Living
Financial Planning
A primary concern for most citizens in the US is saving for retirement. As the life expectancy increases, people have to work more years in order to support themselves in the lifestyle to which they have become accustomed.
New York City, for many people, is an exceedingly difficult place in which to save money. The high cost of living, coupled with the temptation of having literally everything at your fingertips, makes it hard to save for a rainy day. For example, it is too easy to jump in an expensive taxi rather than deal with the inconvenience of getting on a subway or bus. Don’t feel like cooking dinner? Well, there are 24,000 restaurants in New York City, and several thousand of them deliver. Many people who live in Manhattan, in particular, find themselves with little money left over after the rent is paid. Therefore, many people choose to live in one of the four outer boroughs, where the rents are more reasonable. Many commute from Upstate New York, Connecticut or New Jersey.
The decision about whether to keep your savings in a US bank, a bank in your home country, or an off-shore account depends upon your particular situation. There are benefits and disadvantages to each choice, and you should consult a financial planner or accountant before making any big decisions.
Leading economists predict that the US dollar is going to get weaker in the next five years. They claim that the US consumer’s desire for foreign goods (and the resulting flood of US dollars into the market), coupled with the growth of other countries, will contribute to the dollar’s decline in coming years. These economists predict that the currency in up-and-coming countries like China and some Latin American nations will be on the rise.
There are several different types of investments you can make, each with varying levels of risks and returns. You can invest in real estate, stocks (in which you are technically buying a piece of a company), gold, and mutual funds, to name but a few. Mutual funds collect money from thousands of small investors, and this money is then invested in a number of stocks, bonds and other securities. The mutual fund manager purchases these stocks and bonds, and monitors the investments on behalf of the individuals. The benefit of this type of investment is that you can, with a relatively small amount of money, obtain a diversified portfolio with the added convenience of having someone else manage it for you.
Whether or not to hire a financial planner is a personal choice, there is no right or wrong answer. If you do chose to work with a financial planner, experts recommend that you thoroughly interview at least three, and inquire about their education and licences. You should also get references from their other clients. A good planner will assess your goals by determining what you want and need, and balance those goals with the level of risk you are comfortable with. Financial planners are considered especially useful in terms of planning for sending your kids to college and your retirement.
If you do decide to do without a financial planner, it does not mean you have to do it all on your own – many banks offer consulting services that can help you make the right decisions.
Buying property in New York City is one of the best investments you can make. New York City neighbourhoods are constantly reinventing themselves: the lousy, low-cost area one year is the darling of real estate developers the next. Therefore, there is always the opportunity for the shrewd investor to buy cheap before the area becomes the next hip place. Also, people often buy two family homes, then live in one apartment and rent out the other for a price that can pay for the entire mortgage. For more information on property investment, check out the Buying Property section.
If you are interested in purchasing property as a foreign resident, there are several international real estate agents in New York City that can assist you. Two well-known firms are Halstead Property (www.halstead.com, 212 381 3263) and Coldwell Banker Hunt Kennedy Real Share International (www.cbhk.com, 212 877 1300). It might also be a good idea to check out the International Real Estate Digest website, www.ired.com.
Buying property in a country you don’t live in is a complex matter and should not be entered into lightly. You will have to deal with the laws and tax regulations of a foreign country, and each country varies significantly. For example, although land transactions in Mexico have typically been cash only, recently some companies have offered mortgage services, but they require a 30-40% deposit and carry high interest rates. Other countries have taxes specifically for vacation homes. In addition, the nation where you buy the property may have a treaty with the country in which you live that affects the taxes or other aspects of your real estate transaction. Therefore, it is highly suggested that you consult a real estate attorney or accountant experienced in these types of investments. Please note that in some countries non-residents also pay capitol gains tax at a different rate than residents when they sell the property.
Pensions
If you work for any government entity, such as the City of New York, you will receive a pension. Police officers, teachers, and other public servants can collect a pension after a certain amount of years on the job.
If you work for a private entity, there are other ways to prepare for the future through your place of employment. Many companies offer a 401(k) – a retirement plan to which employees contribute pre-tax income. This money is often invested in company stocks, some companies even match your contributions to a certain amount. However, some 401(k) plans will penalise you if you withdraw funds before a certain age.
Off-Shore Savings Accounts
An off-shore account is defined as one held outside your country of residence. It is usually in a low tax jurisdiction and therefore can be financially beneficial. For example, the interest on your account may be free of tax, therefore it may also be a good idea to transfer your existing savings and investments to an offshore account. Please be advised, however, if you are living in the US, you must declare all of your income to the government, even income derived from interest in your offshore account – it is considered taxable income. In addition, you will most likely have to make a sizeable deposit to open the account – maybe as high as $5,000.
