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Cash is King - Article Published 25th July 2013

To read the Article Published in The Portugal News Online by Raoul Ruiz Martinez please click here

Are you worried about your cash deposits? Cannot accept these historically low savings rates? Like many conservative inexperienced investors, are you overly concerned about the safety of banks? Don’t lose faith. Cash is a very powerful commodity.

Today we all must manage our personal finances and make that cash work that little bit harder. There is no doubt that a good old-fashioned bit of timely income and expenditure analysis allows you to plug any gaps where your money is being used inefficiently. The results usually produce surplus liquidity to either save, which is a necessity for those with young families, or go out to have fun and blow your budget once in a while, whatever age you are at.

If you have failed to reign in your spending or have even over-invested in something illiquid like property, life-changing events such as serious ill-health leading to an inability to work or even early death can quite literally change a comfortable life overnight into a very tough financial battle. In this situation, an emergency cash reserve becomes king. Good financial sense would plan to keep such an amount available. But you must expect to achieve little or no return and disciplined to only access it in such extreme conditions.

How much should your emergency reserve be and can you afford it?

This depends on your age, your income levels, other assets or equity and debt. A general rule of thumb is either safekeeping 6 to 12 months’ of salary if you are working or, if retired, usually 10%-20% of the value of your assets. It is worth noting that if you decide to become resident in Portugal you must demonstrate that you have sufficient cash reserves to not become a burden on the state.

Should you have the opportunity to save either on a regular basis or have sufficient amount of capital surplus for emergency cash requirements, with little investment experience or risk, where do you go to preserve the capital and a return that makes the banks offerings pale in comparison?

Certainly there are opportunities for investments in property and you can deal with a professional property adviser or agent which is a regulated industry here. If you are well versed in Portuguese or even a self-starter, Finanças (the Portuguese revenue) have auction properties and real estate posted on their website. In addition, rental income, when dealt with correctly, may allow you to achieve tax breaks when dealing with short-term holiday lets.

A single lump sum investment or even regular savings contributions placed into compliant and tax-efficient life or pension-based savings vehicles, available here in Portugal but mostly in regulated offshore centres across Europe, there are viable alternatives to investing your cash. The banks in Portugal can provide you with some details for onshore products or equally an adviser who is registered and authorised with the regulatory bodies for the capital markets and life industry. Financial markets, like property, provide real rates of return that cash simply cannot afford these days.

Independent and international financial advisers can manage more open architecture solutions outside of Portugal, but make sure that whatever you do you must clearly understand its terms and conditions, the costs, accessibility, and that it meets your objectives and desires, with all forms of taxation sufficiently covered. Today an international perspective presents the better long-term path where financial planning is concerned and the cost for good advice can be priceless where the sovereignty of your cash is concerned.

This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action.

Raoul Ruiz Martinez is a resident and independent consultant for Finesco Financial Services Ltd., Glasgow and advises private clients on financial investments in both the UK and throughout Europe under MiFID regulation. He can be contacted at the offices of euroFINESCO s.a. either by telephone on 289 561 333 or on email

Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Some of the services provided are not regulated by the FCA because they are not included within the Financial Services and Markets Act 2000

Raoul also has regular radio appearances with Raoul’s Rant on the Owen Gee Solid Gold Sunday show and the Money Minute on the Kiss FM Breakfast show from Tuesday to Thursday between 11 and 12.

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