The stock market is the most robust and reliable avenue for long-term wealth creation.

Academia and historical data tell us this in relatively black and white terms, however, many expat investors have still experienced real losses.

Global stock markets have grown significantly over the last 10 years, yet your investments are barely beating inflation?

Or even worse, they are actually down in value?


Market performance certainly isn’t the issue, so where does this disparity come from?

Here are the top 5 reasons expats lose money investing, despite the stock market delivering positive long-term returns.

1. Bad Behaviour – Attempting to Time the Market

One of the most common mistakes investors make is trying to time the market—buying low and selling high.

While this sounds straightforward, it requires predicting market movements with precision, something that even the highest paid professional investors rarely manage.

Successful market timing requires two impossible decisions to be made correctly – when to come out of the market, and when to go back in – the likelihood of you getting one of these decisions correct is near zero, never mind both.

Unsuccessful market timing is a mistake that compounds into much bigger losses down the line, resulting in significantly worse outcomes for investors.

For example, missing just the ten best days in the market over a 40-year period can halve the returns you achieve (you can read more on market timing in our recent article here).

This highlights the importance of staying invested and avoiding the temptation to time the market.

2. More Bad Behaviour – Panic Selling During Market Downturns

Fear is a powerful emotion that often drives irrational behaviour.

But remember, nothing worth having in your life has come with linear progress.

Your career is in a better place today than it was 10 years ago. But it probably had its ups and downs along the way – if plotted on a graph, the experience wasn’t a straight line from the bottom left to the top right.

Your relationships are in a better place today than they were 10 years ago. But they had their ups and downs along the way – again, the graph would not show a straight line from the bottom left to the top right (especially if your household has had to survive through even one teenager phase!).

Investing is no different – markets tend to have larger temporary corrections every 4-6 years.

Unfortunately, this is the price of admission for generating long term returns, and it’s perfectly normal.

For example, in the last 20 years we have had:

  • The Great Financial Crisis (2008)
  • COVID (2020)
  • War in Ukraine & Rising Inflation (2022)

When markets experience these downturns, your instincts can often lead to panic selling.

But this behaviour is reactionary and locks in losses that prevent investors from benefiting from eventual (inevitable) recoveries.

These declines are perfectly natural (like winter coming every year), and typically last for just over 1 year on average.

Those who remain focussed on their long-term goals and why they are investing in the first place, remain invested and benefit greatly from those inevitable rebounds (especially if they are still in the accumulation phase of life and are still saving regularly and adding more money into the market during these periods).

While those who allow the “fight or flight” part of the brain to overcome them, ignore their long-term goals and allow themselves to be distracted and blown off course by short term – and ultimately irrelevant – news headlines.

The key is to have clear goals and invest with a clear purpose, which makes maintaining discipline significantly easier during these periods.

    3. Bad Investment Strategy – Overconfidence, Stock Picking, and a Lack of Diversification

    Overconfidence in one’s own ability – or someone else’s ability – to pick winning stocks can lead to concentrated portfolios, excessive risk, increased trading costs, and ultimately a detachment from the market.   

    This behaviour increases risk and transaction costs, which can erode returns.

    But most importantly, it can significantly detach you from the overall market, meaning that as the overall market delivers returns over the long term, your portfolio does something very different – and you are left behind.

    Diversification, i.e. spreading your investments across various countries, sectors, and companies, mitigates this risk. A well-diversified portfolio can absorb the impact of poor performance in any single investment, industry, or country, and provide more stable returns over time.

    And crucially, a well-diversified, portfolio will guarantee you capture the return the overall market provides.

    4. High Costs (Often Hidden)

    Many expat investors are unaware of the high costs they are exposed to.  

    These costs are often hidden under layers of product and investment charges, meaning many expats are unaware of how much they are actually paying in fees and charges, or what the total cost of their financial arrangements are.

    It’s not uncommon to see total costs of 4%, 5% or even 6% per annum.

    Considering markets typically return 6%-8% on average, you can see how it becomes very difficult to grow your money if you are “leaking” similar amounts out the other end via costs (even with an optimal investment portfolio that captures market returns perfectly).  

    However, most expats do not hold an optimal investment portfolio that captures market returns perfectly, so combine that with high costs and you can see how returns quickly disappear.

    If you are an expat, one of the key questions you should be asking yourself when reviewing your financial arrangements is “how much am I paying?”.

    You need to understand how much you are paying for advice, how much you are paying for products (like investment accounts, pensions, etc.) and what the cost of the underlying investment portfolio is.

    5. Bad “Advice” – Bad Structures & Products

    In many cases, expat investors achieve returns significantly below the market (or, in extreme cases, experience actual losses) because the structures and products in which they hold their investments are dragging down their returns.

    Unfortunately, this is all too common in the offshore world, when expatriate investors deal with a financial salesperson (who typically recommends high commission products and is motivated by the prospect of earning those high commissions) instead of a highly qualified and experienced Financial Planner (who recommends products based on your needs, and is motivated by providing independent, expert advice to a fee-paying client).

    To help identify a salesperson from a Financial Planner, a Financial Planner should have no issues showing you their credentials (in the UK you must be level 4 qualified at a minimum, with the highest qualified individuals holding the title of “Chartered Financial Planner” or “CFP”), the advice should be completely independent, and advice should be fee based, with any commission/fees fully disclosed.

    If your “financial adviser” can’t produce credentials or works on a commission only basis (claiming to provide “free” advice), whilst claiming to be independent, know that this would be illegal in the UK and set your expectations accordingly.

    You can read more on this subject, and how to pick a financial adviser, in our article here.

    A common example of bad products and structures is the sheer number of British expats who have been convinced to transfer their UK pensions overseas over the last decade or so.  

    In some cases, this can be good advice, however, in many cases, this has unfortunately involved transferring perfectly fine UK pensions (or SIPPs) into an overseas QROPS structure, then loading that structure up with more commission-based products that add a further (pointless) layer of costs. This would not be permitted under UK rules, which is usually the main driver for transferring the pension overseas.  

    The end result is a salesperson “double dipping” by charging high commissions at the QROPS level, then another high commission on the pointless secondary layer inside the QROPS.

    Even if your money is invested optimally, it can be very hard to grow your money when it’s sitting inside expensive and unsuitable structures (though again, the chances are high that your money is not invested optimally either, if the same “adviser” that recommended bad products or structures also recommended the investments held within).


    Despite the stock market’s proven ability to deliver positive long-term returns, many expat investors still lose money due to behavioural pitfalls or because they were “sold to” as opposed to advised.

    Attempting to time the market, panic selling, a bad investment strategy, high costs, or simply holding good investments inside bad products or structures, are all common issues undermining investment success in the international arena.

    By recognising these pitfalls, working with a well-qualified and experienced fee-based adviser, and adopting a disciplined, long-term investment strategy, investors can avoid unnecessary losses and harness the full potential of the stock market.

    If your investments haven’t grown as anticipated, then it’s worth reviewing your arrangements to investigate why – there’s a strong probability the explanation lies in a combination of the points above.

    By Technical Team @ Abacus

    Please keep in mind that, whilst we aim to update these articles periodically, the content could be subject to future rule changes. Always make sure to speak to a qualified professional to ensure you have the most up to date information and are taking regulated advice around your specific circumstances.