Investing offshore

Offshore investing is making investments in a country other than the investor’s country of residence, targeting benefits offered to investors by firms and governments across the globe. The challenge for an investor is to identify offshore investments that minimize risk exposure, realize high returns and reduce tax obligations in a legal manner.

In South Africa offshore investments above the 1 million rand discretionary allowance mark have to be legally recorded or he/she may face stiff fines or possible jail time from concealing these investments from the South African taxing authority SARS.

How does Offshore Investing Work?

With the help of certified professional financial entities like bankers, portfolio managers and finance brokers one can invest offshore. There is a series of different offshore investment options, including bond, equity and money market assets.

Many high net worth individuals set up offshore accounts. Typically this is done in order to save on taxes. There are quite a few countries that are famous tax havens, such as the Bahamas, the Cayman Islands, Switzerland, the Isle of Man and Bermuda. These tax havens have become popular offshore investment destinations.

It I important to note that there may be stringent and costly requirements for opening an offshore account. This may include a minimum amount to be maintained in the account, fees and owning property in the destination country.

Benefits of Offshore Investing

There are numerous benefits to investing offshore, these benefits include:
•    The diversification of one’s investment portfolio.
•    The privatization of several sectors in developing countries can be worthwhile offshore investment opportunities.
•    Offshore investing may help in reducing taxes.
•    Some of the offshore investment destinations guarantee confidentiality and in doing so protect their wealth and property from domestic issues and seizures.

Downsides of Offshore Investing

The downside of offshore investing is:
•    Many tax agencies are tightening tax laws in their respective nations.
•    Opening an offshore account can be expensive and may include high legal fees, registration fee and minimum balance to be maintained.

Sources: 
http://www.investorwords.com/8657/offshore_investment.html#ixzz2WZTIPjOs
http://www.economywatch.com/investment/offshore-investing.html