Successful Offshore Investing

01 Nov

offshore investing on the Bombay Stock Exchange

Bombay Stock Exchange

Many investors are intimidated with the mere thought of branching out into international offshore investing territory. As the global economic crisis continues to grow and the United States economy grows weaker it only makes sense to explore as many avenues for financial growth and protection as possible. While new legislation such as FATCA (Foreign Account Tax Compliance Act) is overreaching to make it more difficult to remain anonymous and protect foreign investments there are a few basic tenets to increase success in international investment.

First, find an overseas account to act as a multi-tasking agency for investment. Basically get one account to trade in as many markets as possible. It’s possible to find foreign investment firms who specialize in accounts allowing for trading in multiple markets and multiple currencies. This saves the time and effort of waiting to find a firm in another country and opening another account; you already have access to the market in that country from your currently existing multi-tasking account. These offshore investing accounts simplify the process, or at least speed up the potential of greater return value.

Don’t let share prices addle your brain. Many widely held blue-chip companies trade in overseas markets at ‘penny stock’ levels – prices below $5 per share, and often lower. Depending on the financial landscape of the country you’re trading in, companies sell billions of share to the public rather than the thousands or millions so common in the United States. Yes, that’s billions. The sheer volume of shares affects the price so that stocks can be affordable to the everyday local investor. Find out from the brokerage firm you’re dealing with if you’ll need a local savings account to funnel your dividend payments into. In the United States the dividends go directly into your brokerage account. If this isn’t true for your overseas transactions you’ll need a simple savings account for your dividend payments. The local brokerage firm should be more than willing to recommend a local banking facility.

Naturally, many investors fret over their command of a foreign language. Or, really, their lack of a foreign language. No linguistic prestidigitation needed here: English is the universal financial language. Particularly in online transactions it’s often easy to spot a English language link on a firm’s website or homepage. Truly a world wide web. When sending money internationally the easiest and safest way is through wire transfer. Also ask the firm if you need to register any paperwork with a centralized regulatory commission or agency and what paperwork needs to be filed. If the paperwork is necessary many brokerage firms take care of it for you but it’s still a good idea to know as much as possible about the local laws and regulations regarding your offshore transactions.

Finally, be sure and remain compliant with any onshore taxation institutions. In the United States this is the IRS. While the recent adoption of the FATCA legislation is still mostly an unknown, if you live in the United States and own any offshore investments you must report them to the IRS. A knowledgeable foreign tax advisor can be a great asset.

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