Having said that, there are some basic facts and general principles that you should be considering when deciding about your general investment plans. These apply just as much in Turkey as elsewhere.
See our Guide to Bringing your Money to Turkey as to whether or when you should move your money to Turkey.
See our Guide to FX in Turkey about how to move your money.
See our Guide to Investing in Turkish Property for specific information in that area.
As in any country, you will need to keep a certain amount of your money available in easy-to-access form. There will always be the unexpected expense, such as the need to do repairs on your roof or flights to see a sick child in Australia. How much you should keep in cash depends upon your personal attitude to risk. Many people who are in the happy position of having quite a lot of money find that having a sizeable lump sum (€50,000 or so) in the bank is a great comfort blanket.
For most people of modest means, a good starting point might be to keep about €2,500-5,000 in instantly available cash – i.e. in the bank or available in some other way. However, many people feel that this is not strictly necessary if they have credit cards with a good credit limit and the ability to access other funds in a short period in order to pay off those credit cards. Of course, funds kept in the bank, at the moment, earn little or no interest if they are kept in euro, dollars or pounds and so people are understandably keen to minimise this wasted opportunity. However, funds kept in a Turkish bank in Turkish lira can earn good levels of interest – currently about 13%.
When it comes to funds that can be accessed quickly, many people will look to keep €10,000 in some form that can be accessed within (say) seven or 14 days. Some will increase that to €20,000-30,000. However, again, the point applies that any funds that can be accessed that quickly may, generally, pay you very little in the way of interest and so they do little to help your standard of living.
Finally, many will wish to keep funds that can be accessed reasonably promptly (say, within a month or six weeks). Around 10% of your available money is normal for this (less any money that they have more quickly available).
As to the rest of your money, it should be invested in ways that are going to generate you a sensible amount of income. You should choose to invest some in ways that can be accessed reasonably quickly – say, within three months – but other funds could be held in long-term investments which it might be difficult, slow, expensive or all of these to turn back into cash if you suddenly found you needed to do so.The Rest of Your Money
As with several other sections of this book, the most important issue here is what you and your partner find acceptable: what you are comfortable with.
The stock market in Turkey
Turkey has a stock market (the BORSA). Its key index is the BORSA Istanbul 100 Index.
The Index currently (July 2017) stands at an astonishing 105,633.88. There are proposals to reduce the Index by a factor of 100 to make it more manageable.
Over the last five years, the performance of the Index has been quite volatile but over the last year it showed a return of over 31%; and so far in 2017, a return of over 35%. However, it may be significant that, in May 2017, two of Turkey’s richest families cashed in profits and sold over US$600million of shares.
Volumes tend to be in the region of 750million shares per day.
The number of participating companies has increased from 80 in 1986 to 413 in 2017, and its market capitalisation has, over the same period, increased from US$650million to US$29billion.
You can follow all the key figures, in Turkish or in English, at www.BORSAistanbul.com.
Do offshore investments make sense for somebody living in Turkey?
The short answer is: yes.
However, it depends in part by what you mean by ‘offshore’.
Taken in its strict sense, an offshore investment is any investment located somewhere other than Turkey and it is almost universal for foreigners living in Turkey to have some of their investments located elsewhere. There are many people who have investments in Eurozone countries or who hold some of their wealth in places such as the US, the UK, Japan etc.
However, ‘offshore’ can be used with a much narrower meaning. It can be used to suggest places – often called tax havens – where there is a combination of banking secrecy and very low tax to entice investors to put their money there. Whether such investments make sense for you depends entirely upon your personal circumstances.
When thinking about offshore investments, people will usually think immediately of places such as the Channel Islands, the British Virgin Islands, the Bahamas etc. – many of which have a pretty clean bill of health from the OECD regulators.
However, the OECD every year compiles a list of countries that are wholly or partially noncompliant with exchange of information for tax purposes.
The number of countries on these lists has steadily reduced over the years as more and more have bowed to the pressure to follow the rules laid down by the OECD.
In the 2016 report, the only fully non-compliant country is Trinidad and Tobago.
This suggests that the idea of holding your money in a place and expecting nobody else to know about it is no longer based in reality. It is, almost certainly, not a good idea to invest in countries on any of the blacklists or ‘grey lists’; if for no other reason than that history has shown that most such countries eventually bow to the pressure of the OECD/EU and enter disclosure agreements.
However, many people invest in or via these offshore banking centres not for secrecy, nor to hide their money, but because they believe that there are better and more flexible investment opportunities accessible via these places than they can access from Turkey: for example, a much wider range of mutual funds in various other countries.
Whether you want to take advantage of these extra opportunities is entirely a matter for you. You may feel that the range of investment opportunities open to you through your local financial institutions in Turkey or those in your home country are perfectly adequate for your purposes and you may take comfort in the fact that they have been approved by the regulators in the various countries that you know well.
If you want to join the offshore investors, you need to check out – carefully – the strength and safety of both the places and the investments. There is a lot of material online to help you do this. Not all of it comes from reputable or authoritative sources.
You also really ought to take good financial advice from a specialist in the field.
Do not invest anywhere or in anything if you are ‘cold called’ or approached, unexpectedly, by email.