Investing in a Low Interest Rate World

by Expat Focus investment partner, Tom Zachystal

On August 9th Ben Bernanke, Chairman of the US Federal Reserve, made an unprecedented announcement (I guess by now we should be used to unprecedented announcements from the Fed). He announced that the Fed would keep US target interest rates low for two years. Never before has the Fed committed to a time-span for its interest rate policy.

Many investors were disappointed that the Fed didn’t announce a further economic stimulus measure but in fact the actual announcement is much more useful because it helps bring certainty to what has become a very uncertain investment market.

If interest rates are to remain low, this creates less competition for fixed income type investments. Bond prices go down as interest rates go up and one of the great uncertainties in the bond market during this extended low-interest rate period in which we have been living has been when to get out of bonds, as surely interest rates must rise at some point. Indeed a few months ago I wrote in this space about my concerns regarding fixed-income investments. Now we know that interest rates won’t rise for a while but this is not to say there are no concerns about low-yielding bonds. A concern that remains is that this low-interest environment may spur inflation and if inflation is running at, say 4%, then investors wouldn’t want to be locked into low-yielding bonds.

Low interest rates also create less competition for investments that do not pay an income; commodities for example – especially commodities such as gold that do not trade solely on supply/demand fundamentals. If we could get a decent yield in a savings account then we might be less inclined to put our money into something that is more difficult to value and does not give us a cash flow – we might put our money in the bank rather than holding gold...

Read more at http://www.expatfocus.com/tom-zachystal-220811

Expat Experiences: Chile - Sally Rose, Santiago

Who are you?

My name is Sally Rose. I blog as The Thorny Rose.

Where, when and why did you move abroad?

I moved to Santiago, Chile on March 1, 2011, because I had discovered, during a visit here in 2008, that I felt better here than anywhere I've ever been or lived. Whatever "it" was, I wanted more of it! (I had always had an idea that I would go overseas to teach English "someday.")


What challenges did you face during the move?

Because I expect this move to be permanent (well, as permanent as anything ever is in my life!), I divested myself of almost everything I owned. Since I'll only admit to being 39, I'll just say that it was 39 years worth of "stuff." The hardest thing, beyond a doubt, was giving away my 16-year old cat who was too old to make the long journey.


Can you tell us something about your property?

I am renting from the same landlord whom I've rented from on previous visits. I found his property on Craigslist. I love the location, but will be moving again, eventually, because this apartment is tiny, more like a hotel suite with a kitchenette than a real "home."


What is the property market like at the moment?

Have no idea. I do know this: I was living in New York City before this and I can buy an apartment here for probably 1/4 of what a similar one in NYC would cost.


Read more about life in Chile at:
www.expatfocus.com/expatriate-chile-experiences-santiago-sally-rose

France - Language Is Not The Only Key To Integration

Wendy Mewes looks at finding out about France

Many people simply find learning French or other foreign languages too difficult. While they are keen to pick up a few words of greeting and purchasing, there is no reasonable expectation of going beyond that. This could be through age, lack of language experience or just a poor head for foreign sounds. But language is not the only form of integration.

Most expats know their own areas well enough at a certain level. They visit the sights on arrival and repeat the best regularly with visitors. For holidays they may visit other parts of the same country they’re living in, often to experience a different landscape or environment: from country to coast, or vice versa.

But the key to living easily in your own chosen resting place is to understand that place as well as you can. And I don’t mean knowing the best/cheapest restaurants or even picking up and endlessly regurgitating the local legend. Legends spring from history, landscape and human endeavour. The stories may be larger than life but at another level, it is real life they reflect.

As anyone who has read the excellent Discovery of France by Graham Robb knows, France as a united country has a short history and every region is still anchored in its own individual roots. Getting to grips with the unique character of your area will give you a much greater sense of belonging and an appreciation of what matters to the people who live there and why.

Take most basic level: geology determines the landscape, and the landscape determines what can be grown, eaten, exported, built and defended in any area. Find out about local stone/soil and get hold of examples or know where to go to see them. By such a simple step you can get to grips with the essence of a region. Brittany, for example, is said to be a ‘land of granite’, but if you look at a geological map, you easily see the degree of exaggeration involved in that stereotype...

Read more: www.expatfocus.com/france-key-to-integration-wendy-mewes

Expat Experiences: Australia - Sami, Perth

Who are you?

I am Portuguese by birth, but have lived in South Africa (20 years), Germany (6 years) and Portugal (12 years).

Where, when and why did you move abroad?

I moved to Perth to accompany my husband who had been offered a job. We came in January 2007. Although we were happy in Portugal, there was always a wish to go somewhere else where we could provide our children with a better future, and to an area where we could eventually explore the Asian countries.

What challenges did you face during the move?

We were lucky that the company that sponsored our move/visa paid for a removal company, so it make our life easier. We had to give away a lot of stuff as not all fitted in the container. Of course leaving family and good friends behind is heart wrenching but we had made the choice! We also had to leave our 3 cats behind, as it was far too expensive to bring them. Lucky for us our daughter was staying for a few more years and she took them.

How did you find somewhere to live?

We lived in a rented furnished flat (apartment) for 3 months paid for by the sponsor company, then we had to make our own way.

Perth was in the middle of a property boom at that stage and after having looked at over 30 properties, we had to settle for something less than we would have liked, as we had to give 20% deposit. We had lots of trouble finding a bank that would give us a loan too as we were on a 457 visa (4 year temporary business sponsored visa), hence the 20% deposit and we still had to pay an extra lenders insurance. We settled for a "renovators dream" as the...

Read more: www.expatfocus.com/expatriate-australia-experiences-perth-sami