Top Ten Offshore Investment Tips

Moving abroad can be a stressful time because there is so much to organise, what’s more it takes time to acclimatise yourself to your new surroundings and really settle in to your new home, your new town and even your new nation. On top of all of this, many expatriates quickly become aware how much more complex their entire financial position is now that they have moved abroad.

For one thing your tax status changes immediately as an expatriate – this can have positive long-term benefits, but almost as many short-term complications can arise from this change in status! Expats often also realise that they can utilise the offshore world of savings and investment opportunities once they move abroad too.

However, with all of this choice and potential comes a certain amount of confusion and ambiguity, which is where we usually suggest that you might like to recruit the services of a seasoned financial adviser. But whether you do or not, here are Shelter Offshore’s top ten offshore investment tips to set you on your way. We’re not going to tell you to buy low and sell high because we figure most sane people know this already, nor will we patronise your sensibilities and advise you that if something seems too good to be true then it probably is…

We figure you know all of the investment clichés – and you know that a cliché is only a cliché because it’s true. So, if you want some fresh perspective on what makes for a good approach to investing, read on. But before you do, please bear in mind that the information contained in this article does not, nor is it intended to amount to comprehensive investment advice. Before making an investment or applying for any savings or investment vehicle, we firmly believe that you should seek professional advice!

1 - Whilst you should think long-term about any investment strategy, you should have at least an annual review of your investment and savings portfolio, probably with an adviser’s assistance. That way, you keep your eye on the long-term returns without becoming disheartened about short-term blips, but you also keep all angles covered in case a short-term blip is actually a big problem that could be disadvantageous in the long-run.

2 - Realise that sometimes you have to stop digging that investment hole and cut your losses. Of course, in an ideal world that will never happen – but we don’t live in an ideal world. So keep this in mind.

3 - Remember to think as much about selling your shares or exiting the market or fund as you think about getting in on the investment opportunity in the first place. Whilst most people will do plenty of reading and thinking before they commit to an investment strategy, few people think much before they sell their shares or drop out of an investment fund path. This is not sensible – you need to look at your potential decisions from a wider and longer-term perspective before you commit to them.

4 - Remember that when it comes to investing offshore, the same considerations apply to investing, saving or even banking onshore. Do not put all of your money into one fund, do not invest all of your assets with one company or institution, and basically, do not put all of your monetary eggs in one basket!

5 - If you don’t understand why a financial adviser recommends you invest in a certain fund or in a certain way, or you don’t quite fully understand the approach or fund that’s being recommended to you – and you ask all the questions you need to ask – consider walking away. It could just be that you can’t make sense of something because it doesn’t make sense.

6 - You may be hearing investment tips and sure fire savings bets from friends and colleagues, you might be tempted to consider these tip offs and buy in, however, you need to know that unless advice is from a trusted and professional source, how can you trust it? And if you can’t trust it, how can you then blame anyone else if you follow it!

7 - If you have a gut feeling about an investment solution or proposition and yet it seems to go against what most other investors are doing, that doesn’t necessarily mean you’re the mad one! Many of the world’s most famous investors have been mavericks compared to their peers at the time!

8 - What goes up and up and up generally goes pop and goes down again – bear that in mind and don’t get too carried away.

9 - If something does go pop and leaves your investments lingering at a low level for a long period of time, know when to stop flogging that dead horse!

10 - And finally, consider reinvesting investment generated income or dividends – by reinvesting you maximise the whole ramping up concept and can make your money grow so much faster.

Offshore Interest Rates More Attractive

In this current economic climate it’s getting increasingly hard to find a bank account or savings scheme that will return interest rates that even beat inflation – therefore, the news that offshore interest rates are more attractive should be music to your ears!

Expatriates who have any money on deposit in their new nation of residence or even in their old nation of domicile, may well find that if they choose to offshore their excess cash, their savings and their investments, that they can have access to far more attractive rates of interest and returns in general.

But how do you actually find these higher interest returning savings and investment schemes, where can you find an offshore bank account that pays interest on deposits, and how can expatriates take advantage properly of all the offshore financial facilities available to them? In this report we take a closer look at the world of offshore money for expats…

Offshore Bank Accounts and Interest Rates

All high street banks now offer their expatriate client base access to offshore bank accounts to give them the banking flexibility that they need when they move to live, work or even retire abroad. The most straightforward accounts are really akin to straightforward onshore deposit accounts and therefore are not attractive in terms of the interest they offer. However, because banks want expatriate business, many offer facilities such as the ability to directly link your offshore basic bank account to a better interest paying savings account.

