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Spring Cleaning Perceptions on Investing in the Caribbean

Spring Cleaning Perceptions on Investing in the Caribbean.

Managing and investing your hard earned money is tough. Letting your confidantes know you are investing your money abroad can be downright uncomfortable. There is often a rather uneasy feeling associated with having your own money placed outside of your home country – into the nebulous world known as ‘offshore’. Why is that? Well, several reasons come to mind to those unfamiliar with the subject; however, for the proactive and open-minded, investing offshore can be both intriguing and desired.

John Grisham, Bernie Madoff, and a few others initially sensationalised the negative stigma of offshore investing. Images of mega yachts, gigantic homes with endless bedrooms, butlers and wine abound, but what about those in the real world who happen to have some of their money offshore? How have they been able to do so with confidence? The answer is quite simple – they study, learn and follow the rules.

We live in a world of ever-changing and scrutinising regulation – much of it very good. It creates transparency when needed. It creates trust. It creates efficiency. It even helps to catch the bad guys and for this we all benefit. But what about those of us who just want to maximise the value of our investments, protect our money, and seek opportunity in a global world, all while sleeping well at night and not worrying about the perception of the uninformed?

Investing by way of jurisdictions in a world with progressive, business-friendly, tax-neutral policies is not merely a ‘game’ for the ‘one-percenters’. From structuring a family trust to establishing a registered office or offshore entity, options are available for all. There are many solid, profitable, stable, low-key, ‘middle America’ companies who choose to have an offshore presence in order to provide opportunities in the global marketplace. Contrary to popular belief, these companies and individuals are not exploiting a loophole for their own gain, but managing their assets and opportunities to compete on the same level as the international firms already do. In particular, Canadian and US-based organisations can benefit from legislation and regulation that have existed for decades.

Regardless of the size of your income or assets, we all want to keep the most we legally can. Two unfortunate assumptions when looking to invest offshore are, “I don’t have enough money to look into this,” or, “the new rules don’t apply to me.” Both statements are often said casually and both are categorically wrong. Monies relative to the individual should be the sole focus. Just because you do not think you have ‘a lot’ of money does not mean these new rules bypass you. We all are impacted.

Two related sets of rules and regulations connected to offshore investing have recently been thrust into US headlines – FATCA (Foreign Account Tax Compliance Act) and Dodd Frank (The Dodd-Frank Wall Street Consumer Protection Act). If you stacked both laws on top of each other they would be tall enough to allow a newborn to see over the steering wheel. That alone is intimidating enough for some to avoid offshore investing. The point though, is to find out what actually does apply to you.

A relevant example is onshore/offshore execution (basically, someone in a foreign country buying or selling securities and making investments on your behalf). The old days would allow your New York-based broker to take your instruction and that would be the end of it. If, and when, these new rules come into play, that same broker may now have to hand off that same order you gave them to an offshore entity for final instruction and execution. One would hope your current advisor is cognisant of this situation. If they are not, find one who is. Know that you are entitled to ask. You have options.

I cannot tell you if you have a lot of money, but if it is enough to pick up off the sidewalk, then it is enough money to matter. An educated discussion on your options can start at your primary bank, or the place where you hold the majority of your assets. Your contact there may be knowledgeable of your flexibility and range for ‘risk’ and they may also be in a position to connect you with the appropriate contacts for the legal parameters and paperwork required for a move to offshore investment.

This may all seem a bit confusing, but it is entirely relative, yes, even to you. We are in a changing world and once we get beyond the preconceived notions about offshore finance, we then need to take it a step further and learn the rules and how we can apply them in our daily lives for a successful financial future.

So, get out your feather duster, give your entire prior perception about investing abroad a few sprays of polish, and start fresh. Diversifying some of your monies offshore may not be for everyone, but at least you can make that decision with a clean slate and a bit of informed reading, rather than basing your decision on the eye roller at the cocktail party or the assumptions of others.

Spring cleaning can be liberating for the mind, home, and retirement plan…


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