Invaluable not illegal: offshore investing and saving for expats
Written by Adon Beddoes on November 17, 2017.
The term offshore often raises alarm bells with expats, conjuring up images of illegal investors stashing cash where they shouldn’t. Despite the media hype which encourages this view, in actual fact most offshore investing is completely legal and a useful money management tool which all expats living overseas should consider.
In reality, offshore simply means that you choose to invest money in a location which is not the same as the one where you live. For both working and retired people living in Asia it can bring huge advantages but in order to be able to make informed decisions about how and where to invest you need to do your homework.
That’s where I come in! Below you will find some useful information on the whys and wherefores of investing offshore in order to determine whether it could be beneficial to you.
These are the main benefits of international offshore investment:
Big, international banks structure their services to appeal to an international clientele, particularly those who travel widely for work and pleasure or those who move country frequently. An offshore bank account avoids the hassle of having to open a new account with each move and gives easy access to money from anywhere in the world. Managing and accessing your wealth is made as simple as possible with flexible options such as multi-currency accounts and easy transfers between accounts.
2. Tax efficiency
While not the case for everyone, in certain situations individuals can use offshore jurisdictions and products to structure their investments in a tax efficient way. I’m certainly not suggesting that you hide money in offshore accounts to avoid paying tax but depending on your nationality, where you are domiciled for tax purposes and your personal circumstances there could be legitimate tax efficient ways of investing open to you. This is a complicated area so you will need the help of a professional (like me!).
Some expats live in politically volatile countries where it may be unwise to hold large amounts of cash in a potentially vulnerable banking system. In those cases holding savings in an internationally respected jurisdiction where your money is covered by a robust legal framework and a compensation scheme makes financial sense.
Diversification is THE watchword when it comes to investing because it spreads risk. Offshore banking will give you access to the wide variety of products open to international investors and enables you to diversify in numerous ways – by geographical region, market, asset, currency and sector. With international banking, the whole world is your oyster enabling you to get the best out of your savings and investments while mitigating risk.
So which is the best offshore jurisdiction to invest in? There is no one-size-fits-all answer to this question. While offshore can be any country other than your own, in reality most expats opt for jurisdictions which are renowned as international financial centres, typically places which have no or very low taxes such as the Isle of Man, Channel Islands, Singapore and Hong Kong. Each will have their own protection policies, regulations and reporting requirements so you should talk through the options with your financial adviser.
Similarly, when it comes to the vast array of products to choose from, you should seek advice. Depending on your financial goals, risk profile and personal status it might be most advantageous to invest in funds, bonds or pension schemes either simply or within a tax-efficient wrapper, or a more complicated structure such as a trust or company may be the way to go.
If you are looking for advice on offshore investing, I’d be happy to hear from you. I will take the time to understand your situation, your financial goals and your tolerance to risk and will make recommendations based on your unique personal situation. I take a holistic approach to financial planning to not just build your hard-earned wealth but also to protect it with relevant insurance products. For an informal, no-obligation chat, please feel free to contact me at email@example.com.