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| Index
of Sovereign Society Articles |
Six Reasons to Invest Offshore
By Mark Nestmann |
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| You won’t read much about offshore
investment in the mainstream media. And what you do read is often heavily
biased. |
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| Consider The New York Times. In
a recent front page article about an IRS crackdown on tax shelters, reporter
David Cay Johnson wrote: “These actions come after a decade in which enforcement
of the tax laws grew so lax that the tax shelter industry flourished and
tax crimes, like opening secret offshore bank accounts, openly advertised.” |
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| Doesn’t this cleverly twisted sentence
suggest that having an offshore bank account is a crime? The fact is that
there is no legal prohibition against U.S persons having offshore bank
accounts. The law does require you to report the existence of these accounts
each year if they exceed, in aggregate, US$10,000. If you don’t file, that
is a crime. |
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| Indeed, I can think of at least six important
reasons to invest outside the United States: |
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| Top performance |
| 1. Top performance. Many of the
best-performing investments in the world are not in the U.S. Take Man-AHL
Diversified PLC, for instance, an offshore fund domiciled in Ireland that’s
gained an average of +21.5% per annum since 1996—right through the worst
bear market since the 1930s! And it’s not the only top-performing offshore
investment. Indeed, every one of the 500 non-U.S. managed mutual funds
tracked by Business Week’s quarterly Offshore Funds Scorecard finished
the quarter ending June 30 with positive returns. And more than 96% of
them turned in double-digit gains. |
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| Lower portfolio volatility |
| 2. Lower portfolio volatility. When
you invest internationally, you reduce the risk to your overall portfolio.
This has been proven in studies which show that investors holding both
U.S. and international stocks have experienced lower volatility in every
five-year period since 1974. |
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| Currency diversification |
| 3. Currency diversification. For
decades, the U.S. dollar has been losing value in relation to stronger
currencies. For instance, in 1970, a U.S. dollar would purchase approximately
4.5 Swiss francs. In September 2003, the dollar purchased only 1.4 Swiss
francs. While U.S. investors can purchase foreign currencies through a
few U.S. banks, offshore banks generally offer higher yields, lower fees
and lower minimums. |
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| Protection from professional
liability and other claims |
| 4. Protection from professional
liability and other claims. U.S persons with international investments
enhance their ability to protect assets from lawsuit, civil forfeiture,
business failure, divorce, foreign exchange controls, regressive legislation
or political instability. International investments avoid the U.S. asset-tracking
network, which permits investigators to easily identify the unencumbered
assets of a potential defendant. |
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| Enhanced privacy |
| 5. Enhanced privacy. The U.S. is
one of the few nations lacking a federal statute that protects bank or
securities accounts from disclosure except under defined circumstances.
Many disclosures that are illegal in other countries, either under international
agreements such as the European Privacy Directive, or under national laws
guaranteeing financial secrecy, as in Switzerland, are commonplace in the
U.S. |
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| Safety and security |
| 6. Safety and security. Fifteen
years ago, the U.S. experienced a wave of bank failures at a rate unmatched
since the Great Depression. Some financial analysts believe that the excesses
of the late 1990s may result in another run of bank failures in the early
years of the 21st century. In contrast, the offshore banks The Sovereign
Society recommends aren’t exposed to risky investments such as third-world
debt and highly leveraged derivative investments. Further, these banks
are in politically neutral countries that do not employ interventionist
foreign policy. This makes them a much less likely target for terrorist
attacks such as those that forced the closure of U.S. financial markets
September 12-15, 2001. |
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| Where do you find reliable information
on these investments and jurisdictions? You certainly can’t rely on the
mainstream media, which, despite spending billions of dollars on supposedly
“investigative” journalism, continues to spew the nonsense I quoted above. |
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| Fortunately, as a member of The
Sovereign Society, you hold in your hands the key to identifying the specific
investments and jurisdictions that can offer you greater returns and asset
protection. Our job is to make sure that you keep receiving reliable information
on these subjects, every month. |
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