6 helpful investment suggestions for British expats living in Australia

Category: Australia & News

If you’re a Brit already living in Australia, how you invest your money could have a big bearing on your future wealth, especially if you’re moving towards retirement.

If you’ve recently moved to Australia from the UK, it’s likely you’re thinking about your investment strategy, and looking ahead to hopefully grow your wealth.

Read our six suggestions to get you started and to give you an idea of how you might want to manage your strategy to help you achieve your goals.

1. Have a plan in place for managing your UK assets

One important consideration will be how you move assets from the UK to Australia, and how much you initially decide to transfer.

Clearly this will be dictated by how long you intend to stay here. You should also bear in mind that some assets can’t be moved between financial authorities.

It’s important you manage the movement and disposal of assets carefully as there are two different tax regimes to consider.

For example, if you’re already resident in Australia, any disposal of your UK assets will very likely result in you paying Capital Gains Tax (CGT) in Australia.

It’s also important to get the timing right for any asset disposal or transfer.

In view of this, we strongly recommend you seek professional tax advice when considering the management of your UK and Australian assets and investments.

2. Make sure you understand your investment risk tolerance

As you may well be aware, diverse types of investments carry different levels of risk. It’s always crucial for you to be comfortable with the amount of risk associated with different investments.

Moving from the UK to Australia is a big step, so it might not be prudent to assume that the investment strategy you followed in the UK will be the right one for you now, as you face your future in a different country.

You should also consider key criteria such as your timescale on a particular investment, and the amount of risk you’re prepared to accept to meet your financial goals.

For example, your investment strategy for your super fund, with a potential long-term timescale, could involve accepting more risk in return for greater growth potential.

Again, we would recommend you seek expert advice when you’re planning your investment strategy.

3. The importance of diversifying your investments

Regardless of where you are living, ensuring you diversify your investments is of the utmost importance.

One golden rule of investing, regardless of whether you’re in the UK or Australia, is to maintain a balanced portfolio and not to put all your eggs in one basket.

You’ll find that there are as wide a range of investment options in Australia as in the UK, so you should have no problem in putting together a portfolio designed to meet your needs.

By spreading your investments across different market sectors and geographic regions, you can help to reduce the risk of you losing money in the event of a market upheaval.

4. Consider prioritising your super investments

Putting money into a super fund is highly tax-efficient.

Unlike in the UK where pension contributions are incentivised with tax relief, payments into your super are taxed. However, you will benefit from a concessionary tax rate of just 15% on all your contributions up to $27,500 each year.

The big advantage of a super fund over a UK pension arrangement is that all withdrawals can be made free of tax. Given this, and the concessionary tax rate, it makes sense to maximise your super contributions as far as possible for long-term investment.

Ordinarily, you cannot take money out of your super until you reach age 65. This means you should be looking elsewhere for shorter-term investment opportunities.

5. There are a variety of investment options

In reality, there’s little difference in the investment options you can access in Australia compared with the UK. One important exception is that there is no Australian equivalent of an ISA.

The type of investments you can buy that are similar to those in the UK include:

  • Investment bonds
  • Stocks and shares
  • Funds run by investment fund managers
  • Exchange-Traded Funds (ETFs).

The key factors to keep in mind when you’re starting to invest are how long you’re looking to invest for and how much risk you’re happy to accept.

Remember, the longer you can keep your money invested the better. We would recommend a time horizon of five years or more for any equity-based investments, as longer timescales can help reduce the impact of short-term market volatility.

6. The taxation on your investments is different to the UK

The absence of an ISA-style investment option in Australia means that you need to be conscious of the tax charges applicable on all your investments.

For example, Capital Gains Tax (CGT) is charged on your investment profits at the same rate as Income Tax, rather than the lower CGT rates currently charged in the UK.

The profit you make is based on the difference between the original price you paid and the sale price, less any appropriate charges.

One important point to bear in mind is that if you’ve held your investment asset for a period of 12 months or more, CGT will be charged at 50% of your marginal Income Tax rate. But if you’ve held the asset for less than that length of time, the rate will be the same as your marginal rate.

Losses can be carried forward from previous tax years and used to offset the amount of tax payable on future gains.

As is the case in the UK, you can transfer shares between yourself and your partner. This can make it beneficial if one of you pays Income Tax at a higher rate but needs to be considered in line with your overall tax position as there is potential of buy/sell costs and CGT events occurring in doing so.

Get in touch

If you have any queries regarding your investments, please get in touch with us.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.