Back to Italy: timing is the key issue
Iam a 32-year-old Italian-Australian. I work full time, earning $110,000 gross, and am debt free. I have $40,000 in my super.
I have $200,000 in a term deposit at 2.7% a year. I also have an overseas bank account with 50,000 euro ($75,000) and soon I am going to inherit another 50,000 euro from my father.
I'm very undecided about what I should do. I am quite conservative with my savings and am not sure of the right things to do in my situation – if I should invest in the stockmarket or buy a property, considering I am not yet a homeowner.
In the future I would also like to go back to Italy and live closer to my family. I'm debating if I should invest in Australia or in Italy considering the whole financial depression of Italy and Europe. Giovanni
Well, Giovanni, you have certainly got me thinking. This is a really interesting issue which I know impacts many who are considering moving to another country.
I have a pretty fundamental view that we should own a home and hold the majority of our assets in the country we live in. My family moved to Australia in 1963 when I was eight years old. Obviously my then four-year-old sister and I were far too young to be involved in any decisions but now that I think about it my parents sold up their UK home and moved all our assets to Australia, bought a house, invested in Australian assets and so on.
Whether they would have done better or worse leaving investments in the UK I am really not sure. Equally, I also see the argument that Australia did very well from 1963 to now, so it has been a great place to live and invest. But that was 1963 and as I ponder your question I am very aware that some 55 years later the world is a different place.
So I am trying to put myself in your shoes. As Spain and Portugal recover and the northern part of Europe enjoys decent economic growth, things are a lot better. From an economic perspective, Italy remains a bit of an enigma. It is one of my favourite places to visit; I love the people, the country and the culture. But I would struggle to invest there, unless of course I lived there.
The key to this, I think, is your time frame. “In the future I would like to go back to Italy and live nearer my family” is a pretty general statement. Does this mean next year, or in your retirement? If the move is a minimum of five years away, my inclination would be to invest here. Cash is not really a great long-term asset. Your 2.7% term deposit is going backwards after tax and inflation.
Yes, I appreciate you are conservative but going backwards is not a great long-term plan. The Australian economy is strong, our population is growing and we have a slowing and even falling property market in many places. So if you are here for years to come I feel you could consider a well-located property in a growth location. Aussie shares are not cheap but not stupidly expensive at the moment, so building a conservative share portfolio, again with a long-term view, is not a silly idea.
But if you are keen to leave soon, I would stay flexible and hold cash. The truth is “the grass is always greener”. I don't want to sound negative but a lot of people have moved back to their native country and soon returned.
If, though, you head back to Italy, settle happily and do not plan to return to Australia, I wonder about holding too many assets here. If that happens I would like to see you own a home there.
So the real issue is your timing. If you are off soon, hold cash and see how you settle. If it is a long-term plan, I'd be investing here, with of course some offshore exposure via your super and any shares you invest in.