Banking is not one of the easiest topics, and following conventional wisdom can be more than dangerous. It is generally acceptable across the board, even by financial experts, that domestic banking is the safest and most responsible option. After all, the banks are insured so you are assured of your cash should go wrong.
In this regard, the general public takes more time thinking of the perfect pair of shoes to buy compared to which financial institution they’ll entrust with their life savings. This is the classic moral hazard; people are more likely to take risks since the costs will be borne by someone else. When it comes to banking, most people have that mentality; however, the truth is that sometimes the clients bear the costs of their banking decisions, as sound Merchant Advise indicates.
Banking is where you need to form your own opinions based on your own research and ignore the conventional wisdom. It is prudent to give some serious thought to the choice of custodian when it comes to your life savings. If you are keen on diversification, it is time you considered a bank outside your home country.
Why Choose an Offshore Safe Haven Instead
An offshore account is one of the vital components of a successful strategy in international diversification. But why choose a bank outside your home country? Here is what you get with an offshore account;
Protection from capital control
Protection from government seizure and bail-ins
Protection from wrongful confiscation
Protection from corrupt government dealings
Safe and conservative haven for your money
While offshore accounts can offer a safe haven and save you a great deal of your life savings should something happen, you cannot just send money blindly. You will need to consider the best option for your circumstances before you move all your life savings into a foreign bank.
Here is a brief guide to assessing an offshore bank
|Political and Economic Influencers|
|Political risks and economic fundamentals of the jurisdictions in which the bank operates are essential pointers to the safety of your saving|
|The Bank Assets’ Quality|
|How are the loan book and bank investments? This shows you where your money goes when you save it with them. Go for banks that are conservative as it proves that they are not gambling with your life savings|
|A relatively safe institution will have some cash at hand instead of loaning it all out or investing it in risky ventures. The bank should be able to meet your withdrawal needs without having to sell some assets at a loss; the bank should be in a position to give you back your money anytime you need it|
|This is how the bank’s financial strength is measured. Capitalization also shows whether the bank is at a risk f insolvency based on their excess leverage use.|
How to Choose the Best Country for Your Offshore Account
A lot goes into looking for an offshore account: the home country of your preferred bank must be considered. Therefore, in order to make the best decision, it is important to choose a country with a stable government, favorable tax laws and receptiveness to foreign investment. Here is how to get the best home for your cash.
|Pick out the countries you know, or have heard, are receptive to foreign investments and research on their financial institutions and policies regarding foreign investment.|
|Check Out the News|
|Be keen on news from online sources as well as those of international media publications on what’s going on in your preferred country. Additionally, check out the websites of your preferred banks and be sure to check their licensing certifications|
|Beware of Online-Only Banks|
|Be wary of banks that have a good online presence and nothing much beyond that. Most countries have a few of these outlawed banks that are simply names on buildings and nothing more. If you are on a website that does not indicate the official bank names and functional contacts, you might be dealing with a fraud|
|Be Cautious of Unusually High Returns|
|We are all in it for business, so when a bank offers you unreasonably high returns for your investments, think twice. Often times, when the deal is too good to be true, it probably is just that|
|The Minimum International Standards|
|Does the bank of your choice meet the Basel Accord’s set minimum standards? These rules limits the bank’s risk by ensuring that it reaches its set limit of minimum capital, disclosed reserves and shareholder equity in addition to limiting equity and debt holding|
There are endless options when it comes to finding the perfect home for your offshore safe haven; it need not be a scary venture. You can always consult legal professionals who are experienced in offshore accounts to get you through the initial tricky bit.