Financial Advisors
Below are a few suggestions on where to begin your search for a financial planner, as well as contact information for the Financial Planning Association of New York, which can give you tips on how to find the planner that suits your needs.
New York City, for many people, is an exceedingly difficult place in which to save money. The high cost of living, coupled with the temptation of having literally everything at your fingertips, makes it hard to save for a rainy day. For example, it is too easy to jump in an expensive taxi rather than deal with the inconvenience of getting on a subway or bus. Don’t feel like cooking dinner? Well, there are 24,000 restaurants in New York City, and several thousand of them deliver. Many people who live in Manhattan, in particular, find themselves with little money left over after the rent is paid. Therefore, many people choose to live in one of the four outer boroughs, where the rents are more reasonable. Many commute from Upstate New York, Connecticut or New Jersey.
The decision about whether to keep your savings in a US bank, a bank in your home country, or an off-shore account depends upon your particular situation. There are benefits and disadvantages to each choice, and you should consult a financial planner or accountant before making any big decisions.
Leading economists predict that the US dollar is going to get weaker in the next five years. They claim that the US consumer’s desire for foreign goods (and the resulting flood of US dollars into the market), coupled with the growth of other countries, will contribute to the dollar’s decline in coming years. These economists predict that the currency in up-and-coming countries like China and some Latin American nations will be on the rise.
There are several different types of investments you can make, each with varying levels of risks and returns. You can invest in real estate, stocks (in which you are technically buying a piece of a company), gold, and mutual funds, to name but a few. Mutual funds collect money from thousands of small investors, and this money is then invested in a number of stocks, bonds and other securities. The mutual fund manager purchases these stocks and bonds, and monitors the investments on behalf of the individuals. The benefit of this type of investment is that you can, with a relatively small amount of money, obtain a diversified portfolio with the added convenience of having someone else manage it for you.
Whether or not to hire a financial planner is a personal choice, there is no right or wrong answer. If you do chose to work with a financial planner, experts recommend that you thoroughly interview at least three, and inquire about their education and licences. You should also get references from their other clients. A good planner will assess your goals by determining what you want and need, and balance those goals with the level of risk you are comfortable with. Financial planners are considered especially useful in terms of planning for sending your kids to college and your retirement.
If you do decide to do without a financial planner, it does not mean you have to do it all on your own – many banks offer consulting services that can help you make the right decisions.
Buying property in New York City is one of the best investments you can make. New York City neighbourhoods are constantly reinventing themselves: the lousy, low-cost area one year is the darling of real estate developers the next. Therefore, there is always the opportunity for the shrewd investor to buy cheap before the area becomes the next hip place. Also, people often buy two family homes, then live in one apartment and rent out the other for a price that can pay for the entire mortgage. For more information on property investment, check out the Buying Property section.
If you are interested in purchasing property as a foreign resident, there are several international real estate agents in New York City that can assist you. Two well-known firms are Halstead Property (www.halstead.com, 212 381 3263) and Coldwell Banker Hunt Kennedy Real Share International (www.cbhk.com, 212 877 1300). It might also be a good idea to check out the International Real Estate Digest website, www.ired.com.
Buying property in a country you don’t live in is a complex matter and should not be entered into lightly. You will have to deal with the laws and tax regulations of a foreign country, and each country varies significantly. For example, although land transactions in Mexico have typically been cash only, recently some companies have offered mortgage services, but they require a 30-40% deposit and carry high interest rates. Other countries have taxes specifically for vacation homes. In addition, the nation where you buy the property may have a treaty with the country in which you live that affects the taxes or other aspects of your real estate transaction. Therefore, it is highly suggested that you consult a real estate attorney or accountant experienced in these types of investments. Please note that in some countries non-residents also pay capitol gains tax at a different rate than residents when they sell the property.
Pensions
If you work for any government entity, such as the City of New York, you will receive a pension. Police officers, teachers, and other public servants can collect a pension after a certain amount of years on the job.
If you work for a private entity, there are other ways to prepare for the future through your place of employment. Many companies offer a 401(k) – a retirement plan to which employees contribute pre-tax income. This money is often invested in company stocks, some companies even match your contributions to a certain amount. However, some 401(k) plans will penalise you if you withdraw funds before a certain age.
Off-Shore Savings Accounts
An off-shore account is defined as one held outside your country of residence. It is usually in a low tax jurisdiction and therefore can be financially beneficial. For example, the interest on your account may be free of tax, therefore it may also be a good idea to transfer your existing savings and investments to an offshore account. Please be advised, however, if you are living in the US, you must declare all of your income to the government, even income derived from interest in your offshore account – it is considered taxable income. In addition, you will most likely have to make a sizeable deposit to open the account – maybe as high as $5,000.
Financial Advisors
Below are a few suggestions on where to begin your search for a financial planner, as well as contact information for the Financial Planning Association of New York, which can give you tips on how to find the planner that suits your needs.
