Georgetown Trust Blog

Planning Your Retirement? Consider an Offshore Investment

Posted by Georgetown Trust on Feb 10, 2015 12:00:00 PM

planning-for-retirementWealthy investors and individuals whose high net worth merits a sound asset protection strategy are often besieged by offers from financial advisors and retirement planners who paint a rosy, worry-free picture of their golden years.

These financial professionals offer a variety of products, from annuities to mutual funds and from depositary instruments to real estate.

Offshore investments, trusts and international private placement variable life insurance policies are great instruments for retirement, but they are seldom talked about by planners. There is a logical explanation for this.

Personal financial and retirement planning has come a long way over the last few decades in North America and Europe, and in most cases, the profession is highly regulated. There are few truly independent advisors; most are bound by appointment or by employment contract to offer certain financial products.

There is absolutely nothing wrong with this; after all, most of these financial professionals are paid on a commission-only basis, and many of the products they offer certain advantages to wealthy investors planning for their retirement.

Licensing, regulation and oversight of the financial industry is certainly a welcome practice, but in many cases it ends up limiting the investment potential of high net worth individuals. This is not a matter of an overprotective stance by regulators; it boils down to economic and sovereignty issues.

The companies that offer financial products for retirement are often based in the same jurisdiction they are offered in, and thus there is a vested interest by regulators to keep offshore investment products out.

The Growth of Offshore Investments and Trusts

Offshore investments are commonly associated with high-yield financial instruments and asset protection strategies. Although they serve both purposes, it is important to remember that offshore investments essentially pose the same risks as those financial instruments that are commonly traded in the major financial exchanges in Wall Street, Toronto, London, and Paris.

Offshore investments are made with an expectation of profit and understanding of risk, but they are generally not subject to myriad taxation and fees as their counterpart financial instruments in North America and Europe.

Offshore trusts and variable universal life insurance policies can be combined with offshore investments as part of a retirement plan focused on asset protection. Although these offshore products are not regularly offered by financial planners, they are increasingly being discovered by wealthy investors who are concerned about the growing levels of taxation and austerity in many economically-developed nations.

The long-term effects of the global financial crisis are starting to be felt, and many investors are naturally troubled about the developments in their nations.

Asset protection has become the number one concern among high net worth individuals approaching retirement age, and they are looking at offshore trusts as their solution. In certain offshore jurisdictions, the laws governing trusts offer maximum privacy and protection to the grantors, trustees and beneficiaries, as well as minimal taxation.

When combined with flexible life insurance products that allow policyholders to freely invest funds in lucrative offshore opportunities, retirement planning begins to make a lot more sense.

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Topics: Asset Protection