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 If you've been thinking about investment opportunities that involve other countries such as offshore investing, you need to make sure you've got all the information you need to make the right decision. Most countries do not offer investors the same protections as those available in the United States through agencies such as the Securities and Exchange Commission.
It's also practically impossible for law enforcement agencies to investigate and prosecute cases involving offshore investing. And once you've lost your money, it is almost impossible to recover it.
Offshore Investment Opportunities
That's not to say that all offshore investing is not a good investment opportunity. After all, John Kerry sent about $25,000 offshore around 1983 as demonstrated by some documents uncovered by the Boston Globe. But John Kerry is no ordinary investor. Right or wrong, there is no doubt he made an informed decision before sending his money offshore.
Let's start by taking a look at the federal government's feelings about offshore investing, and then discuss briefly the types of offshore opportunities you might find. We'll also talk about some of the logistical problems - such as dealing with investments and agencies that are in different geographies and time zones.
Offshore Investing Offers
Maybe you've seen this type of offer in your email box - OFFSHORE INVESTMENTS ARE TAX-FREE AND CONFIDENTIAL. So you investigate and find out that the company behind the email claims to be located offshore or offers an "offshore, tax-free" investment. In fact, some of the places favored by investors for their low rates of taxes are known as offshore financial centers or even tax havens.
When you are taking this kind of offer seriously you need to get a second opinion from someone you trust and someone that is knowledgeable about the tax implications of offshore investing. This could be your attorney, a financial advisor, or even an accountant.
There are many con-artists ready to persuade investors to invest their money "off shore". The federal government gets complaints about these types of companies all the time from people that have lost their money to these scams. Don't be a victim, get the help you need.
You should also be aware that the government recognizes the opportunity that offshore banking operations present for money laundering. Many high profile money laundering cases have generally involved the use of offshore accounts or transactions to facilitate the movement of illicit funds through the banking system. The government relies on the banking system itself as the first line of defense. Federal banking regulators may review a bank's efforts to prevent or detect money laundering in their offshore private banking activities
Working with Offshore Investments
The other problems with offshore investing are obstacles such as differing time zones, currency exchange rates, and the potentially high cost of information exchange made to offshore agencies. The Internet has made it much easier to do business offshore, but also makes it easier to fall victim to a con artist.
Advantages of Offshore Investing
All that being said, if you are still interested in offshore investing, some of the advantages of this type of investment include:
- Tax Sheltering
- Diversification
- Confidentiality
- Protection of Assets
We're going to finish up this publication by talking about each of these advantages in the sections below.
Tax Sheltering
Some countries offer special tax incentives to foreign investors. The favorable tax rates in an offshore country are designed to promote a healthy investment environment that attracts outside wealth. This offers the typical investor an opportunity to shelter money from taxes.
Diversification
Offshore accounts also give investors virtually unlimited access to international markets and to all major stock exchanges. In addition, there are many opportunities in developing nations, including those that begin to privatize sectors formerly in the control of government. The bottom line here is that investors have a more diverse set of options when they invest offshore and do not limit themselves to domestic opportunities.
Confidentiality
Many countries have enacted laws establishing strict corporate and offshore banking confidentiality. There are serious consequences if this confidentiality is breached. However, offshore laws will allow disclosure in circumstances of drug trafficking, money laundering or other such illegal activity.
Asset Protection
Finally, offshore centers are popular places to restructure ownership of assets, whether through trusts, foundations, or an even an existing corporation. Individuals who are concerned about lawsuits and want to protect their wealth often elect to transfer a portion of their assets from their personal estates to an entity that holds it outside of the country.
About the Author - Offshore Investing
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