Pros and Cons of Offshore Investing

  • July 12, 2016
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Many of us think of offshore bank accounts as incredible that applies only to celebrities or secret agents, but they actually have some great advantages for regular investors. Offshore investment accounts are mainly about reducing taxes and liability. Because of its numerous benefits, more and more people, and companies are turning to this option.  Almost half of the world’s investments and assets are held in offshore  jurisdictions.

Offshore investment refers to a wide variety of investment strategies offered outside of an investor’s home country to take advantage of the tax benefits. That means, it involves depositing your money in a foreign jurisdiction. Well know people, including celebrities, actors and politicians to private families are all engaged in international investing using offshore jurisdictions. There are several offshore investment providers available from offshore banks, fund managers or trust companies, to individual firms and group seeking investment.

However, if you are acutely considering this process, consulting with an expert in this field and following pros and cons are highly recommended, as going it alone could end up costing you more than it should.

Pros of Offshore Investing

When looking up offshore investing, Asset protection is probably the main thing you always heard about. It makes this possible by transferring assets through structures like trusts, foundations or corporations, to a legal entity outside your country.

Tax saving is the main advantage of offshore jurisdictions, that force most of investors to do international investment. It is not illegal, as they are part of a well planned international investment structure.

It encourages foreign investments by their flexible investment regimes, as compared to onshore investment. In this process, assets are easily diversifying because of the easy access to international markets and exchanges.

Foreign investors get a degree of secrecy, that is not just for the condition of hiding transactions, it is a right that should be enjoyed by everyone in their investment decisions.

Hedging is the other benefit that means exposure to offshore markets could be a form of shield against global inflation.

Pros of Offshore Investing

It doesn’t come cheap, as you required a minimum amount to open an investment account in another country. In addition, offshore investments may cost you more due to the professional fee structure of the account service provider.

Whether hiring professional financial advisers will save you a lot time setting up and managing your offshore accounts, you need to pay a large amount to them for all these services.

The other disadvantage is safety consideration. It is common that persons who are new to the offshore world, may find it difficult and feel unsecure. That is why, it is important to choose a reputable organization to handle your assets.

Matters around legality might make you nervous about investing offshore and could cause you to be discouraged about investing.

Like any other business or investment venture, offshore investing may also be risky.