Georgetown Trust Blog

Offshore Investments and Your Financial Goals

Posted by Georgetown Trust on Feb 17, 2015 9:11:00 AM

offshore-investmentThere are compelling reasons why you are choosing to engage in offshore investing. One of the more recognizable motivations is the fact that those offshore investments provide opportunities that are not necessarily available in a domestic setting.

Since the goal is to increase your wealth and provide the resources to accomplish short term and long term financial goals, it’s important to choose the right holdings in the right international location. As you consider different options, keep these tips in mind:

Balancing Risk and Rewards

Just as with domestic investing, it is necessary to weigh the potential outcome of a given offshore investment with the degree of risk that you are willing to assume. You will find that even with offshore investing there are opportunities offering modest returns along with a reasonably low level of volatility.

At the same time, there are other options that could generate impressive amounts of returns but carry a much higher level of risk. Your job as the investor is to consider how any particular opportunity fits in with the goals you have set for the portfolio.

A good approach is to establish a foundation of international assets that provide steady returns for relatively little risk. Those assets will give your portfolio a sense of stability and provide a cushion when some of the riskier investments don’t pan out the way you hoped. To get the most from that core group of assets, make sure you diversify a bit.

For example, identify offshore investments that include stocks, bond issues, real estate and even life insurance. The diversity will increase the odds that even during severe economic shifts that affect the world in general, the losses with some of these assets will be offset by gains with others.

Taking on Additional Risk

With your core group of assets in place, devote some of your attention to offshore investments that have the potential for impressive returns but come with a greater degree of risk involved. These investments provide the chance to enjoy some short-term gains that will help increase your financial wealth significantly.

You may see these as the ideal way to deal with goals that you want to realize within the next year to five years, such as buying a vacation home. While more speculative in nature, taking the time to evaluate these offshore opportunities in depth will make it much easier to determine if there is the potential to generate the returns you need to meet a specific goal.

As part of the evaluation process, look closely at the projections for growth. Make sure those projections are coming from reliable resources. You also want to understand how those projections were crafted.

Did they allow for external factors such as shifts in consumer demand, changes in governments and even the potential for adverse weather conditions to undermine the worth of the underlying assets?

Don’t underestimate the value of checking the past performance of the asset as a way to project what will happen in the future. If the asset continued to perform well during past periods of economic decline, there is a good chance the same will apply in the future.

Protecting Your Interests

There are a number of ways to structure an offshore investment portfolio. One of the more important aspects is to make sure you engage in asset protection. Make sure your assets are insulated from failure as much as possible.

You also want to utilize current tax laws so that the amount of tax liability is kept within reason.

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Topics: Asset Protection