By Kathlyn Von Rohr
Years ago, you had to be very wealthy to meet the minimum balances and afford the banking fees for an offshore bank account. Not anymore. After dramatic changes in international banking and Internet communications, you can secure a relatively modest offshore account, as your quick, inexpensive entry into the world of foreign investments. And while some nations, like Switzerland, may ask for high minimum deposits, others are relatively low.
An offshore bank account in the right jurisdiction provides layers of asset protection, as well as better investment opportunities. An offshore account shields your assets from greedy settlement-seeking lawyers or determined creditors who want to seize your wealth (in most offshore jurisdictions, they won’t get past the local courts).
Better Investments, Less Taxes
Yes, your cash will be safer offshore, but one of the big pluses of an offshore account is your power to trade freely and invest widely in foreign-issued stocks, bonds, mutual funds and national currencies. You can diversify with instant access to the world’s best investments without being hindered by U.S. laws or SEC rules. You can buy attractive life insurance and annuity products unavailable in the U.S. and Canada. Tax savings may result from deferred investment earnings, capital gains or appreciation, rather than being immediately hit with taxable ordinary income.
Choosing the right jurisdiction for your offshore bank account makes all these investment opportunities possible. Here’s a quick look at two top jurisdictions where you can secure an affordable offshore account.
Denmark: Double-Digit Investment Opportunities
Denmark is not only one of the best nations to shop for international investments, but it’s continually ranked the “safest place to bank” by Moody’s. Plus, Danish banking fees are also significantly lower than Austria and Switzerland.
Denmark’s second largest bank, Jyske Bank, is internationally known for their unequaled investments and the management of those investments. Just this spring, Global Investor magazine named Jyske Bank the best performing European Equity Fund Manager in Europe. And it’s no wonder. Just in 2005, Jyske Bank had five equity funds yield more than 40% (with returns of 42%, 41%, 51%, 44%, and 60%).
But Denmark doesn’t offer the same level of banking privacy as Austria or Switzerland because there’s no bank secrecy law. And at the end of each year, under the EU tax directive, all Danish banks must turn over clients’ information to the Danish tax office, which is free to share that data with foreign tax authorities.
Liechtenstein: Iron-clad Asset Protection with Safe-Haven Currency Options
Liechtenstein, a tiny independent enclave nestled between Switzerland and Austria, is a banking haven in its own right. This Swiss neighbor uses one of the safest currencies in the world: the Swiss franc. Plus, Liechtenstein has a reputation of having even more bank secrecy than Switzerland. Bank secrecy may only be lifted by a local court order and Liechtenstein rarely recognizes other countries’ mandates. The Liechtenstein government also insures all bank accounts—no matter how large.
However, this level of sophisticated asset protection doesn’t come cheap. Liechtenstein’s banks have no official minimum, but they try to attract high net-worth individuals—which means fees are high.
So as you can see, even with higher fees, banking offshore can definitely pay off in the end (sometimes in double-digit returns). You can bank in regions where your bankers are bound by law to keep your assets safe. You can maintain a level of complete financial privacy where no one—from ex-spouses to creditors to settlement-seeking lawyers can discover your assets. Plus, you can keep your wealth in a host of currencies to protect yourself should your native currency ever plummet. Everyone should have some money outside their home country’s banking system. Even if it’s just as a safety net. You never know when you might need it.
Kathlyn Von Rohr is the new managing editor of The Sovereign Society. She manages the content of both The Sovereign Individual and the daily Offshore A-Letter.