Tips on Offshore Investment
Offshore investment is often attractive because of the tax cut benefit, higher returns and freer regulations in such well-known tax havens like Bahamas and Bermuda. Are you thinking of diversifying your investment portfolio or of lowering the risk on your investment inshore?
Are you thinking of investing abroad? Read our guide to offshore investing.
Many rich and wealthy choose to invest offshore in order to benefit from the lower taxes, more lenient regulations and other financial incentives available in so called “tax havens.” These locations are usually small government without so much assets and resources such that the best way they can improve their economy is by attracting foreign investors (with their lower taxes). Often, offshore investment is linked to shady deals and tax evasion. However, there are also a lot of offshore investment opportunities that are legitimate. If you are thinking of investing abroad to cut on taxes, here is a guide to help you make an informed decision. It is because while the attraction of a tax shield may be tempting, the risk and cost of doing so may outweigh the benefits.
Know your main purpose in wanting to invest abroad. Is it mainly for tax purposes? Is it to diversify your investment in order to protect some of your assets from economic fluctuations inshore? Or is it so that you can freely make business decisions with lesser restrictions from the government?
Determine what investment portfolio you want to invest in. Different investments – accounts, bonds, shares and trusts -- carry different risks. Make sure that you understand the risk attached to your chosen investment scheme and are willing to face the risk inherent to it.
Keep yourself updated about new rules regarding offshore investment in your home country. Laws change frequently and because of many tax evasion cases involving offshore investment, the government is implementing stricter rules year by year. If you don’t get yourself updated on revisions, changes and additions to the law, you might be transgressing some without your knowing. This could result to costly penalties.
While offshore accounts are usually attractive because of their high returns, there are also risks to consider. Don’t jump immediately on the best deal you think you got. Weigh out the risks versus the return on the investment. Know whether your investment is adequately protected under the regime of the government it is under. For instance, would you be able to recover your investment or part of it in case the financial vehicle that manages your fund collapses?
Be sure that you are doing business with a legal entity. There are many investment scams or that sound very legitimate when in fact they are ponzi schemes. To be sure, hire the expertise of sound and well-known financial advisors, attorneys or accountants.
On the lookout for offshore investment opportunities? You don’t have to be a big-time investor to start thinking about offshore investment.
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