19 Jul 10 Reasons you need an Offshore Bank Account
The term Offshore Bank Account refers to a type of account which you have outside of your country of residence. Such bank accounts may be used by people who wish to keep funds outside of their domestic country for some reason. It helps in protecting and increasing your wealth. An offshore bank account may be needed for many reasons and some of them are illustrated below:
- Asset Protection
An offshore bank account protects you from government agencies which are armed with the capabilities of freezing your assets. If you ever get involved in a tussle with any government agency, the foreign account protects resources you can later count on.
- Much Higher Interest Rates
The European Central Bank and the Feds happen to have manipulated interest rates to a very low rate. These low-interest rates give lesser returns to the savers. Therefore, you can find foreign banks which pay a much higher interest rate. This will help in generating more income abroad rather than at your home residence.
- Reduce Political Risk
Mostly people think that a significant threat to savings is the market but we are of the opinion that it’s a wrong approach. The government poses a major risk to your savings. Nowadays, with governments falling deeper into bankruptcy, the investors have to face bail-ins and bank deposit taxes are implied.
Moreover, retirement savings are nationalized and capital controls are imposed. It is better to place some of your savings in an offshore account to reduce your political risk. The home government cannot easily confiscate, freeze or devalue your money if you have placed it in an offshore bank account.
- Sounder Banking Systems and Banks
Offshore bank accounts are the most trustworthy custodians of your hard earned savings. As most of the banks only keep a small amount of cash on hand to meet customer withdrawal requests, this means that during emergency situations you could have trouble accessing your money. There are sound banking systems abroad with low debts which do not gamble with customer deposits. Many of these banks are much better capitalized and keep more cash on hand.
- Currency Diversification
Offshore banks offer online platforms for holding foreign currencies which help to diversify your portfolio risk, as well as protect your purchasing power and internationalize some of your savings.
- Guarantees Access to Medical Care Abroad
In case you cannot get the medical care you need in your home country, you have the possibility to go abroad. But if your home government has imposed capital controls, it could be difficult to pay for the medical care you need.
As the foreign bank account is not hostage to capital controls in your home country, you can easily pay for the medical care you need.
- Quick Transfer
If a government has imposed capital controls, offshore bank accounts may give you numerous meaningful benefits. Having one gives you the option to act quickly and transfer more money abroad.
- Exploit Your Personal liberty
A foreign bank account gives you more options which mean more freedom. It protects you from absolute dependence on any one country and therefore the government is not allowed to control your destiny.
- Peace of Mind
An offshore bank account can be thought of as an insurance policy. It plays a role in protecting you from unsound banks and accompanying banking systems. It offers protection from the destructive actions of a bankrupt government and consequently helps you achieve peace of mind.
- Limit Tax Liability
Offshore companies can also be used as part of legitimate tax planning to minimize inheritance tax or capital gains tax. So the less tax you have to pay more money you will save.