If you’re an expat looking to grow your money while living abroad, you’ve probably heard about aiming for a 6% return. It sounds ideal; high enough to grow your wealth but not so aggressive that it keeps you up at night. But in today’s global market, what does a “safe” 6% return for expats actually look like?
What Does “Safe” Really Mean?
The word “safe” is used a lot, but rarely explained properly. Safety in financial terms doesn’t mean zero risk. It means managing risk in a way that aligns with your goals, timeline, and comfort level. For expats, safety also includes political stability, tax efficiency, and access to funds when needed.
Is a 6% Return Still Realistic in 2025?
We’re living in uncertain times. Interest rates are higher than they’ve been in years, inflation has put pressure on cash savings, and markets are recovering from global instability. Against this backdrop, a 6% return isn’t out of reach but it demands a thoughtful strategy.
The Expats’ Dilemma: Safety vs Growth
Expats often fall into one of two traps: playing it too safe and losing value to inflation, or chasing high returns and ending up with volatile or illiquid investments. The sweet spot lies in careful diversification, picking a blend of assets that generate returns without putting your future at risk.
What a 6% Return For Expats Could Look Like
Let’s break this down into some practical options. A 6% return doesn’t have to come from a single investment. Instead, think of it as a target across a well-balanced portfolio.
Example 1: Fixed Income + Dividend Shares
This could be a 50/50 split between corporate bonds and global dividend-paying shares. Bonds offer steady payments, while dividend shares provide growth and income potential. It’s low drama, especially when you stick to big, established companies.
Example 2: Real Estate Investment Trusts (REITs)
REITs offer a way to earn from property without owning a building. Many REITs have long-term tenants, creating regular income. The returns vary, but with the right mix, they can contribute nicely to a 6% target. Just watch out for currency exposure if they’re based in another country.
Example 3: Bond Ladders and Structured Notes
Bond ladders help manage timing and interest rate risk. Structured notes can also be engineered to produce defined returns based on market performance. They’re a bit technical, but a good adviser can build something tailored to your needs.
The Role of Currency Risk in Expat Returns
One of the biggest threats to expat returns is currency fluctuation. Imagine earning 6% on a US-based investment only to lose half of it because of a weak exchange rate. If you’re earning and spending in different currencies, managing that risk is vital. Currency-matched investments and hedging tools can help keep your returns intact.
Tax Considerations for Expats
Taxation for expats can be a maze. The same 6% return can look very different depending on where it’s held. Offshore platforms, insurance bonds, and tax wrappers can offer shelter, but not all are created equal. Make sure you understand the fees, transparency, and local tax treatment before signing anything.
Case Study: Sarah, a British Expat in Dubai
Sarah, aged 42, wanted a 6% return that she could rely on for future school fees and travel plans. Her adviser built a diversified portfolio across REITs, dividend shares, and emerging market bonds. Her annualised return after three years: 6.3%. After fees, exchange fluctuations, and minor drawdowns, her real return was just above 5.5%, still strong, and with room to grow.
Why Behavioural Investing Matters More Than Product Choice
Many expats obsess over the best fund, stock, or property. The truth? Behaviour matters more. The people who get solid returns are the ones who stay the course, avoid emotional decisions, and rebalance when needed. Staying invested beats jumping in and out every time the news changes.
The Power of Cash Flow in a 6% Strategy
Returns aren’t just about percentages. They’re about what you can do with the income. A 6% return on a £500,000 portfolio means £30,000 a year. That could cover rent, school, or travel, without touching your capital. The key is building a return that doesn’t force you to sell when markets dip.
Tools to Track and Manage a 6% Return
Use apps and platforms that let you see net return after fees, inflation, and currency moves. Many people only look at pre-tax, pre-fee growth and assume they’re doing better than they are. Keeping an eye on your real net gain makes a huge difference in decision-making.
Building a 6% Strategy That Works for You
Before chasing numbers, ask yourself:
- What do I need this return for?
- When will I need the money?
- Can I stomach ups and downs?
- Is this money to grow, or to spend?
The answers shape everything.
Conclusion
So, what does a “safe” 6% return for expats look like in today’s market? It looks like balance. It looks like discipline. It’s not about finding magic investments, but building a stable strategy that works with your lifestyle, goals, and income needs.
Yes, 6% is achievable. But you need to be clear, consistent, and cautious not just optimistic.
FAQs
- Is a 6% return for expats guaranteed?
No return is guaranteed. But with the right structure, a 6% annual target is reasonable and achievable over the long term. - What’s the safest way to aim for 6% annually?
A diversified mix of fixed income, dividend shares, REITs, and structured products can help create a stable return without excessive risk. - Should expats use offshore platforms?
They can offer benefits like tax deferral and global access. But always read the fine print — some come with high fees or hidden conditions. - How do I reduce risk while targeting 6%?
Focus on global diversification, regular reviews, and investments that provide steady income rather than high short-term growth. - Can I get 6% returns without giving up liquidity?
Yes, with the right balance of listed funds, ETFs, and short-duration bonds. Avoid locking everything into illiquid or long-term schemes.
