| Advantages of an Offshore Company |
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Those who think about capital off shoring should take into consideration that risk is quite a relative term. For example, when you are thinking about jumping out of a 10 story building it may sound really risky. But if that building is set on fire, then taking the risk becomes the salvation.
But before we go into discussing how to minimize the risks on your assets and money, let’s think about the reasons why many Americans are moving their capital to offshore banks and why their number has increased a lot in the last few years.
Right now, there are two sides of this story. Some say that the assets should be kept at home, as it is the safest way to proceed. But there are also some other people that say US is slowly becoming a police state and that the law is devious. Sure, it is also true that motherland offers a lot of financial benefits and it is the biggest economy in the world and this means stability. But on the other hand, the same freedom can lead us to failure, burden us. Right now, the mass media is bias about the politics. They continuously criticize the economical policy and the medical system. But, for example, the same medical system has many more options that any other medical system in the whole world. There are also voices that say the cancer is spreading in the political environment and that it is too late to do anything. Money laundering is one of these felonies created after the “war of drugs”. They created the law to get rid of the criminals and drug dealers but it rapidly turned into a trap for normal people. Also, there was another repercussion: the property in US is guaranteed by the Fourth Amendment to the Constitution but, without proof, there are government agencies that can accuse you of many things and many federal agencies are connected to the crime mob. There are many legendary abuses of the asset forfeiture law and people fear that. There are federal agencies that assume the revenues from forfeitures and this creates an opportunity to increase the budget limits. Also, according to the Financial Freedom Report, in US there are more citizens in prison/1000 than in any other developed country. And also, many of them are not in prison because they did thefts or frauds and they are there because they do not fit the accepted norms. This means that statistically speaking it is quite impossible for a citizen to be completely innocent because there are so many laws and restrictions that you are bound to break one of them. As an example, did you ever come across the law that says you must not carry any prescription drugs in another container besides the one that the pharmacy gave you? Did you break it? This means that many people that are successful can fear their assets and they are not safe. For example, the top 10% of the income earners pay half of those incomes as a tax on the individual income. In this way, they can not keep what they have worked for. The “favor the rich” policies do not exist and the successful people have to give away what they produced. These are just a few reasons why right now US is not a hospitable financial country and that the offshore banking system seems very appealing. Also, there are many people that are afraid the government will one day prohibit them from taking funds offshore and keeping them in the country. This means that if you will ever what to leave US, your money will be safe somewhere else and you will have some peace of mind in that. Plus, the less developed countries welcome the affluent refuges and treat them well especially if they are wealth ones. Besides all this, there are other great benefits for having assets offshore. The Access to Foreign Investments: Even if the US has many investment options, there is no harm in trying to invest somewhere else. You can invest outside US in some great businesses. There are many top mutual fund managers that have placed their money in funds outside the US or they even manage them. Financial Investment Diversification: You may be familiar with the phrase "Put all your eggs in one basket, and then watch that basket closely." This means that you must not put your eggs in a single basket because if the basket is ruined, you will loose everything. Work on diversity and grow your portfolio. Also, the diverse portfolio enables you to lower all the risks. For example, you can avoid the risk of not being able to cash in at full value any time you want. You can diminish that risk by getting investments in low yield and liquid forms of money market funds. You can also create savings accounts, short-term deposits and also short-term government securities. But you should also know that all these will loose their purchasing power because of the inflation and you must take that into consideration. Plus, the income you will get from them will be heavily taxed. The best protection against inflation effects are the real estate businesses, the common stocks, and also the natural resource investments. They also carry out a risk and that is the deflationary economy. Besides not being able to cash in whenever you want, there are many other risks which you must asses. Growing a diverse portfolio means investing in many areas and industries that belong to multiple countries and also to multiple currencies. You will also protect your assets by not keeping them under a single political jurisdiction. Global Trade Opportunities: Have you ever heard of the statement "The world is getting smaller"? You may think it is a cliché but it is a true phrase. For example, if you are planning on doing business outside USA, then you will need to have assets outside the country. Going offshore is a possibility. Safer Banks & Insurance Companies: Right now, if you are in the US, the "free" government "insurance" which applies on savings and also on checking accounts is not really an insurance. A real insurance is a fund of assets based on the premises that something will go wrong. If one of the 1,000 policyholders will suffer a loss of $100,000, the others will pay $100 to cover their share of that loss. If you have a very high risk, then the insurance will not cover you. The so called government "insurance" has no study on what average losses mean. If something is bound to happen, it will be paid from the general funds of government and this is made of tax revenues. This means that all the costs are deeply buried in the total tax bill. Also, the taxpayers have no way of knowing how much the actual insurance is costing them. Rational analysis of costs or benefits is not on the base of government insurance. This can only mean that the banks get forced to become more aggressive and to figure out ways in which they will deal if they are without insurance. Both S & L and banks are now competing one with another to offer high returns on citizens’ savings. And because they are covered by the government with that insurance, they do not take care of the money and do not consider the risks. They also get involved in risky kinds of investing like buying long term bonds that get derived from the short-term deposits. There were cases, some years ago, where the S & L managers themselves were putting their deposits on the table and invested in high risk "junk bonds" and also in speculative derivative and option investments. On the other hands, the non US leading international banks and insurance companies do not jump ahead that much and are more conservative because they do not live with the illusion that the government will rescue them if something happens to their assets. It is a known fact that the US banking system is much more leveraged than other foreign banking systems and this is because of the federal insurance program. It is a great risk that the US banks’ efforts of getting deposits with high interest rates are based on speculative investments that could make the system collapse. This means that if you are a conservative investor it is a safe way to get some of your funds out of the US banking system. |