Published: September 24, 2018 | Blog Post
The term offshore investing refers to a situation in which an investor holds assets outside of the country in which they reside. In the past this was a practice used primarily by wealthy investors and large corporations, but with costs decreasing and other barriers to entry lowering, it is becoming an increasingly common investment option for private individuals. The term “offshore” can refer to any type of asset held in a different jurisdiction, including banks, investment accounts, real estate and corporations. Traditional offshore financial centers included Switzerland, Cayman Islands and Bermuda but with the ease of moving money in today’s world, competition is wide open and as we like to say at BTC Trading, competition always benefits the client.
BENEFITS OF INVESTING OFFSHORE
Private individuals are realizing that investing offshore provides diverse benefits. They have greater freedom and a wider range of opportunities. The flexibility inherent in private overseas investing gives individuals more control in achieving their investment objectives. BTC Trading Inc. manages wealth for an international clientele from all corners of the globe. They seek a variety of benefits from holding assets offshore:
LOWER GEOPOLITICAL RISK: Ten years ago Venezuela and Syria were stable countries. Things can change very quickly and it pays not to have all your eggs in one basket. A seemingly benevolent socialist government can send inflation rates soaring and wipe out the value of previously substantial wealth. Greece is another recent example, where people found their bank deposits suddenly frozen, albeit for a short period of time. Never say never.
ASSET PROTECTION: Courts and governments can order assets frozen for many reasons, including professional litigation and divorce. There are many ways to legally shelter investments, including numbered companies and trusts. For maximum protection, hold assets where one’s country of residence does not have jurisdiction or a tax exchange treaty.
CURRENCY DIVERSIFICATION: This is achieved simply by holding assets that are priced in different currencies, for example by owning stocks listed in different countries. One does not have to be a sophisticated forex trader. Currency diversification is an automatic hedge against fluctuating investment cycles, inflation and other geopolitical risks.
HIGHER RATES: Stable, industrialized nations have historically low interest rates. They are starting to rise again but not to any significance. Higher rates of return can be found in smaller economies like New Zealand and Australia and in corporate fixed income products, without incurring great risk.
PRIVACY: There are many legal and legitimate reasons for someone to want fiscal privacy. These include previously mentioned issues like litigation and divorce, in addition to a multitude of others. An innocent example could be the surgeon general of a country wanting to invest in tobacco stocks to ensure his family’s financial future. Hedge funds are also notoriously private, wanting to protect their edge against the competition.
SECURITY AND PEACE OF MIND: Having money in a foreign jurisdiction allows one to rest easy. It is reassuring to know that one has access to funds, regardless of what comes at you in life. If an aggressive tax auditor has restricted one’s access to cash at the same time as one’s spouse needs sudden medical care, it’s nice to know one has access to funds at any time.
FREEDOM: Having assets in an offshore jurisdiction gives one the freedom of movement and the freedom to optimize many aspects of one’s decision making in life, not the least of which is to find the best investment opportunities.
TAX EFFICIENCY:There are many legal ways to minimize one’s tax obligations. Offshore investment centers are tax havens with many specialists engaged in helping people and companies establish trusts and corporations in order to minimize taxes and maximize wealth protection. Minimizing estate taxes is an important aspect of this industry.
HIGHER RETURN ON INVESTMENT: In addition to gaining access to investments in countries with higher interest rates, working with an offshore wealth manager opens up the door to an entire world of opportunity in comparison to being restricted to one’s local market.
INCREASED MARKET ACCESS: Investing offshore provides greater flexibility to invest in undervalued markets, companies and currencies. It allows investors to get the jump on emerging sectors, IPO’s and many alternative investments.