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[Jizzo T. Clown]

I've heard that you can't pay into an IRA if you don't have a taxable income here in the US. Someone else said that many banks/investment firms won't accept traveler's checks or money orders from overseas thanks to the PATRIOT Act. This seems to really limit any retirement savings options for us TEFLers, especially if we want to live/retire abroad. What are our options?

[GambateBingBangBOOM]

If you live in Japan, you can use Go Lloyds to put money directly into an American bank account. Then you can transfer it anywhere online to any account that you want.

Other countries probably have similar companies.

[tedkarma]

Next time you are in your home country set up a bank account with a bank that does online banking and has a bill pay/checkwriting feature (almost every bank does nowadays).

Wire your savings to them and no problem. If you don't know of one try First Internet Bank at firstib.com - I use them - they work fine. Even the credit union I have belonged to for about 30 years does everything on the net now.

Same thing - set up your financial accounts when you are there - use a relative's address - set the account to paperless statements and you are set. I use fidelity.com (can do EVERYTHING online) and buyandhold.com (all online).

Done right (and it's not difficult to do) you can easily move money around from one to another - and most of that is electronic too. The four accounts I mentioned - I can easily move $$ from one place to the next depending on my financial plans and needs at the time.

And, as many of us do - diversify your savings a bit and invest in real estate also (maybe not this year though . . .).

Then - you are good to go.

Living overseas for extended periods of time DOES require some financial planning - and you can't leave it all up to Uncle Sam to make it easy for you. We are, after all, the round pegs that don't fit in the square holes. And, good old Unkie Sam has been kind enough to exempt us from the first US80k+ so we can't beat on him too much.

[ls650]

How much do you find you pay for the wiring service? When I was in Indonesia, I had to pay the equivalent of $10 US to wire money overseas. Unfortunately here in Mexico I have to pay about $40 US to do the same thing....

[tedkarma]

It varies - but in reality it doesn't matter - it's just a cost of doing business. Some people save a few bucks by getting bank checks and mailing them. At one time, in one country, I used to send home cash (not recommended - but I never lost a dime!).

If you wire a larger amount of money (say US$6-10,000), the percentage cost becomes quite small. (Difficult to do from Mexico, I know!)

But . . . if you don't go to your home country often (I don't) - then you don't have much choice.

The goal is a good investment plan and income in your older years. Can't let a $20 (or $40) wiring charge get in the way of that.

Let me soften that a bit: This is all just my opinion - and what has worked for me since I have been overseas (1989). IMO & IME

[Jizzo T. Clown]

Ted,

Forgive my ignorance...How exactly do you wire money over the internet? Do you just have a savings account? What kind of interest rates are you getting? What do you mean by diversifying your savings? Do you put into an IRA or did you invest in a CD?

(or maybe I should talk to a financial planning company??)

[tedkarma]

I don't mean wire over the Internet - I mean wire from your local bank to your bank in the USA. Then that bank can pay your bills or route your money where you want it to go. Get the routing information from your bank - (the set of numbers on the bottom of your checks - not counting the check number). It will seem confusing at first - but after the first time save the papers from the bank and go back next time and just say "Same!" and give them the papers - maybe with a different amount written in.

By diversify I mean to keep money in several different places - so your risk and return are more balanced. I keep money in savings/money market accounts AND in brokerage/mutual funds accounts AND keep investments in real estate. Usually when one is sucking wind the others are doing okay.

Many financial planning firms are highway robbers - better to go to Amazon.com and invest a hundred or so bucks and begin an education for yourself in investment. Don't trust your future to someone you really don't know that well. You work too hard for your money. Also, if you can't blame someone else - you will work harder to do it right for yourself.

I have no need for an IRA as I don't live in the States - and I don't intend to return. No advantage for me. I don't worry about the interest rate on my savings account as the purpose is for fast cash when/if I need it. I get a fair competitive rate from my credit union - but I don't worry about it as only a small part of my saving/investments are in cash. Same issue with CDs.

[SueH]

For ideas on investment it's also worth looking at sites like the Motley Fool which has both US and UK versions.

[tedkarma]

Sue is quite right - there are many many websites with great information - a good portion of it free or relatively inexpensive.

The limiting factor for me though - with so many of them - is that they are so heavily focused on 401k's, IRA's etc etc - which have little releveance for the long-term expatriate. But, they do get the ideas going and provide some instruction about investing - though most often are totally stock market oriented (and there ARE many other options).

The good part of this discussion is the importance of getting yourself educated as to the options available.

[guangho]

You can track stocks on Yahoo finance and set up an online trading account (there are many different firms doing this) and for a fee of US $4-7/transaction buy and sell stocks that you think are doing well. (Yahoo helps you research them, track them, see how they have done long term, etc.) The long-term market trend is upwards. The Dow Jones, which is an index of stocks, increased about 400% in value over the past fifteen years or so. As you can see, this is a long-term proposition. Avoid day-trading and the like.

For me, I need to get my debts paid off and have a stable outlook financially before saving.

[Cdaniels]

How about a low-cost mutual fund like Vanguard? What about spyders? I want to spend very little time thinking or worrying about my investments. which, I've heard by the way, is often just as effective an investment strategy as any other.

[tedkarma]

[Joe Gahona]

Yeah, and with that you get to deal with tenants from those crappy neighborhoods.

[tedkarma]

Not all poor people are bad tenants.

And, since I'm on the otherside of the world - my property manager handles it anyway.

In fact, I think I've had more trouble with wealthier people in nicer properties. Maybe they are all bad? Had a nice big 4br house in a nice neighborhood absolutely trashed - knee deep in it!

Edit:

Just in case you really want to know - my experience has been that less expensive properties tend to rent for 1-1.5% per month of their value and more expensive properties often rent for as low as 0.5% of their value per month. Don't know why - that's just how it is where I own property (Arizona). So . . . when you invest your money - and are wondering what you are going to eat and how to pay your medical bills when you get old - which ROI would you want?

[ls650]