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Whilst http://www.interest-rates.org.uk concentrates on helping you find the best savings interest rate available to you, we will sometimes ask an expert for an alternative view. Today Peter Randall, based in Brussels, has kindly agreed to share his considerable experience. IS CASH ALWAYS KING??? ====================== Whereas saving is about the accumulation of money for future use, and the avoidance of waste, investment is choosing where to put that money in the meantime to achieve the best return. Keeping your money as cash is thus an investment decision just as much as buying a portfolio of shares. Is keeping cash the best way for you? Is keeping cash without any risk? What are the issues you should be thinking about? CURRENCY ======== Should you be keeping your money in the currency: * you received or earned it * where you now live * of the country you came from originally * that matches your tax bills, or other liabilities * that earns the highest interest rate? An all-eggs-in-one-basket strategy may not be best. The US$ fell nearly 30% against the Euro in the past four years, and the Russian Rouble crashed by 99.5% against the US$ over the 10 years to 1998! It pays to diversify. TAX === Wherever your money is, it is increasingly likely that someone wants to tax it: * where it is held (see the European Savings Directive) * where you are resident * where you are tax resident * where you send it for future use (perhaps your home country). Tax avoidance by non-disclosure is clearly illegal and will soon be virtually impossible. Holding cash directly may not be the most tax-efficient way. INFLATION ========= Eats away at the spending power of your money (3% inflation over 10 years means your money will have lost a third of its value). Does the interest you receive on your cash, after tax, even keep up with this? TIMING ====== When will you need the money back? If in two, three or more years time, perhaps it is worth looking at alternative ways to invest? By now you may feel it would be a good idea to explore some alternative investments. Peter has many years experience of international savings and investments, and would be happy to explore some of the options open to you. For more information about Peter, or to contact him please follow this link. If you wish to be removed from the email list please contact us. ======================================================================================================================================= CONTENTS * What you want from these newsletters? * The European Savings Directive. COMING NOW -------------------------------------------------------------------------------------- WHAT DO YOU WANT FROM THESE NEWSLETTERS? For future newsletters we would much appreciate your ideas for topics that you want to know more about, that would help or interest you. Please share your thoughts with us at ivaplace@yahoo.co.uk -------------------------------------------------------------------------------------- THE EUROPEAN SAVINGS DIRECTIVE Have you done anything yet about the Directive that comes into force from 1 July? This may affect your savings held in accounts not only in EU countries but also in many established tax havens. Some countries are offering you the choice to opt for either: * Deduction of tax at 15% from interest due to you. In this case information will not be passed to the tax authorities in your country of residence. Tax deducted will increase over time. * Information about your savings being passed to the tax authorities in your country of residence. In this case tax will not be deducted at source. Other countries may be making the choice for you. Where you have the choice, you should by now have received forms from your savings institutions. If you do not complete and return such a form by 1 July your bank will probably, by default, deduct tax. The information required of you, if you opt for ‘exchange of information’, is not onerous, but does appear to vary. If you are EU resident, this may include: * Account Number with the Bank or Building Society. * Confirmation of your address. * Yours signature to a declaration that you are willing for information to be passed to the tax authorities in your country of residence. * Your Tax Identification Number (TIN) where this exists. WARNING! You may still get caught up in the process even if you are not EU resident. Different jurisdictions seem to be requiring different information from such non-EU residents * A tax residence certificate from your country of residence * A statement from your financial adviser * A copy of a recent tax return IS THERE ANYTHING ELSE YOU CAN DO? Some banks are allowing you to postpone your receipt of interest payments until a more tax effective time; this may be useful if you are planning a move to a lower taxed country. You may also be able to get a tax exemption certificate or some other documentation to prove that you are not liable to tax in your country of residence. -------------------------------------------------------------------------------------------------- Please do share your experiences and problems of the European Savings Directive, with thousands of other savers – by sending your email to ivaplace@yahoo.co.uk. – please let us know if you don't want your name published. Don’t forget that more information on the Savings Directive is available on the website at www.interest-rates.org.uk/europeansavingstaxdirective.htm