than ever to win on them.  That said, some get lucky.  My friends sister recently won £10k on her £50k holdings.  Many win smaller amounts, very often £25 a time.  If you’re happy to put your money somewhere with no guaranteed return but with the hope of getting something equal to or much better than interest then it’s an option. I know people that have never won a thing.  The more you have in there the higher your chances of course.  You can put a maximum of £50k in and yes, you can have them living in Australia.  If you go onto money saving expert you’ll see a calculator of your likely average winnings.  It’s usually a bit more than interest you will earn in regular savings accounts but the risk is it may be less, even nothing.  

[DIG85]

10 minutes ago, Tulip1 said:

Just remember with premium bonds, you are putting the money somewhere that earns no interest at all.  You are hoping for some wins that will be the equivalent of lost interest or much more if lucky.  It’s harder now than ever to win on them.  That said, some get lucky.  My friends sister recently won £10k on her £50k holdings.  Many win smaller amounts, very often £25 a time.  If you’re happy to put your money somewhere with no guaranteed return but with the hope of getting something equal to or much better than interest then it’s an option. I know people that have never won a thing.  The more you have in there the higher your chances of course.  You can put a maximum of £50k in and yes, you can have them living in Australia.  If you go onto money saving expert you’ll see a calculator of your likely average winnings.  It’s usually a bit more than interest you will earn in regular savings accounts but the risk is it may be less, even nothing.  

Yes, PBs can be part of a savings/investment strategy, but they should generally be regarded as akin to cash savings, like money in a bank account. They are not really investments. I've never held any and don't intend to.

Edited May 11, 2022 by DIG85

[Tulip1]

16 minutes ago, DIG85 said:

Yes, PBs can be part of a savings/investment strategy, but they should generally be regarded as akin to cash savings, like money in a bank account. They are not really investments. I've never held any and don't intend to.

No they’re not investments.  I expect for most, they are somewhere to park your money in the hope of a responsible return in winnings and the chance of something bigger.  With interest rates rising they will be less appealing as savings rates begin to rise.  They are still low though so many will still gamble on the hope of a good PB win I think.  I wouldn’t get them either but they are popular. I do actually have a small amount of them which my dad gave me for Christmas over 20 years ago.  I keep them for the sentimental value.  I’ve never won a penny on them.  The OP seemed keen to put their money somewhere that will keep up with inflation.  They’ve no chance of that but based on their hopes I’d think the possibility of getting no return on their money wouldn’t be what they’re looking for. 

Edited May 11, 2022 by Tulip1

[Marisawright]

17 hours ago, mxh said:

12 years, so don't really have any of those options open to me.

But I don't really want to tie the money up in the UK....

Nevertheless, I would seriously think about topping up the UK pension while you've got some spare funds to do so.  It's pretty cheap and will pay off when you retire.  

[Marisawright]

2 hours ago, Tulip1 said:

No they’re not investments.  I expect for most, they are somewhere to park your money in the hope of a responsible return in winnings and the chance of something bigger. 

Bear in mind, though, that the OP is not in the UK.  That severely restricts their options.  We were the same.  Faced with the choice of leaving our money in a bank account with pathetic interest, or putting it in premium bonds where they have a slim chance of winning something, it was a no-brainer for us.  We have won a few small prizes.

[ramot]

On 12/05/2022 at 10:46, Marisawright said:

Bear in mind, though, that the OP is not in the UK.  That severely restricts their options.  We were the same.  Faced with the choice of leaving our money in a bank account with pathetic interest, or putting it in premium bonds where they have a slim chance of winning something, it was a no-brainer for us.  We have won a few small prizes.

We have won mostly small amounts, but occasionally a more generous one fairly consistently over the years we have, and still do have, PB’s. Perhaps not as good ‘an investment’ now as the prize money was reduced, but a safe way to park your money, and easy to withdraw at any time, especially from overseas, with the chance of winning more than the interest rate if left in the bank. . So it does suit some people, not all of us want a long term investment, and PB’s shouldn’t be dismissed as a choice.

We might have even have come out on top some years!!!

Edited May 14, 2022 by ramot

[Whey aye]

On 11/05/2022 at 11:52, mxh said:

I've got a reasonable sum of money from a house sale sitting in a current account in the UK.

At the moment the exchange rate to bring it over to Aus isn't great, so ideally I'd like to invest it over in the UK for a while until the exchange rate picks up again. I'm not looking for huge returns - just something to help it keep up with inflation. However, the main stumbling block seems to be that I'm unable to open any new accounts in the UK as I'm not a UK resident.

