Alan PT

Prompted by a couple of mentions of finance & investment topics on other threads, I thought I'd drop in a couple of things here and ask if anyone else has useful links or experiences to share?

Other than open an account with https://www.activobank.pt/ and get some insurance with https://www.logo.pt/ our contact with Portuguese finance has been quite limited, but we have found these sites useful (in Portuguese, but auto-translatable):
https://www.doutorfinancas.pt/
https://contaspoupanca.pt/ (he has an interesting ongoing series of articles where he tracks his progress with quite a few different PPR investments)

I notice that Portuguese colleagues often just open an account with a non-Portuguese investment provider, like https://www.degiro.pt/ (and often not even via their PT site). I did have a long look at PPR's, but decided they were a bit too restrictive for us personally. I'm awaiting the launch of EU PEPP's with interest to see if that shakes things up a bit: https://www.eiopa.europa.eu/browse/p...roduct-pepp_en

Any other tips/experiences/links you can share?

SgtTroy

Banco de investimento global - totally self-managed gamble on the markets via various funds , going reasonably good so far.

Various obrigacoes - Porto, Benfica, etc, with all the risks involved.

Naturally, it would depend on how risk averse you are.

We were even considering government bonds a while ago, but the interest rates dropped to below 1% for the duration of the term.

As far as PPRs are concerned - for me the calculation is 20% tax credits now, compared to 20%+ return on the same "investment" until the time we could access it. That is if the PPR has guarantee of the capital invested, which some of them do.,

Alan PT

Used to pass the BiG building on the train every day, name always made me smile, but it's actually got some interesting offers!

Was looking at PPR as a lump sum investment, so the tax credit doesn't help very much there. The 8% rate on maturity is nice, but for me the investment choice was too limiting. But if you just want a fairly safe steady investment you don't have to think about too much then they work much better. The Alves Ribeiro PPR has a nice record, but it's a bit bond heavy for my taste, would work well for other people with less racy* tastes though

*racy being a relative term here, folks with lots of US tech and crypto would consider my investments very dull (and I would consider them crazy, each to their own!)

NSG666

Interesting topic Alan and it made me go off and look at what PPRs are about so thanks for the links. I note what you said about your Portuguese colleagues who are presumably not using any tax saving wrapper and taking a 28% hit on growth?
Do you know when the tax on growth becomes payable? e.g. if you invested 10k and it grew to 11k by the end of the year, do you pay tax on the 1k regardless of whether you leave it invested or withdraw the full 11k? I hope it's just as you withdraw it but some of the ex-pat tax specialists like to be vague and imply that you pay regardless.

Alan PT

Yes, my colleagues will be paying 28%, but here's why they do it. I had to actually go create a spreadsheet to check this, but if I achieve growth (outside the PPR) which is better by only 1.5%/year then I actually do better, despite the extra 20% tax. Given that I can probably eliminate 1% of cost immediately by using a low cost investment platform, suddenly the balance is much closer than you'd expect.

Why is this non-intuitive fact true? It's because the 1.5% is on the whole initial capital, but the 28% is only on the gain (which is obviously going to be much less, unless you assume crazy growth rates). So, nothing fundamentally wrong with PPR's, but don't rush to buy them simply because of the tax saving

The growth accumulates inside the PPR tax free and the exact final tax rate on accessing varies, but should be 8% if you can meet any of: over 60 years of age, education expenses and payment of housing credit installments and over 5 years of investment duration; serious illness, death, long-term unemployment, permanent incapacity for work. Even if you can't meet any of those, it's only 8.6% after 8 years. So it's pretty flexible.

SgtTroy

Have you never found at home any cash in a book, or in an old box.
PPR "investment" is more about hiding money from oneself 😎

NSG666

Music to my ears. Yes I ran some calculations too and a 28% taxable investment growing at 5% p.a. over 8 years gives the same balance as a PPR paying 8% tax but with 4% growth. Like you say there are 'cheaper' investments than PPRs so 1% should be easy to find. Now just to find out whether DeGiro offer the Vanguard Lifestrategy ETFs on either the Italian or Frankfurt stock exchanges.

Alan PT

Yes, there's some truth in that

Though I have the tendency to walk around C&A going, "Oh, that's a bit expensive, I'll wait for the sale", so it's more likely I have to be reminded to actually spend the money sometimes

SgtTroy

Alas, most of my traps are online...just a click or two away 😁

NSG666

A bit of info for anyone still in the UK and researching the subject (as you need to be in the UK to open an account). When asked what happens if/when you leave the UK to reside in Portugal, Vanguard essentially said you can retain what you already hold or sell but not buy anything else via their platform. Hargreaves Lansdown gave a similar response but there are still things e.g. ETFs that you can continue to trade via them. It didn't seem to make any difference to Interactive Investor who said you can continue to operate the account just as you can from the UK and you can buy and sell everything they offer.

This might be useful to anyone but especially if you are planning on returning to the UK or not sure as you can continue to hold the investments in your ISA and/or SIPP wrapper and they will retain that status for when you do return to the UK. Even if you're not planning on returning it does mean there is a fairly low cost UK investment platform giving access to a vast range of investments adn all in English.

Alan PT

Good tip, definitely worth checking things out before you leave and opening any new accounts you need. It's not impossible for non-residents, but it is significantly more difficult.

If you have a SIPP then I believe there's a legal obligation on the provider to continue your SIPP when you move. With an ISA I'm not sure if that's the case, but most of them do (but you can't pay in more). For a general trading account it is dependent on the providers policy.

If you have no plans to return to the UK, there's not a great advantage to keeping a UK ISA, since it is subject to Portuguese tax. It's hard to beat the low cost SIPP's available in the UK though. Do watch ii though - they charge a sneaky extra fee for non-residents! It's worth paying a little extra base fee with AJ Bell, no extra fees and no problems for non-residents

Aside from SIPPs, if you want to invest in pounds on the LSE, it's useful to have a UK provider. If you want to invest in Euros not so much - you can get a very low cost general trading account in English and Euro denominated from Degiro (for example) and then you'll avoid all the currency conversion fees on trades and dividends that a UK provider would change

SgtTroy

SIPPs (or at least some of them if one has more than one) could easily be moved to QROPS

NSG666

Yes they can but you need to do your homework. The overseas based advisors promote QROPS but I did read an article written by a financial advisor who said that switching to QROPS was a bad move for the majority - he went on to explain why but I can't remember the detail just that QROPS wasn't suitable for me. I think that it can be beneficial for those who are likely to go over their lifetime allowance.

SgtTroy

It really depends on the personal circumstances.
I've done my homework and found it beneficial for me.
For someone else it might be a completely different story.

NSG666

I'll have a look at AJ Bell - yes I saw ii charge £4/month for non UK residents (never did get an explanation why). Shortly after you started this thread I looked at both BIG and Degiro to see whether either offered the Vanguard Lifestrategy ETFs that are list on a German and Italian stock exchanges but it seemed like you had to register with them just be able to perform a search - of course that might be operator error on my behalf!

I'm surprised this thread hasn't gathered more momentum especially from those who are looking to make the move. I guess others are either more clued up than me, so wealthy they don't care or just haven't given any thought to the financial investment implications of making the move post Brexit.