To tap into securities markets globally various strategies are constantly being devised by investors. However, convenience plays a major role in trying to manage domestic affairs along with those overseas, as it is not possible to be at two or three places at the same time and assistance is necessary be able to do business effectively. Trustworthiness and reliability are therefore crucial when hiring or delegating an investment firm, a bank, insurance company or brokerage house to take care of your personal money matters.
Investors who turn to offshore investment firms and offshore banks to manage their offshore investments are able to avail themselves of different types of offshore investment accounts and trading facilities. The first option of an offshore investor is an offshore bank account, but opening an offshore investment account better suit offshore investment and trading transactions.
An offshore investment account may take the form of an offshore trading account or an offshore brokerage account based in whether the account is expressly designated as an offshore trading account with an offshore bank, offshore insurance company or investment firm, or whether the account is held as an offshore brokerage firm. With this in mind, an offshore investment account can thus be given the general definition of an offshore account that is used for securities transactions in certificates of deposits, stocks, bonds mutual funds. In addition to offshore trading and brokerage accounts, offshore custodial accounts and individual retirement accounts (IRAs) can be used as offshore investment accounts.
An offshore investment account is managed by an investment dealer and offers the benefit of operating as a multi-currency account to which cash deposits are made in different foreign currencies. As with regular offshore bank accounts, the holders of offshore investment accounts can issue bank drafts and perform wire transfers in order to access their funds and transact as may be needed, in compliance with the regulations established by the offshore firm for the use and management of the assets within an offshore investment account by owners since the assets of an offshore investment account are not intended for daily bank transactions. Certain offshore investment firms provide access to multicurrency market funds and may pay interest on the cash balance of offshore investment accounts. This said, instead of opening a regular offshore bank account, an offshore investment account may provide an equal number or more benefits, a higher degree of flexibility in terms of the transactions that can be performed and more effectiveness by facilitating access to offshore investment opportunities. Other advantages associated with offshore investment accounts held at offshore banks or sophisticated investment firms include checking accounts, online banking and reduce bill payment facilities and the possibility of borrowing against marginable securities.
If held as an offshore brokerage account, an offshore investment may be structured as a margin account through which securities can be bought from borrowed funds from the offshore brokers; an offshore cash-management account through which the holder of the account deposits funds to facilitate trading; or as a discretionary account which enables the offshore broker to trade securities on the account holder’s behalf at discretion. For each of these types of offshore investment accounts, rules and guidelines may vary from one offshore investment firm to another based on the types and range of services offered; although offshore investment and trading procedures apply the same principals as those used for onshore markets.
An offshore investment account may be fee or commission based, whereby the account manager charges a fixed percentage of the assets held in the account or according to the amount of assets bought by or trades made on behalf of the owner of the account/investor. When choosing an offshore bank, investment or brokerage firm it is important to know the costs involved. Fees and account requirements vary and may include a set up fee, fee per trade in relation to no transaction fee funds, minimum account balance, fee per trade in relation to transaction fee funds and maintenance fees.