Has anyone else been in this situation and found any options for what to do with GBP sitting in the UK, whilst they are tax resident in Aus?

And to pre-empt the likely response of 'bring it over', 'the exchange rate might not pick up' etc - yes, I'm aware of this, and bringing it over regardless IS an option that I might consider. But I'd like to know if there are any other options that I'm not aware of.

You are probably being Pennywise and £ foolish. What would the trigger point be for you to bring the money over here,5% or what as a drop in Forex rates.

I'm not a fan of the words opportunity cost but in this case the cost can be high.I invest,have done for decades,some returns for Australian companies for the last 10 years,with dividends reinvested are 

Comm bank 13.2% per annum.

Macquarie bank 26.8%.

CSL 24%

Wesfarmers 14.7%

Fortescue metals 25.1%

Westpac and ANZ 7.6%

Woolworths 8.6%

Rio Tinto 13%

BHP 10.7%

Woodside 4.8%

Ampol ( Caltex) 12.8%

These are investing in individual companies,so no fees and charges.

The well diversified portfolio in super,my industry fund ( CBUS) averages 9.3% since 1985.

The ASX 200 ( AXJOA) annual average rate is 11% roughly since 1/1/1980 ,so $1000 grows to approx $85,000.Before fees and charges 

Pay your UK pension to catch up,roughly £3 a week for class 2 stamps.The 12 year catch up period may or may not still be going.At present that £3 gets you approx £ 5 a week on your pension What a bargain.

If you don't want to start an investing career then put it into super,don't claim it as a tax deduction.Put $200K in now and in 24yrs it will grow to $1.6 million if averages continue 

Penny wise £ foolish?

 

 

[Whey aye]

On 11/05/2022 at 11:52, mxh said:

I've got a reasonable sum of money from a house sale sitting in a current account in the UK.

At the moment the exchange rate to bring it over to Aus isn't great, so ideally I'd like to invest it over in the UK for a while until the exchange rate picks up again. I'm not looking for huge returns - just something to help it keep up with inflation. However, the main stumbling block seems to be that I'm unable to open any new accounts in the UK as I'm not a UK resident.

Has anyone else been in this situation and found any options for what to do with GBP sitting in the UK, whilst they are tax resident in Aus?

And to pre-empt the likely response of 'bring it over', 'the exchange rate might not pick up' etc - yes, I'm aware of this, and bringing it over regardless IS an option that I might consider. But I'd like to know if there are any other options that I'm not aware of.

The other obvious things are bring it over here and if you have a mortgage then put it into a mortgage offset account.Next stage,open a line of credit on your house,redraw whatever you are comfortable with and invest it. This turns part of your mortgage interest into a tax deduction.NEVER do anything for a tax deduction only,the investment still has to perform.

Three of the companies I gave are recent listings on the stock exchange (ASX).CommBank, (CBA) ,Woolworths,  (WOW) and Macquarie Bank ( MQG).Disregard MQG,it is an outlier,a 500 page annual report for an investment bank that operates in around 36 countries is a bit of a bugger and not for beginners.However since listing ( IPO) in 1997 an investment of $7500 has grown to $550 - $600K ( says he with a big smile on his face).This is with dividends reinvested.

CommBank and Woolworths are more easily analysed and a good cornerstone.Recent listing means 30 years.So CBA was listed in 1991 by Hawke or Keating,they were having dummy spits at the time so I forget which one was PM.Woolworths was floated out of Adsteam ( Adelaide Steamship),due to the high interest rates back then Adsteam were too highly geared and went bust.Various companies were floated out of it by the receivers to reclaim money for creditors.Woolworths( industrial equity) was listed in 1993 by the receivers.

So.

1000 shares in CBA in 1991 cost $5400. 1000 shares in Woolworths cost $2500.Total outlay $7,900. By the end of next year WOW is 30 years listed.Reinvesting all dividends instead of taking the cash means by the end of next year you will have approx 6500 shares in CBA,and 4000 shares in WOW.Multiply the share price by the number of shares and see if $7900 grows to $ 1 million over 32 years.On averages for the dividend yield including franking credits then your income will be $50 - $60K.

Opportunities are unlimited every day.If none of these things fit in with what you want to hear or see,then they will never be real or true to you.The only things that will be real or true to you, are things that fit in with what you want to hear or see .

Penny wise £ foolish?