Your day-to-day account can be fed from this savings account, ensuring that the majority of your cash stays in the account that pays interest out. The interest rates available tend to be slightly more attractive and positive than available onshore…however, to really gain access to better offshore interest rates you need to seek out specific savings schemes or investment alternatives.

Getting the Best Interest Rates on Your Offshore Savings

Other than the money you have on deposit for every day expenses and a sum of money you ideally have close to hand for use in the event of emergencies, all other money should be saved or invested slightly differently – i.e., with a view to getting the best returns you can to enable that money to grow healthily. Therefore, when it comes to saving as an expatriate it is really positive to learn that the offshore world offers you many interesting, attractive and exciting opportunities to diversify the way you stash your cash so that it has the best access possible to attractive interest rates.

If you’re saving for the long term towards retirement for example, and if you’re willing to lock your money in for the longer-term, there are a great many institutions in even the most well respected offshore jurisdictions such as the Isle of Man, Jersey and Guernsey that will offer you excellent rates of return on your capital, depending on how long you’re willing to lock in for.

An independent financial adviser will be able to help you find which range of products best suit your needs. Areas to be taken into consideration when seeking the very best returns possible include your attitude to risk, how long you can realistically lock in for, where you’re currently resident and whether you have a lump sum to save or you would like to drip feed an account monthly or annually perhaps.

Advisers can guide you towards either a range of products or even a specific savings scheme that best suits you only after they have spoken to you – because you are unique and so will your savings portfolio need to be if it is going to be best aligned and developed to meet your specific needs.

Getting the Best Returns on Your Offshore Investments

You can also now take your onshore pension offshore to try and attract better returns through a scheme called QROPS (qualified recognised overseas pension scheme). It is backed by the British government, and investors who are putting their money aside for retirement abroad find that along with better potential returns, they can benefit from not having to take an annuity upon retirement, of being able to will excess wealth from their pension to their heirs, of being able to retire when they want, and of escaping the watchful eye of the British tax man after five years.

This scheme is very exciting and it is one that all expats who have an onshore pension pot worth in the region of £50K plus should explore with an adviser.

Offshore Savings in Isle of Man

The Isle of Man is one of Great Britain’s offshore jurisdictions, and it has an exceptionally good reputation directly as a result of the supervision regime in place on the island governing the financial institutions that operate therein, and because of the investor protection scheme in place.

Many of the most reputable financial advisories recommend funds and savings based products based in the Isle of Man to their clients, as part of a balanced portfolio. This is because of the jurisdiction’s reputation on the one hand, and because of the wealth of offshore savings and investments available in the Isle of Man on the other.

If you’ve been recommended the jurisdiction or you’re wondering about the island’s offerings, in this report we examine why the Isle of Man is so well respected, and what kinds of offshore savings, funds and investment account solutions you can find therein.

Investor Protection Isle of Man

The Isle of Man government legislated for the establishment of a fund to which all qualifying financial institutions have to commit. Through this fund investor protection is guaranteed, and if in the event that a manager or trustee of an authorised scheme is unable to satisfy clients in respect of a civil liability incurred by them in connection with their business, affected clients will be paid compensation.

The scheme is not without its critics however, because only £48,000 of an investor’s money is really protected. 100% of their first £30,000 under investment is protected and 90% of the next £20,000 is protected – but the maximum payout is limited to £48,000. This is worth bearing in mind if you do decide that the Isle of Man is the right place for your savings and investments – you may wish to divide up your funds between institutions.

Regulation and Supervision of Financial Services Companies in the Isle of Man

As mentioned, the Isle of Man is almost universally respected in the financial services industry – this is largely because of the level of regulation and supervision in place that all financial services companies have to adhere to when they establish an operational presence on the island.

Any business wishing to commence ‘regulated activities’ – i.e., financial services related business - in or from the Isle of Man has to be licensed by the island’s Financial Supervision Commission, and the Commission will not issue a license unless it is 100% satisfied that the license applicant is “a fit and proper person to undertake the regulated activity.” The ‘fit and proper test’ is both an initial test at the time of granting a licence, and a continuing test in relation to the conduct of regulated activities. The test takes into account integrity, solvency and competence and is very strict and far-reaching. It is as a result of this that only serious companies ever establish themselves on the island, and therefore, as a result, the most reputable financial advisories trust in these companies to do the best for their clients’ funds.

Offshore Saving in Isle of Man

Many of the leading banks, fund managers and financial services companies have a presence in the Isle of Man – from Skandia to Abbey National, from Standard Bank to Coutts – and whilst many of them undertake private banking and investing business for high net worth clients, they also offer slightly more straightforward and mainstream offshore savings solutions. If you’re non-resident in Europe, straight savings solutions on the island can be particularly attractive – this is because you personally fall outside the remit of the European Savings Tax Directive. However, if you are onshore within Europe, you can still benefit from the range of savings products available within the jurisdiction.

