Investing for expatriates is a bit trickier than for virtually every other category of working people. For instance, expatriates have a higher tendency to have different investments in multiple jurisdictions than non-expatriates.
Consequently, they have unique asset management needs, evident, for example, in their use of global custodians for the management of their assets. Global custodian would be wealth managing companies working on your behalf.
While virtually anyone can explore offshore investments, it has always appeared that expatriates are the best positioned to take advantage of them. If you are an expatriate, therefore, here is a guide to investing in offshore assets.
Unsafe Retirement Systems
As appealing as investing in offshore assets is to many expatriates and many others seeking the perfect climate for their retirement nest egg, it is not without its risks. In fact, it is a delicate territory that should be approached with caution.
Hence, the following are important considerations to make to prevent unsafe offshore retirement investments.
How well-regulated is the offshore custodian?
The offshore investment world is filled with fraud. Ponzi schemes will readily come to mind. There are many stories of anguish, pain, and loss. Your story should not be the same. However, to ensure that, it starts with the confirmation of the regulatory status of the custodian you want to use.
What is the regulatory framework in the jurisdiction of the custodian? How different is it from that of your home country? How strong is it? Research the custodian’s track-record and decide for yourself if you are okay with it.
Protective scheme on the bank keeping your savings ?
Many jurisdictions have protective schemes for investments. For example, in the United States, there is the Securities Investors Protection Corporation (SIPC) insurance scheme. Therefore, before you use any offshore custodian, broker or bank you will leave your savings. First check for the protective system its jurisdiction offers. Which asset is protected? Up to what amount?
If the provisions of the custodian itself and its jurisdiction of operation do not offer reasonable protection for your investments, it might be better to stay away.
How will the wealth manager operate on your account?
How the custodian will operate and managing your account should be a matter of utmost concern to you. In this regard, transparency and accessibility should be the considerations to make. Will the custodian be regularly publishing its fee structure? How will you be accessing your account?
Best wealth growth services usually provide an easily accessible quality platform, allows the easy monitoring of portfolio and trades, and regularly releases the account statements of its clients.
Therefore, before you invest in any offshore investment system, make sure that you have checked off those points.
How to Use Offshore Jurisdictions to Settle Bank Accounts
Offshore jurisdictions have a striking benefit: you can use them to settle your banking. This type of bank account will offer extra layers of protection for your funds and will enable you to grow your wealth. Those are some of the reasons you should open one.
An offshore bank account will protect you in the event your domestic bank goes insolvent. Also, in situations of high political risks, it will help to give you privacy and peace of mind. Additionally, there are currency risk protection and higher interest rate advantages.
Hence, an offshore account in a jurisdiction with a robust regulatory framework will efficiently protect your assets, reduce economic and political risks, and give you higher interests on your savings than you would get at home.
Finally, following from their media and regulatory notoriety, you should not have concerns about your offshore bank account. All you need do is comply with the necessary reporting requirements and adequately do your tax filings.
Using Permanent Portfolio for Growth
Even though many investors believe safety and growth are mutually exclusive, they do not have to be so. You can achieve safety, while also recording a long-term growth under all economic conditions on your portfolio. That is possible via a permanent portfolio.
So, how can you construct a permanent portfolio? You can do so by following the formula:
- Growth stocks
- Precious metals
- Government bonds
- Treasury bills, 25% each
Experience has shown that, indeed, permanent portfolios do tend to have smoother rides during harsh economic cycles than most of their counterparts.
Benefitting from Low-cost Investments (e.g., ETF)
Moreover, you can use your offshore bank account to benefit from low-cost investments such as Exchange Traded Funds (ETFs). Exchange Trades Funds (ETFs) trade like stocks and enable investors, whether small or big, to diversify their market exposure.
Hence, ETFs allow investors to access many asset classes and sectors at low costs. They save investors the time and efforts for the analysis and management of their investments. Besides ETFs, you might also consider investing directly in offshore stocks.
Importantly, when using offshore investing, you should be wary of fees, commissions, and other expenses. As useful and practical as offshore investing is, the tremendous costs they can carry can surprisingly make them unattractive.
The Low Tax Advantage of Offshore Banking
Of notable importance is the tax benefit of offshore bank accounts. And it is because of this that they have become so notorious. Investors gravitate towards countries with tax incentives, the so-called tax havens. These countries do this to attract outside wealth. Therefore, operating bank accounts and investing in those countries enjoy distinctive tax advantages. You too can start benefiting from them by opening an account in any of those places.
Set up your plan as an expat living in Vietnam
Offshore banking and investing are two invaluable ways to protect your money, grow your wealth and take advantage of many low-cost investment opportunities that may not be available in your home country. The effectiveness of offshore banking and investing cannot be denied. And despite
the notoriety they have earned from regulatory authorities and the media, the vast majority of their activities are legal.
As an expatriate, you can get to benefit from those advantages, too. For example, you can use offshore investing in getting tax benefits. However, as far as offshore banking and investing are concerned, what is important is that you choose only an offshore investing and banking outfit that operates within the regulatory framework of its jurisdiction of operation.