Legitimate Reasons to Consider an Offshore Bank Account
Many people would associate offshore banking with practices such as tax avoidance, tax evasion or hiding money from your spouse. Actually though, the reasons why most people decide to set up offshore bank accounts are much less sinister than that. Here are a few legitimate reasons why someone might consider setting up an offshore bank account and perhaps why you might think about setting up an offshore account yourself.
If you’re interested in setting up an offshore bank account then I would guess that it is quite likely that you would also be interested in investing too. One of the primary principles of investing is diversification. Diversification allows you to spread your investment risk across a range of assets or markets so that if one were to fall flat, it would not bring your whole portfolio down with it. At least not too far down anyway.
Investing some of your cash into an offshore savings account could allow you to spread your exposure across separate banking systems, so that if one were to fall down – in the same way the banking system of Iceland collapsed not all that long ago – you will not be completely exposed to one geographical banking system.
So you have spent a lifetime building up a nice little nest egg and you are now sick and tired of the measly returns being offered by the savings accounts in your current locality. The pursuit of higher returns from savings is another perfectly legitimate reason why some people might consider opening an offshore savings account. Of course when investing offshore we should keep the example of Iceland in mind, it doesn’t always go smoothly.
Safety of the Banking System
The recent credit crunch called into question the safety of many different banking systems across the globe, and in some ways it continues to do so. We have already mentioned the possible risks of offshore savings accounts when it comes to seeking higher returns in foreign accounts, but saving offshore also offers the prospect of less risk, how so? Well, saving offshore also offers you the opportunity to store money within banking systems which are considered to be some of the safest and most stable banking systems in the world. The German bank KFW for example has consistently been named as one of the safest banks in the world in which to invest your money.
As we can see then, having an offshore bank account doesn’t necessarily involve parking your money on a small island somewhere with no trace of the account. Often times, quite the opposite is true. So how do you know where exactly to place your cash? Well this is the difficult part. There is plenty of information available online to help you find answers to the most common questions about offshore savings accounts but if you are still unsure then you can always consider seeking expert advice on the matter.
Whatever your preferred method, I hope that this post has shown that there are many legitimate reasons why a person might consider investing offshore and that it is not all about tax avoidance and the hiding of money.
Do you have an offshore savings account and would you recommend one?