lexi_k

Hubby and I originally came to the US for 2 years, and 6 years later, we're still here. We are definitely planning on returning to the UK within the next 4-5 years, but as we originally came for such a short period, have never really sat down and figured out the best way to structure our finances etc. Additionally, I have recently started to be self-employed, so would like some advice on relevant US-based pensions/ investments etc., that won't get shafted when we move back. We are not looking to invest in a fund managed by financial advisors, we're just looking for someone to lay out our options and point out any pitfalls. Do such services exist? Everything I can find seems to be a funnel into investment management, but I'm not sure if I'm just googling the wrong terms!

Glasgow Girl

Not sure what you asking here. Most people with money to invest would be looking to put it into a pension, mutual funds, shares, bonds or the like.

You have the same options for investment as anyone living in the US. If you are looking at what pension/retirement options are available to you research IRAs, and Roth IRAs if you are self employed, and your company’s options if your are employed. If you have money to invest outside of retirement accounts and are not comfortable with your own research then it sounds like you want a regular financial advisor who works for a fee, and not commission. There are plenty of them around. They can advise on pensions and investments that might be right for you, and if you pick a good one they will give you impartial advice. Of course they won’t be able to advise on the tax consequences of moving back to the UK which is perhaps what you are really asking.

From that perspective it depends whether or not you are a US citizen. If you are a US citizen you are far better of being invested in US based funds or individual shares listed on any recognized stock market, and staying clear of anything else for the rest of your life regardless of where you live. If you are not a citizen you should still invest in US based funds or shares listed on any recognized stock market while you live here, but once you move back you can invest in whatever you like. The reason is the tax rate and reporting requirements on non US funds are draconian. If you invest in an IRA or Roth, just leave it invested in the US until you want to withdraw the funds, it will continue to grow tax free.

Look at voluntary National Insurance Contributions to beef up your state pension. That is about the only non US based investment opportunity that is available to you.

In your words, you won’t get shafted moving back to the UK with US investments, but you will be in world of pain if you have non US based assets and are either a US citizen no matter where in the world you live, or if you live in the US and are subject to US taxes regardless of citizenship.

durham_lad

+1 on the advice above.

For retirement accounts you can open an IRA or a Roth IRA with one of the big brokerages such as Fidelity or Vanguard, and for simplicity choose one of their target retirement or freedom funds, which invest in broad index linked funds and have an asset allocation that changes as you get older. (More stocks when young, more bonds when near to retirement)

The big brokerage firm accounts can be managed from the UK on return so no need to cash out retirement funds. Roth IRAs are tax free growth and withdrawal in both countries which certainly makes things easier.

If you decide to invest in after tax funds then choose ETFs rather than mutual funds because of the favorable tax treatment once back in the UK as many/most are HMRC recognized.

Pulaski

Agreed 100%. I had a very similar response drafted out in my head, but ran out of time yesterday evening to post it - it was similar right down to recommending Fidelity and Vanguard.

The only thing I would add to the two posts above is to point out that the UK does not have the same regulatory and tax hang-ups about non-UK investments (whether tax-advantaged pension investments or other investments) that the US has about non-US investments. So the only concerns you might have on returning to the UK are going to be logistical ones surrounding communications and what the investment firms allow you to do. For example, it is common for US investment brokers to only allow US residents to open an account even though an account holder can live anywhere in the world. So it may be very difficult to move your investments to another broker after you leave the US, other than to an account that you had opened before you left the US, but going with a very well known broker like the ones mentioned above, and you shouldn't have any problems (should never need to move your investments to another broker).

Also bear in mind that advisors cost money, which comes out of your account, so IMO you would be no worse off investing in low cost, index tracker type funds than having someone "actively" managing your funds. In any case, unless you are investing $millions, an investment adviser is only doing what a computer tells him/her to do, so only a fairly basic level of service for which you would pay quite generously.

durham_lad

As Pulaski points out it is very important to set up your US bank and brokerage accounts before moving back to the UK. For example when our son moved back in 2017 he quit his job and immediately began the process of transferring his company pension plan (401k) to an IRA at Vanguard. With the Rollover IRA account already established he was able to monitor and complete the rollover and now manages it from England, which would probably have not been possible if he had left it in his company 401k or tried to move it to a new IRA account after he had moved.

Recently HSBC US closed a bunch of accounts transferring their customers to another bank, but that bank does not accept anything other than a US phone number for validation when logging in causing issues for overseas residents. I don’t know about Fidelity but Vanguard allows UK phone numbers for their 2nd level verification. In preparation for facing this HSBC issue myself I opened a Wise Borderless account which then provides a US bank routing number and account number and I have successfully linked it to my Vanguard account. Wise does not have the government insurance protections a regular bank has but is a great conduit for moving money from US financial institutions to our UK bank.