Understanding Offshore Investment Management
When
it comes to investing our money, it is essential to understand the terminology
and the process.
Offshore
investment is a lucrative opportunity – particularly for expats looking to maximize
their returns – and here we explain what this type of investment means, and
when it is most advantageous.
What it Means to be an Investor
Investing
is a way of utilizing your money to produce a revenue stream, or to allow it to
increase in value. There are multiple ways to invest, such as purchasing
properties, making a financial investment, or buying stocks and shares.
Offshore Investment
Any
investment made in any overseas market is an offshore investment, and most
often these are highly attractive in countries where tax regulations offer a
higher rate of return. The only substantial difference to any domestic
investment is the location of the fund.
Over
the last few decades, offshore investments have grown in popularity, as reforms
relax the rules restricting the values that can be transferred abroad. This
type of investment can be used for multiple purposes:
As
a retirement investment fund.
As
a savvy way to make your money work harder.
As
a vehicle to produce tax-efficient returns.
These
are more common than you might think, and many millions of pension funds are
invested in offshore vehicles.
Benefits of Choosing Offshore
Investments
Typically,
one of the main attractions to investing in a fund based in another country
relates to tax regulations. As the global investment market becomes more
accessible, being able to choose countries where assets are taxed at much lower
rates, offers a secure way to achieve higher returns and greater financial
stability.
Provided
returns on these investments that are returned to you in your country of
residence are declared and taxed appropriately, there is nothing untoward about
choosing offshore investing as an efficient and smart way of maximizing the
value of your investment funds.
For
support understanding the taxation rules and how offshore investments would
impact your obligations, it is always wise to work with a financial adviser who
can provide advice about the most effective options.
International Investments for Expats
For
expats living away from their country of origin, offshore investments can be a
lucrative way to manage your tax liabilities while increasing the size of your
asset portfolio.
As
an example, in some countries, you need to pay tax on any interest you
accumulate through savings. Choosing to invest offshore in a country with lower
rates of tax means that by moving your savings overseas, you will reduce the
amount of tax you have to pay.
Expats
find that using this type of investment is a safe and convenient way to protect
the value of the assets they have saved; allowing the security of knowing their
future income is protected.
Particular benefits of offshore
investment for expats include:
Tax efficiencies – countries with zero tax or very low
taxation rates can dramatically reduce your tax liability and are often
accessible regardless of which country you now live in.
Diversification – choosing to invest overseas allows you a
more significant opportunity to diversify your investments. By splitting your
assets between different types of investment, or between different offshore
locations, you have a safety net by avoiding potential risk.
Global accessibility – as overseas investments continue to grow in
availability, managing international investments is becoming more streamlined.
Many offshore products have services specifically designed for expats, such as
accounts available in multiple currencies, and overseas mortgages.
Risk management – as currencies fluctuate, this can have a
substantial impact on your investment funds. By choosing to locate your
investments in stable economies and currencies, you can create a natural hedge
against currency fluctuations at home that might have devalued your investment
funds.
These
advances in the functionality of offshore investments make it easier than ever
before to manage a diverse portfolio, and mean that should you choose to relocate,
your finances needn’t be affected.
Comparing Investment Options
Choosing
an investment can be a complicated process; so we strongly recommend working
with a wealth management expert who can strategies with you and identify the
best investment options for your circumstances and aspirations.
There
are lots of options to consider, all of which depend on how you would like to
invest, and what you would like to gain from your offshore investment fund.
Here
are some of the most common terminologies associated with offshore investments,
and what they mean:
Offshore banking – for expats, any bank located outside of
your country of origin is considered an offshore bank. Simply moving your
savings to a location with minimal, or zero, tax can significantly reduce your
liabilities.
Private banking – when you work with a wealth management
expert, you achieve an outstanding level of confidentiality, and a dedicated
level of service where recommendations made are specific to your assets.
Offshore funds – when you invest in a pool offshore, there
are multiple ways to diversify your portfolio. Well-managed funds can provide
excellent investment returns, and are typically created for non-residents of
that country – making them ideally suited to expats!
Offshore trusts – an offshore trust is a way in which assets
can be invested to avoid heavy taxes, such as inheritance tax. This type of
trust is most often accessed by expats. Note that the regulations around the
use of such trusts are robust, and so it is essential to work with a financial
adviser to ensure that your trusts are reported and managed accurately.
Legalities of Offshore Investing
Offshore
investments are often confused with tax avoidance schemes. However, they are a
legitimate and secure way of ensuring the safety of your finances and
efficiently mitigating the total taxes you need to pay.
There
are, of course, rules about how much you can invest, when and where, and how
the returns on these investments are reported; but an offshore investment is
simply a way to take advantage of the benefits available through the global
investment market.
Chase
Buchanan always recommends consulting your financial adviser or working with a
wealth management professional to ensure your investments are made in reputable
and stable offshore funds and are always disclosed as required.
Every
investment carries some level of risk, and our consultants always ensure that
you have a full and transparent understanding of what risks are associated with
any recommendations we make, as well as what returns you can expect to achieve.
Changing Countries of Residence as an
Investor
Offshore
investments offer multiple benefits to expats, but if you decide to relocate or
move back to your country of origin, you’ll need to understand how the regulations
will impact your investments.
This
all depends on where you are relocating from, and where you are moving to – but
a well-managed international investment fund located in a tax-efficient
offshore location may not change, or may incur significant additional taxes
depending on the country-specific rules.
Your
financial adviser can explain the regulations depending on your relocation
plans to allow you to prepare your finances in advance.
Why Expert Support is Essential for
Successful Offshore Investment Management
As
with any investment, or any decision impacting your finances on a long-term
basis, it is advisable to work with an expert in offshore investing to provide
you with personal guidance on the ideal ways to invest your assets.
Chase
Buchanan is an expat investment advice
specialist, and work with you to:
Understand
what you would like to achieve from your investments.
Plan
and budget for your plans, including relocations.
Advise
on the most advantageous investment routes and options.
Structure
a long-term strategy to manage your asset portfolio.
Provide
advice and recommendations about when to make changes to your investments.
Stable
offshore investments can make a significant difference to your future, your
family, and your finances.
Work
with the experts, and ensure that whichever investment options you choose, they
are designed to work for you.
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