Balancing Your Offshore Financial Assets With Your Domestic Assets

Life is all about balance. Everyone needs time with loved ones and some time alone. Business must be balanced with pleasure. Time devoted to work and play should be equitably divided. Without balance, life can spin out of control, leaving you wondering what went wrong.

This basic aspect of life also applies to the way an investor chooses to acquire and maintain different offshore financial holdings and assets that are a little closer to home. Concentrating too much on either side of the pond can ultimately create difficulties that are not worth the time or effort. In some cases, focusing too much on one or the other can also mean losing out on a deal that would have generated significant returns.

Balance and Equal Aren’t the Same

One of the misconceptions about applying the concept of balance to offshore financial assets and their domestic counterparts is that they have to be more or less evenly divided. That is not the case at all. The idea is to assemble a collection of assets that work in tandem. Each asset brings some sort of benefit to the investor’s overall financial scheme. From time to time, you may find yourself with more domestic assets and fewer international holdings. At other times, your portfolio may contain considerably more offshore assets and fewer domestic holdings.

Balance simply means that the current combination of assets is accomplishing what you have in mind. Between the benefits, returns and volatility that are inherent with those assets, you are steadily moving in a direction that is favorable. Your offshore financial holdings are performing at the levels you envisioned and providing the increase in wealth that you hoped to achieve. At the same time, those domestic assets are also doing well overall and allowing you to realize the level of returns desired.

How do I Determine Balance?

Balance is determined by what you think about your current assets. Take a look at the stocks, bonds and real estate you currently hold. Consider the balance in your offshore account along with the balance in your domestic account. Think about the mortgages that you have with banks in Belize and how well you are doing with retiring those debts with some of the returns on your investments. Are you happy with the way things are going? If so, you have achieved balance.

What Can Upset the Balance?

With both your domestic and offshore financial holdings, there is one aspect that can upset the balance. That aspect is an asset that is not performing up to expectations. When this is the case, it is your responsibility to determine if that asset should be sold or if you want to keep it in hopes that the returns will increase.

Just about any type of financial holdings will have ups and downs. As the market shifts, the value of some assets are affected only slightly. Others are impacted to a greater degree. When the market movement causes a temporary decrease in value for some of those assets, your returns will decrease.

Restoring the Balance

The question is what must be done to restore the balance. In some cases, you do nothing. Should you determine that the current direction of the market is short term and the asset in question will begin to increase in value in a few weeks or maybe a couple of months, it may be in your best interests to ride out the present circumstances.

The key is projecting the performance level of the asset next month, six months down the road and possibly even a year from today. When those projections indicate that the asset will settle at a lower price and not recover within an appreciable period of time, replacing the asset makes a lot of sense. Doing so paves the way for something that ultimately provides returns that are more in line with your financial planning.

Who Decides that Your Portfolio is Balanced?

In the end, no outside individual or expert can determine if the domestic and offshore financial assets in your portfolio are balanced properly. That is a determination that you must make. Since balance is determined by how well the current holdings are helping you generate the returns desired and are also helping you reach toward other financial goals, only you can decide if a given asset is performing at an acceptable level.

Feel free to obtain advice from financial advisers. Their thoughts and opinions may trigger a line of thought that you had not previously considered. At the same time, never forget that you make the final decision. As long as you are happy with the current mix of assets, then your portfolio is balanced.

About this author

Caye International Bank Limited (CIBL) was granted an Unrestricted "A" Class International Banking License on September 29th, 2003 by the Central Bank of Belize and is regulated by the Central Bank of Belize which set the standards for liquidity and capital adequacy.