As a British citizen living abroad, how can I invest without an ISA?
02 August 2021
Question by Phil
I am a British/Irish citizen living in Malta and have between £5k-£10k to invest for 5 years. Clearly, ISAs are out as there is a requirement to be a UK resident. I am happy to accept a medium level of risk, and would appreciate some info on where to put this to maximise returns.
Answered by Boring Money
We usually say that to invest in the markets (whether that be shares, funds or bonds) that you shouldn’t invest in these asset classes in the short term, and the minimum short term is 5 years (https://www2.boringmoney.co.uk/learn/articles/long-term-financial-planning/).
5 years in the investment world is short term, and if you need those funds within 5 years, it is likely that investing in the markets is not the answer for you. You want to invest for a long enough term to allow you to have certainty of what you have.
You are correct that for an ISA (https://www2.boringmoney.co.uk/learn/investing-guides/product-guides/stocks-shares-isa/)you need to be resident in the UK. However with a General Investment Account/unit trust (https://www2.boringmoney.co.uk/learn/articles/why-use-an-investment-trust/), there are no restrictions on residency (though this will be dependent on the platform you choose).
If you were to go onshore with a UK unit trust, that would be taxed in the UK. This unit trust would either issue dividends or interest, and this would be taxed in the UK. However if you are a basic rate tax payer, you do have a £2,000 dividend tax-free allowance, plus a personal savings tax-free allowance of £1,000.
Most of the robo advisers (https://www2.boringmoney.co.uk/learn/investing-guides/product-guides/robo-adviser/) and DIY platforms (https://www2.boringmoney.co.uk/learn/articles/digital-wealth-is-set-to-grow/) will have risk questionnaires that you can go through, and they can recommend some portfolios/funds.
However for 5 years, I wouldn’t recommend investing in the markets, but instead maybe look into investing your money in a fixed cash account, which will get guaranteed interest returns.
If you do invest, you have to accept that if you take a medium level of risk, your capital may decrease.
Hope this helps,