Benefits & Drawbacks of Offshore Investing

Oct 15th, 2013 | By | Category: Senior Finances

Seniors Consider Offshore Investments

Imagine this scenario — you’ve spent time working your way through the United States investment market. You’ve established solid investments full of ROI, but over time you’re looking to shake things up. Avoid risky domestic investment moves, and participate in offshore investing that financially delivers exactly what you need. If you’re unfamiliar with offshore investing, examine the benefits and drawbacks before you charge ahead and open your bank account.

Offshore Investing Benefits

You’ll have a variety of investment vehicles you’ll use for overseas investments. For example, the U.S. Securities and Exchange Commission reports that American Depositary Receipts, U.S. traded foreign stocks, direct investments, and other options are available. You aren’t stuck with a single investment method. If one way doesn’t work out for you, another method is available to test.

You’ll also stay on top of developing countries by getting involved in the overseas market. Learn about an up-and-coming market segment that’s booming in a particular country and monetarily capitalize off the deal.

You aren’t left without company verification options with offshore investments either. It’s certainly harder to get your hands on information with overseas companies, but many larger entities in which you may consider investing do file reports with the SEC. It doesn’t even cost you any money to look up this information.

If you receive investment money in overseas currency, you may want to consider opening an offshore bank account instead of constantly worrying about the exchange rate. Forbes reports that opening an offshore bank account is not significantly more difficult than opening a normal bank account. It just tends to require more paperwork before you’re good to go.

Offshore Investing Drawbacks

Offshore investing sounds exciting, especially if you enjoy watching developing and emerging markets, but there is significant risk as well. Many political and world news markets are highly volatile, which is an offshore investment risk. Investing in a country on the brink of a civil war might sound like an exciting time. If conflict actually occurs, you’re going to watch your investments plummet in value. It’s essential to stay on top of the world news and your country’s top news sources so you have an idea of what’s happening on a day-to-day basis. It could save you a lot of money in the long run.

Caterer Goodman reports that another disadvantage is how offshore investments complicate your taxes. Hire an expert accountant to determine potential tax liability from offshore investments. Talk to your accountant about the high volume investments for overseas accounts and the security of how you’re moving money.

Russell Barnhardt: Russell is a venture capitalist and investor.

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