You need to speak to your own financial adviser to determine whether the jurisdiction is appropriate for you, and if so, which institutions match your needs best, and which of their offshore savings solutions you can benefit from.

Offshore Savings Bonds Advantages

The wonderful world of offshore provides even those who are expatriate residents onshore in Europe, and therefore potentially affected by the EU savings tax directive and associated exchanges of information agreements, with a way to effectively and securely manage all of their savings and investments under one umbrella.

The umbrella in question is called an offshore savings bond, also known as an offshore portfolio bond or even a wrapper. If you’ve never heard about this product then this report will outline its many advantages in details. Or if your financial adviser has recommended you have one as part of your balanced portfolio, it will give you more insight into perhaps why one has been recommended to you.

The advantages of offshore savings bonds are many…read on to learn more, because whether you’re actively considering incorporating one into your financial plan or not, after reading this report, you may well discover how much you could benefit from such a solution.

Offshore savings or portfolio bonds are structures under which a plethora of assets, accounts, funds and even shares can be held. The structure itself consists of an insurance contract and a bank account which when coupled together creates a holding vehicle for you through which you can invest and manage your investments.

Such a structure falls outside the remit of the EU savings tax directive.

You can invest through an offshore savings bond into the likes of offshore funds, cash deposits, direct holdings, bond-based funds – and you can use the confidential and secure structure to limit your tax exposure and liability. The other main and real advantage is that such a bond or wrapper allows you to minimise the administration of all your investments to the absolute minimum. You can swap and change how and where your money is invested with a simple and easy faxed instruction. This means that you no longer have to engage in the time consuming headache of proving who you are for company due diligence every time you want to restructure how your assets are held and invested.

Something as seemingly straightforward as taking advantage of one banks preferential interest rates on an account over anothers can be an administrative headache nowadays as you have to go through the one bank’s due diligence process before you can transfer your money in – potentially resulting in you losing out on a least a month’s worth of the preferential rate. But with an offshore savings bond, no such hassle is incurred. You simply fax your instructions through – and hey presto, your money will be transferred according to your wishes!

The transparency for you, the ease of asset and account management, the security, privacy and confidentiality of the structure all combine together to make these products invaluable for expatriates who have in the region of £50,000 or more under management, invested or saved. The structures are also very cost effective to maintain once they are established, and you can easily offset the cost with the tax you save through structuring all of your investments under this one, tax efficient and legitimate umbrella.

If you want to find out more information about these products and solutions, learn how you can also benefit from discounts on fund charges, and even have initial charges reduced to zero in certain circumstances, get in touch with us.

Instant Access and High Interest on Offshore Savings Accounts

The ultimate in terms of the perfect savings account would be instant access, it would pay high interest and it would be offshore for expatriates who want to make the most of any tax savings available to them in their new nation of choice. But does such an account exist?

The fact of the matter is, high interest is a relative concept – because what’s high in interest terms today certainly wasn’t high just three or four years ago! But for expatriates the good news is that there are offshore banks and international institutions willing to pay ‘better,’ more attractive and favourable rates of interest on instant access savings accounts held offshore.

Lloyds TSB International is one bank that has just launched a new product that fits the brief – i.e., an instant access and high interest offshore savings account. But there are restrictions on the account that may not appeal to you, so the good news is that if you are prepared to hunt around and perhaps work with an adviser, you will be able to find the right balance through the right account for your money.

With job insecurity a reality for all of us unfortunately, and the inevitable stress that that brings an extra tough burden for expatriates whose status abroad may be wholly based upon their job, (for example, those whose residence is based upon a work permit perhaps), we tend to want instant access to a chunk of our hard earned savings at the moment. This gives us options if we lose our job for example. We can lay our hands on the cash to fund us through a lean period, we can get access to money to fund repatriation, or we can perhaps use the money to set up our own business.

This means that instant access savings accounts need to be exactly that – instant access – not, one penalty free withdrawal a month, or 30 days notice. But finding an instant access savings account that pays any interest at allonshore is nigh on an impossibility. So, the good news for expats is that there are real and solid alternatives offshore. As stated, Lloyds TSB International has just launched a brand new high(ish) interest offshore savings account, it’s available in pounds or euros with an introductory bonus that allows savers to earn up to a maximum 2.5% gross interest for first 12 months. The offer is not available to those with money already deposited with Lloyds however, and the minimum opening balance is either £5,000 or €5,000 – so it’s not ideal for everyone.

