You live in Prague and earn your salary in CZK. Part of your savings is still in EUR. You may have an investment account you opened before moving to Czechia, property in your home country or shares from a previous employer. And you may not know whether you will still live in the Czech Republic ten years from now.
So where should you invest?
For an expat, the answer is rarely simply in Czechia or abroad. A good investment strategy should reflect where your assets are today, what you want them to achieve and where you may eventually need the money.
That makes investing as an expat less about finding one ideal product and more about making different parts of your financial life work together.
Can foreigners invest in the Czech Republic?
Yes. Foreign nationals can invest while living in the Czech Republic. The investment services and products available to you may depend on your country of residence, tax residence, citizenship and the requirements of individual financial institutions.
It helps to distinguish between several things that are often confused: your citizenship, your country of residence and your tax residence. They may all be the same country, but for an expat they often are not.
Your tax residence can affect how investment income is treated. Your country of residence may affect which services a financial institution can offer you. Your citizenship can introduce additional rules in specific cases.
This is one reason why an investment that worked perfectly before moving to Czechia may deserve another look after you settle here.
Start with your life plan, not an investment product
Before choosing a fund, ETF or investment platform, ask a more important question: what does this money need to do for me?
For someone who expects to stay in Prague for the next two years, the answer may be very different from someone raising a family here and planning to remain for another twenty.
Think about:
- How long do you expect to live in the Czech Republic?
- Where might you live in 10 or 20 years?
- Where are your existing investments and property?
- In which currencies do you earn, save and spend?
- Will you need part of the capital for a property purchase or another major expense?
- Are you building wealth, preparing to draw income from it or planning to pass it on to your children?
The Czech National Bank also recommends defining your investment horizon before selecting investments. A longer horizon generally gives an investor more capacity to tolerate short-term market fluctuations.
For an expat, however, the horizon has another dimension: where will you be when you eventually need the money?
Should you invest in Czechia or abroad?
Living in Czechia does not mean your portfolio needs to be predominantly Czech.
Where your investment provider is based and where your money is actually invested are two different things. A Czech investment account can provide access to global assets. Likewise, an account held abroad does not automatically make a portfolio more internationally diversified.
The right geographical allocation depends on your goals, existing assets, investment horizon and future plans.
Imagine someone who owns an apartment in Prague, receives a Czech salary and has most of their cash in CZK. Adding a portfolio heavily concentrated in Czech assets could increase their dependence on a single economy rather than diversify it.
Someone else may have the opposite problem: almost all their financial assets may remain in their home country even though their career, property and future are now firmly based in Czechia.
The question is therefore not whether to hold Czech or foreign investments. A better question is: what exposure does my total wealth already have, and where am I unnecessarily concentrated?
CZK, EUR or USD? Think about currency differently
Currency is one of the first questions expats ask us. Should I invest in Czech crowns because I live in Prague? Should I move my savings into euros? Does buying an investment quoted in US dollars expose me to the dollar?
There is no universal answer.
It is useful to distinguish between the currency in which you receive your income, the currency in which an investment is quoted and the currencies to which the underlying assets are actually exposed.
Then there is another factor that can matter even more: the currency in which you expect to spend the money in the future.
Consider an executive currently earning CZK in Prague but expecting to retire in the eurozone. Holding all long-term assets in CZK simply because their current salary is in Czech crowns may create a different risk rather than eliminate one.
The reverse can also be true. Someone who plans to stay in Czechia may need part of their wealth available for future expenses in CZK even if much of their existing portfolio is held in euros or dollars.
Currency allocation should therefore be intentional. It should follow the role of the money rather than today’s address alone.
Diversification for expats goes beyond stocks and bonds
Most investors understand diversification as spreading money across different investments. For an expat, there may be several additional concentrations worth reviewing.
The first is the familiar one: asset classes. Holding a combination of equities, bonds, cash, property or other assets can reduce dependence on the performance of a single type of investment.
Then look further. Regions: is a disproportionate part of your wealth connected to one country or economy? Currencies: are your assets concentrated in a currency that does not match your future plans? Financial institutions: is almost everything held with one provider? Jurisdictions: would your financial setup still work if you changed your country of residence?
