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Benefits of Investing Offshore
You may be unhappy with your current portfolio, and it may be time to explore new options. Looking into offshore options is a great way to open up your investment portfolio to great markets, secure banking, and tax advantages. In this article, we will cover the benefits of investing in assets found in offshore markets and where individuals can invest when they are prepared to go offshore.
We are sure you are wondering, ‘What dao I get out of investing offshore?’ Let us take a look at some of the many benefits.
One of the biggest draws to making offshore investments is the diversification. According to Modern Portfolio Theory, a popular theory for maintaining a healthy portfolio, diversification is a pillar of a successful portfolio. Diverse portfolios outperform a concentrated one. When an investor owns a large number of investments in more than one sector or asset class, investors can protect themselves from unsystematic risk.
When there are 12 or more stocks in a stock portfolio, unsystematic risk is almost completely eliminated. Systematic risk can always be around the corner. By investing in non-correlating assets, you can protect yourself from volatility. Non-correlated asset classes are investments like bonds, commodities, currencies, real estate, fine art, and cars.
Along with diversification, tax benefits are on the top of reasons to go offshore. Some investors seek out offshore investment for the tax benefits. These incentives benefit the investor as well as encourage the growth of their own economy by attracting wealth from other countries.
Low-cost jurisdictions are legal ways for individuals and corporations from all over the world to reduce their tax responsibilities. They provide banking services to foreign entities, allowing them to save money, and making it more appealing than continuing their financial business in their home countries. For individuals, low-cost jurisdictions can offer lower or no capital gains tax, tax on interest, inheritance, or personal income. Many corporations have saved billions by reporting earnings to subsidiaries in countries that have better corporate tax laws.
One of the biggest draws to offshore banking is security. For some, depositing money into a bank in their home country is not safe. Do you trust your bank? Do you think that your money could be safer or that your bank could be doing more with your money? Maybe it’s time to try offshore banking.
In terms of investment, banking offshore can help diversify your portfolio, protect your assets, and is the first step in moving your assets out of your country. Opening a bank account offshore also plays a key role in forming an offshore corporation, offshore SD-IRA, or international trust. Many offshore banks offer investment opportunities, managed investment accounts, and foreign exchange services.
Holding an offshore account plays a key role in conducting international business. Some international customers like to send money to a non-U.S. bank to completely avoid the U.S. banking system. If you play your cards right and set up a smart tax plan, an offshore bank can also maximize your tax efficiency by holding your offshore bank account in a tax-exempt country.
By renouncing citizenship, you will no longer be subject to the tax laws of your home country and can enjoy life without the hassle of being taxed on money that you may not even be making in your home country. When expatriating, you may be required to pay an expatriating tax, like in the U.S., but that will be pocket change compared to what you’d be saving over the years. You have the opportunity to achieve both personal and financial liberation overseas by tapping into new and developing sectors, and developed areas of investment, allowing and encouraging you to diversify your portfolio.
Each country has its own process of acquiring residency or citizenship, but some are easily gained through investment, each offering different options and perks in terms of investing, starting a business, and tax benefits. To gain citizenship via an investment, the government may require you to invest a certain amount of money into sectors that could create jobs for native residents.
Ways to Invest Offshore?
Are you ready to start your offshore investment journey? Below are some of the ways investors are placing their money in different countries.
Many real estate investments can lead to residency and, in some cases, a quicker road to citizenship. In rare cases, immediate citizenship is offered after a high enough investment in real estate. This is especially attractive for those looking to expatriate or those who want to earn a second passport in order to extend the amount of visa-free travel that is possible. This can play a key role in offshore retirement or years of stress-free travel.
There are also a lot of tax benefits that come with investing in real estate offshore. In fact, it is one of the few ways that an American can legally keep some of their money offshore privately. When real estate is held directly in an investor’s name, as opposed to in a trust or LLC, the investment is not reportable.
There are many reasons one would choose to invest in a foreign currency, mostly protecting from risk. For one, diversification plays a key role in any healthy portfolio. By buying other currencies, you can hedge yourself against losing out from another investment or also gain from the economic strength of another nation.
Invest Offshore with Alpen Partners
If you are ready to enhance your portfolio with an offshore investment, or if you are still on the fence, contact Alpen Partners today! If you are serious about your life goals, financial planning and investments are probably important to you. We understand the importance of your wealth, and with partnerships all around the globe, we can help grow and maintain it. Investing offshore can involve many steps, from tax optimization to asset protection. Different global investments have different rules with different returns.
Alpen Partners Wealth Management International AG, the sister company of Alpen Partners Wealth Management AG, is now a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). Together with our partner Swiss private banks, our company can now offer the full Swiss private banking experience to American clients, both resident, and non-resident.
Alpen Partners Opinion
When investing with Alpen Partners, we are constantly looking for strategic ways to alleviate risk, while salvaging growth and profits. These two concepts, in theory, inversely affect each other. However, by studying global markets and understanding what is impactful on markets, we believe that we can alleviate risk without cutting into potential growth. Investing globally, outside of your domestic market, is one of the most important aspects of portfolio diversification. When considering investing on a global scale, an investor will notice that this inverse relationship between risk and growth, does not always hold true.