Barclays offers a high interest instant access savings account to international customers only as well – although they are reticent to tell you the actual rate of interest they will pay you until they have all your details! What’s more, you forfeit the 30 days’ interest on your remaining balance if you withdraw your money instantly. HSBC has various offerings for those who need instant access and interest growth on an account – and of course, all the institutions are vying for your business as a saver at the moment. This gives you a little more weight if you’re bringing new business to a bank…and even more weight can be added if you’re introduced by a financial adviser sometimes.

Some expatriate advisers and their advisories have excellent working relationships with a broad range of institutions – so much so that the latter offer special introductory bonuses to new clients brought along by the advisers. You need to make sure that any accounts that are suggested to you are exactly right for your circumstances of course, and an adviser will work with you to ensure that your money is housed as appropriately for your circumstances as possible. I.e., where a lump sum is required on instant access deposit they will find the right account for you, and where other money and assets can be put away for the longer term, they will look for the best options at present.

So, to conclude, as an expatriate and someone who can take real advantage of the wonderful world of offshore, there are instant access, interest paying savings accounts available to you – and whilst the rates of interest available aren’t exactly pretty, they are better than you can get onshore and they are improving!

Offshore is becoming future of bussines

A generation ago, when expatriate managers returned home, they unpacked their bags and stored their newly acquired global skills into a file cabinet.

After all, what use did the home office have for experience in an overseas satellite office? Now with global markets, organizations expect managers taking overseas postings to possess international experience before they head abroad. Personality becomes paramount, especially entering a country in which the manager has no first hand experience.

Personnel Decisions International surveyed managers in multiple countries to gauge the five personality traits judged to be most crucial to succeeding overseas. The traits of managers in various countries provided sharp contrasts. Western European countries such as Netherlands, Germany, and France are the most direct and unemotional, and place a lower priority on group harmony.

On the flip side, Saudi Arabia and Japan registered the highest level of concern for group harmony and sensitivity to words not expressed. Asian and European countries generally followed the pattern of their respective peers. Managers in China rated much more introverted than their counterparts elsewhere.

The purpose of the survey, according to Marc Sokol, senior vice president at Personnel Decisions International, is to highlight cultural differences to heighten awareness, not as a means to compare cultures. Such awareness builds empathy in managers as they navigate a new culture.

Given the wide range of personality traits necessary for success in overseas assignments, organizations need to provide an aggressive training regimen to teach employees the cultural dos and don'ts along with an immersive language environment Simply handing an employee a cultural "dummies" guide and a basic phrasebook for speaking with the locals won't be enough.

"The cost of failure is very high," says Sokol. "If you leave it to self- study, then you're rolling the dice."

To minimize risk, a lot of companies are choosing to send individuals overseas for shorter assignments, usually three to six months in duration. The employees do not bring their families with them and obviously do not sell their homes.

There is a four-stage process to acclimation with a foreign culture: awareness, empathy, bridging, and leveraging diversity.

While working in Britain for five years, Sokol had to learn the measure of understatement used by the British when speaking to co-workers. When a co-worker said he was "a bit frustrated," that indicated a high level of frustration and was a warning signal, not simply a conversation starter.

"It's like trying to explain what [Wizard of] Oz is," he says. "By our second year in London we were able to explain to others what life is like there without knowing everything."

Ironically enough, Sokol says that despite, and perhaps because of, the language similarity, the failure rate for expat employees in Britain is higher than in other countries where English is not the first language. A false sense of familiarity inhibits some expats from building networks quickly and overcoming initial cultural barriers.

Aside from diplomatic postings, Sokol says Royal Dutch Shell is a model organization for teaching employees how to get acclimated in a foreign country. Their managers receive deep immersion prior to placement overseas.

In which countries can I start offshore company?

Offshore jurisdictions

It is possible to incorporate offshore companies in many jurisdictions. In some onshore jurisdictions, such as the UK and New Zealand, there are particular types of companies which offer many of the advantages of typical offshore structures. The following list is not exhaustive.

Andorra

Anguilla

Aruba

Bahamas

Barbados

Belize

Bermuda

British Virgin Islands

Brunei

Cayman Islands

Cook Islands

Costa Rica

Cyprus

Delaware (see also Delaware General Corporation Law)

Dubai

Gibraltar

Grenada

Guernsey

Hong Kong

Isle of Man

Jersey

Jordan

Labuan

Lebanon

Liberia

Marshall Islands

Mauritius

Monaco

Netherlands Antilles

Nevada

New Zealand

Panama

Ras Al Khaimah

Seychelles

Singapore

Trinidad and Tobago

Turks and Caicos Islands

United Kingdom

Vanuatu