Not every investor needs to diversify across every one of these dimensions. But when your career and assets cross borders, they are worth considering as part of the same picture.
A typical expat portfolio: three countries, three currencies
Consider an executive living in Prague.
They receive most of their income in CZK and an annual bonus in EUR. Investments accumulated during an earlier stage of their career remain with a financial institution in another European country. They also own property in their home country and hold a substantial cash reserve in Czechia.
None of these decisions is necessarily wrong on its own.
The problem is that they were made at different points in life and for different reasons. Nobody has looked at them as one portfolio.
The first question in this situation is not which new investment to buy. We would first want to understand:
- what each part of the existing wealth is meant to achieve,
- whether geographical and currency exposures are intentional,
- how much liquidity the client needs,
- when different parts of the capital may be needed,
- whether the existing investments still fit the client’s plans,
- and what happens if the family leaves Czechia in the future.
Only then does selecting individual investments make sense.
For clients with assets across countries, this shift from a collection of financial products to one coordinated strategy can be more important than adding another investment to the portfolio.
What happens to your investments if you leave the Czech Republic?
Moving out of the Czech Republic does not automatically mean you need to sell your investments. It can, however, change the context in which you hold them.
A change of residence may affect your tax situation, reporting obligations and the services your financial provider can offer in your new country. An investment structure that is simple while living in Czechia may be less practical after moving elsewhere.
This is why portability is worth considering before you invest. If there is a realistic possibility that you will move again, ask: can I continue holding these investments from another country? Would my provider still be able to service me? How would a change of tax residence affect my situation? In which currency will I eventually need this capital? Would moving require restructuring the portfolio?
The answers depend on the investments, provider and countries involved. But the principle is simple: the best time to think about the next move is when you build the portfolio, not three weeks before leaving the country.
How are investments taxed when you live in Czechia?
Taxation is one of the areas where generic advice for expats quickly reaches its limits.
Your citizenship alone does not determine how your investments will be taxed. Your tax residence, type of investment income, location of assets and relevant double-taxation treaties can all matter.
Czech rules, administered by the Czech Financial Administration, also distinguish between different forms of investment income and contain conditions under which some income from securities may be exempt from Czech income tax.
For a straightforward Czech investor, the situation may be relatively easy to assess. Add investments in another country, foreign dividends, a previous pension arrangement or another tax residence, and the picture can become more complicated.
US citizens are a particularly important exception, because US tax and reporting rules can continue to apply while living abroad.
For this reason, investment and tax decisions should not be treated as completely separate when a portfolio crosses jurisdictions.
At Melior Invest we focus on the investment strategy. Where a client’s situation requires individual tax or legal assessment, we work with the appropriate specialists rather than treating a general article as personal tax advice.
Do you need a financial advisor as an expat?
Not every expat needs ongoing wealth management.
If you are investing a relatively small amount into a straightforward diversified portfolio, have no assets elsewhere and expect your financial situation to remain simple, you may be comfortable managing it yourself.
Professional advice tends to become more useful as the number of moving parts increases. For example, when you have investments in several countries, hold assets in different currencies, receive company shares or stock-based compensation, own property abroad, expect another international move or need your portfolio to provide an income.
The same applies when the amount of wealth becomes large enough that individual decisions need to be considered in relation to the whole. At that point, the question changes from “What should I invest in?” to “How should all of my assets work together?”
How Melior Invest works with expat clients
We start with what you already have. That can include investments held in Czechia and abroad, cash in different currencies, property and other significant assets. We then look at what the capital needs to achieve and over what period. From there we can build an investment strategy for expats around your goals rather than around a particular product.
And the work does not end once the money is invested. Markets change. Your career can change. You may buy or sell a property, receive an inheritance, start drawing income from your portfolio or move to another country.
Long-term investment management means revisiting the strategy when your life changes, without rebuilding it every time markets make headlines.
We work with clients in English and Czech, either in person in Prague or online.
Your life may cross borders. Your investment strategy should be ready for it.
If you live in the Czech Republic and have investments, savings or property across countries, we can help you look at them as one portfolio and build a strategy around what you want your wealth to achieve. Let us discuss your situation Meetings are available in English or Czech, in person or online.
