Could working overseas help you to fast-track your savings?
PUBLISHED: 09:49 17 January 2020 | UPDATED: 09:49 17 January 2020
Becoming an expat could help you to boost your savings, says financial expert Peter Sharkey.
Good friends, who moved with their three children to the Isle of Man about 20 years ago, visited us for a few days over the Christmas holidays. Cue wall-to-wall laughter, coupled with 'Jeez-I'd-forgotten-that' reminiscing of incredulous events that defined our twenty-something lives. Much drink was taken.
Relocation to 'that tiny speck in the North Sea', as they call their home, was prompted as much by a desire to escape London (where we all met while in our twenties, many years ago) as it was by employment opportunity. They both still work for a well-known insurance company in Douglas and maintain that their quality of life is '100 times better' than it was in the capital.
They explained that a significant number of island-based employers, including their own, are currently desperate to attract people to work there and, they say, "remember what it is to enjoy life." With the Isle of Man enjoying virtually full employment, a number of relocation incentives are being offered to people in the UK, several of which are financial.
Average Isle of Man salaries are already around 14% higher than the UK, but last April the government introduced a National Insurance Holiday Scheme for new and returning residents, an initiative that has achieved traction here.
Under the scheme, National Insurance refunds, capped at £4,000, enable eligible employees earning a gross income of £30,000 to take home £27,450, 15% more than they would if they were working in the UK.
Head a little further up the salary ladder and the benefits become even more attractive: someone earning £60,000 under the new scheme would take home £51,450, a saving of more than £8,500, while an individual earning £120,000 could expect to receive net income of £95,604, so retaining almost £21,500 more of their pay than they would in the UK.
Jobs are available across the island's largest sectors, in e-gaming, which accounts for more than 18% of GDP, as well as in insurance, finance and IT. In total, these four buoyant areas of commercial activity are worth more than £2.7 billion to the Manx economy.
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Competition amongst employers for personnel is stiff and the island's most recent recruitment drive, launched in December, which targets both qualified and non-qualified accountants in the UK and Ireland, has succeeded in focusing attention of firms who are mindful that they must compete for the best talent.
The latest initiative includes a dedicated website which provides useful information on relocating, a direct link to opportunities available in the Isle of Man and a suite of video case studies.
Working abroad for a number of years is often a hugely effective means of accumulating a much larger level of savings over a considerably shorter period than would be possible in the UK.
I speak from experience.
Working in London for a large American corporation in the early 1980s, I was offered the opportunity to relocate to Riyadh, Saudi Arabia, on a lucrative two-year contract. I ended up staying for four years. Prior to heading off to the desert, I had almost no savings and didn't own a property, but that comparatively brief spell working as an expatriate, a period I thoroughly enjoyed - and not just because of the cash - provided an opportunity to get on the property ladder and start a business (as well as get married and start a family) much sooner than would have been possible had I remained in London.
Nor can the intangible benefits that accrue from spending time abroad be discounted: you become more attractive to employers; your view of the world changes, because travel really does broaden the mind; you're likely to consider other international opportunities as a matter of course and you meet lots of different people. Furthermore, if you do return to work in the UK, you bring a different perspective to your role.
The Isle of Man's current initiatives justifiably highlight the Island's enviable emphasis on work-life balance, outdoor activities and a strong sense of community, but it's the financial incentives that provide headline appeal. The prospect of accumulating a greater level of savings much sooner than most people could expect is less than a half hour flight away. For that reason alone, it's worth exploring.
TAM Asset Management Ltd offer savers the opportunity to invest their savings in Investment ISA portfolios comprising a variety of different funds pursuing cautious, balanced or adventurous strategies. For further details, please visit the MoneyMapp website.
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For more financial advice, check out Peter Sharkey's regular column, The Week In Numbers.