Despite the fact that most people have no idea about the benefits of investing offshore, almost all of them have heard horror stories and are swept by a constant stream of negativity regarding this topic. There are many good reasons for that, and what I shall do now is discuss a few myths regarding offshore investments. One thing to understand is, most of what you have probably heard about investing offshore is just plain false.
So let’s tackle this issue with an open mind and see what is really going on.
MYTH: People who invest offshore are looking to evade taxes.
FACT: The vast majority of individuals who invest offshore include expatriates who already live in high-tax areas such as the European Union, North America, and Japan, and pay their taxes responsibly. When they invest offshore, they are seeking higher returns, without any intention of evading taxes. Some people who invest offshore already live in low-tax areas, or are non-resident for work-related reasons, and are just looking to earn high returns. A desire to improve one’s life through investing responsibly and successfully is the main reason people invest offshore, and not because they want to evade taxes.
MYTH: Only criminals, drug lords, and terrorists put their money offshore.
FACT: Again, the vast majority of people investing offshore are people like you and I. They only wish for higher returns, more privacy, and a reasonable alternative to the high taxation that exists in their country of residence, by investing in a legal and responsible manner. The real reason such devastating myths are spread is because the banks and tax authorities want to keep your money in their institutions, for their own financial gain. Banks want you to keep your money domestically, since it helps eliminate competition. The tax authorities want you to keep your money in the country, since they make money off the interest you earn every year.
MYTH: If I already have money invested in my country of residence, there’s no need to go offshore.
FACT: Practicing financial diversity is crucial. Having access to top offshore funds, superb asset protection, potentially high returns, tax efficiency, and flexibility are only a few of the reasons why it makes sense to invest off- shore.
MYTH: Offshore banks and financial companies cannot be trusted.
FACT: Most of the largest banks and financial institutions in the world are located offshore, and many have received the highest ratings from independent rating agencies such as Standard & Poor’s and Moody’s.
MYTH: Americans can never enjoy the benefits of investing offshore.
FACT: While it is true that Americans are taxed on worldwide income, and that major low-tax districts are being pressured into sharing information with the U.S. authorities, the fact remains that investing offshore is still a hugely beneficial option for Americans.
Depending on where you live, as an American, you too can have access to tax-efficient funds offshore. The high returns, flexibility, diversification of investment options, and high privacy make investing offshore very appealing even to Americans.
MYTH: Investing offshore is only for the extremely wealthy. I have heard that I would need hundreds of thousands of dollars just to begin investing in an offshore financial center.
FACT: While it is true that many offshore investments do require high initial investments, the opposite is also true. There are investments out there that let you start saving for as little as $150 per month. This is an amount that anyone can comfortably put away, so it makes no sense to put off saving!
There are many other myths out there, perpetuated by the media and even family and friends, but the main point to consider is this: People just like you are investing offshore and reaping the benefits of their decision. Why shouldn’t you also?
Excerpted and adapted from the ebook "An Expat's Guide to Investing Offshore" by Arin Vahanian.