Investing is one of the most effective ways to build wealth and enjoy a secure financial future. You don’t have to limit your investment activity to opportunities found at home. It’s also possible to include offshore investments as part of the planning.
Knowing more about what sort of offshore investment options are available will make it easier to identify investments that will help you reach your goals. Here are a few examples to consider.
You can indeed set up a savings account at home with no problem. You may not realize that an offshore savings account will likely offer a more competitive interest rate. There may also be differences in how the interest accrues to generate more returns from those account balances.
Locking in the best possible interest rate depends on the amount of money you can deposit and maintain in the account. It isn’t necessary at many offshore banks to deposit a large amount first. If necessary, feel free to make regular deposits and eventually reach a threshold where you begin to earn the best interest rate. Consider this account your basis for investing since savings accounts are still one of the most risk-free forms of investing available.
Time Deposit Accounts
This type of offshore account makes it possible to enjoy a higher interest rate than is typically offered with standard savings accounts. You agree to leave the funds in the account for a specified period in return for that interest rate. Once the period is complete, you have several options. These include:
- Rolling the entire balance over for another term
- Leaving the principal in the account for another term
- Withdrawing the entire balance
Most countries allow you to establish more than a one-time deposit account, making it easy to generate interest income with little risk while saving for some specific purpose. For example, one account could be for building reserves to use after you retire. The other could be a safe place to tuck away funds you intend to bequeath to a loved one.
Many nations welcome investors who are looking for offshore real estate deals. It’s possible to arrange financing with banks in those countries, often at competitive rates compared with domestic mortgages. You may be surprised at what you can purchase for the amount of money you spend.
Some international laws make it inviting to invest in offshore commercial real estate that can be leased to local business owners. There’s also the possibility of investing in residential real estate that you can rent out for a time and then use as your home after retirement.
In either of the above scenarios, the rental income could cover the purchase cost and the general upkeep. Eventually, you will enjoy steady returns above and beyond those expenses.
Sometimes called international funds, offshore mutual funds function much like their domestic counterparts. With this investment, you combine your resources with those provided by other investors, allowing the pool of securities involved to be managed by a professional. The group then shares the rewards. It can be a great way to expand the range of your investment activity while keeping the risk more in line with your comfort level.
One factor that makes this approach different is the security types managed under the fund. Rather than being domestic securities and assets, they may involve other securities found around the world. Access to such a range of types helps broaden the base of the kind of investments you can make while also helping to keep the risk level somewhat low.
Offshore bonds allow the opportunity to participate in funding a project with the promise of a fixed return. That return is often in the form of a specific amount of interest you will make once the bond matures. This is one of the safest types of investments you can make in terms of volatility.
Keep in mind that there is a price to pay for choosing this investment. Given the relatively little risk, the returns won’t be as spectacular as those investments with greater volatility. This type of investing can provide reasonable returns for an investor who prefers to be more conservative financially.
Foreign exchange (Forex) trading involves trading world currencies on the market. It is an investment approach that involves close monitoring of the shifting exchange rate between specific currencies. This makes it possible to know when to exchange one currency for a different one, generate increases for a time, and then exchange it for another currency as the market shifts.
There may be several benefits to managing this type of investment activity using an offshore account rather than a domestic one. For example, the taxes owed may be lower. You may also find the fees associated with ordering the trades are lower. This allows you to retain more of the returns from your activity.
Stock issues that are based offshore are also something to consider. While many stocks are traded on domestic exchanges, others can only be secured and traded using exchanges in international locations. Consider offshore stock portfolios to tap into areas you cannot reach with a domestic portfolio.
Why consider this approach? Along with investing in options not available at home, you may find that investment costs are lower. You may also come across options with higher rates of return but lower risk levels. Make sure you understand the laws that govern the purchase and sale of stocks in the country where you base your activity, and it will be easier to make the best choices.
It’s possible to invest in various mining operations or participate in other activities that involve purchasing and selling precious metals. Gold and silver are only two options that can be part of an offshore portfolio. Copper, palladium, and platinum are also popular among investors worldwide.
Like most investments, those in precious metals will fluctuate in value. One of the great things about this investment is that precious metals tend to hold their value when other assets go through slumps. Devoting part of your portfolio to precious metals helps maintain stability even if other assets are underperforming for a time.
Weighing Risk Versus Return
Determining which offshore investments are suitable for you means evaluating the risk and potential returns related to your overall financial goals. Once you have a clear idea of what you want to accomplish, it will be easy to utilize your offshore financial accounts to secure the investments that are likely to help you reach your goals.
You’ll find that institutions like Caye International Bank have the personnel and the experience to help you explore those options. Contact our team today if you would like to discuss the possibilities for your offshore investment strategy and establishing offshore banking accounts.
This article originally appeared here on Finextra.