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Offshore Investment Guide

Investing offshore is one of the ways that entrepreneurs and enterprises have sought to reduce risks involved in investing all of their assets in domestic markets. This is partly because investments offshore give greater access to foreign markets and securities, while by tapping into a wealth of offshore investment options, offshore investors stand a better chance of achieving diversified portfolios and hence greater chances of ensuring sure returns on their investments.

There is a broad range of investments offshore that individuals and corporations may opt to invest in. These include cash investments offshore, investments in equities, real estate, options, forex, bonds and offshore collective investment schemes. Understanding the risks involved in investing offshore in any type of security should be priority for the offshore investor, since this may help n seeking reliable offshore investment strategies and expert management assistance that can be tailored to meet specific investment considerations.

Some of the factors to consider before venturing into any investment offshore include politics, taxation, legal and regulatory environments, market volatility, investor perception, social stability, local infrastructure, availability of professional services and time zone. This is based on the fact that any adverse event or occurrence that affects any of these factors is more than like to negatively impact any one or more offshore investment securities.

Cash investments offshore are the most common types of investments made. Cash investments are made by almost everyone without anyone regarding or considering the act of depositing money into an account, savings plan or insurance policy as a cash investment. These deposits are investments because over time they are expected to accumulate interest at variable or fixed rates and therefore increase in value. Cash investments offshore would involve deposits in offshore bank accounts, just the same as deposits made locally in a savings account, fixed deposit, a building society account, a retirement account or other savings plan that would enable you to obtain a greater sum of money that what was initially invested, no matter how small the return. Fishing around to find out about the rates at other financial institutions would help you to decide where to make your cash investments in order to optimize your returns while ensuring that your investment is safe.

Cash investments, whether as an investment offshore or locally are generally considered safe given that the level of risk is minimal, the investment can usually be easily accessed despite restrictions that may be put against the investment if made for a fixed term and the returns are sure, as the rates of interest are clearly defined. Before withdrawing or spending your cash investment offshore or onshore, the rate of inflation must be carefully considered given that inflation will determine your purchasing power. Inflation rates higher than the interest rates earned on your cash investment would reduce the actual amount earned in interest as well as the value of your dollar, if you were to spend more money for fewer goods.

Equities are another offshore investment option. These include shares, securities and stocks that are purchased in companies or invested in a fund known as an equity fund. As an investment offshore or locally, an equity fund is managed by a fund manager and enables you to pool your money with other investors for the purpose of purchasing shares in various corporations and organisations. If the investments offshore or locally are successful and the companies generate significant profits, the dividend paid out to the fund to the distributed among the individual investors would be greater, than if profits were minimal.

Safely pooling offshore investment funds increases the chances of investing offshore in a larger number of corporations and thus a greater chance of generating reasonable amounts in returns. Because of what a share in a company represents, purchasing shares represents part-ownership regardless of not being involved in the company’s affairs or management, an annual income is guaranteed as long as the company remains profitable, therefore making this type of offshore investment a long-term, high-returns investment. On the contrary, if the companies in which this offshore investment was made do not perform as anticipated generating low profits, dividends could become variable and insecure, share values could be decreased or absolutely no returns could be obtained if one or more companies fail. It is therefore important to ensure that fund managers are skilled and make sound offshore investment decisions.

A smart offshore investment option is property. Once you have followed the necessary alien land holding regulations if applicable in the country where you are making this offshore investment, acquiring property is always a secure investment. Not only does property increase in value, but it is evidence of a physical investment for life if not sold. An offshore investment in property can be developed for commercial, agricultural or personal use and thereby be further increased in value.

Some of the usual risks of an offshore investment in property include slow turnover if the intention was to buy and sell as real estate and the rate of appreciation is lower than expected resulting in having to wait for a number of years for an acceptable rate of appreciation and in turn a longer wait before selling; a downturn could reduce buyer interest and numbers in desirable tenants and decrease in property value due to falling exchange rates. If the offshore investor is unable to earn a regular income from his offshore investment in property maintenance costs and legal fees for the initial outlay could create financial burden.

Bonds are a common offshore investment option and are invariably referred to a usually referred to as fixed interest securities. Like with regular trading, as an offshore investment bonds are purchased for a fixed term and fixed interest rate. Treasury bonds, gilts and corporate bonds are three main types of bonds issued by governments and corporations respectively. Bonds are normally issued in order to raise funds publicly and thus are known as debt securities for which regular payments are to be made at fixed interest. Whether purchased locally or as an offshore investment, bonds can be trade on the stock market. As an offshore investment, bonds can be a source of regular income, interest rates may be much higher than those received on a cash investment, bondholders are given priority over shareholders in the event of a company’s dissolution, and loss can be avoided by buying or selling at the opportune time.

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