Why Choose an Offshore Bank Account?
The truth is often shocking!
The IRS recently released data stating that slightly over one million people have filed on their FBAR as having a foreign bank account. With a bit of research obtained from various articles and once the major corporations have been removed the remaining percentage of American Citizens owning foreign bank accounts is hovering around 0.3%! That’s not a misprint Less than 0.3% of Americans have a foreign bank account. Did I happen to mention that the truth is often shocking!
By the percentage alone I understand that the vast majority seem lost when it comes to understanding some of the safe guards and benefits achieved by having one or more bank accounts in foreign nations as compared to having all your accounts in your home nation. Truth is there are more differences than similarities especially when it comes to protecting your savings. Below are some sound reasons for why owning a foreign bank account is a prudent move for almost everyone.
- Political Jeopardy: Perhaps the highest risk people face is risk from their own Government. Certainly by now history should have taught us when Governments are deep in debt and rapidly sinking deeper they turn about-face and look towards their own citizens as their personal flotation devises. Currency controls are already present so be prepared! This is only the exposed part of a much bigger iceberg lurking below the surface. A few examples to ponder over are the bank bail-ins of 2008 and more recently in Cyprus. Bank deposit taxes in Spain and France, retirement savings nationalization plans in Poland, Portugal, Argentina and Hungary to name but a few. It’s not necessary for it to be a full capitol control as is currently happening over in Iceland and Cyprus to greatly limit your options. Consider keeping some of your savings outside your home nation. Seriously there’s nothing to lose by doing so and possibly everything to lose by not.
- Easier to Own a Variety of Currencies: We’ve all heard the term “all your eggs in one basket” more time than we’d like to remember. By internationalizing your account at the same time why not internationalize some of your holdings. Domestic banks are very limited in what they offer in terms of accounts in various currencies. More often than not offshore banks offer their clients much broader choices when it comes to offering various services in various currencies. This is a prudent way of diversifying the risk of having all your eggs in one basket and much the same should be look upon as yet another way of broadening your portfolio foundation for greater stability.
- Better Capitalized Banks and Banking System: It’s no secret that western nations are all but insolvent. These nations are leveraged at ratios that would make any competent accountant cringe in fear. Even worse the banking systems in western nations are backed by the most insolvent of all and that’s their own Government. Perhaps worst of all is these same banks only keep a fraction of physical cash on hand. As little as 3% reserves and that’s mostly to meet withdrawal requests. Start to look for offshore banks holding a respectable cash reserve along with a noteworthy history of stability. Generally speaking banks that keep higher cash reserves on hand are the same banks that tend to be more conservative than those in western nations. They just don’t gamble the same way with their customer’s funds. Should there be yet another Lehman moment it’s these banks that might be able to fund their customer’s deposits longer and that could be a godsend if you’re one that falls into the cusp.
- Much Higher Interest Rates Or Greater Return on Deposits: In western nations it almost appears to be an all-out war against savers. Vision this as a sort of wealth shift from savers to borrowers. Theatrically low-interest rates are the basis of forming a transfer of wealth from the savers to those who are the borrowers. Huge problems have developed over the last decade because of this shift from saver to borrower. Seems it’s these borrowers who are least capable of ever repaying their loans. I trust by now you’ve grasped it’s the same banks most of us are currently using that I’m referring to when I use the term borrowers. In western nations interest rates are not even keeping up with the real rate of inflation. You are being penalized for good responsible performance. Look abroad you’ll find several well capitalized institutions eager to compete for your business. You’ll discover banks paying very respectable rates of interest not only on accounts but excellent returns on CD’s held in US Dollars.
- An insurance marker For Accessing Medical Care: Living as an expat for longer then I’d like to remember I can tell you with absolute certainty there is excellent medical care in several developing nations. Have you ever even thought of the value a foreign bank account would possess in case of a medical emergency? In most western nations right after college debt its unpayable medical expenses that bring millions to insolvency. What if you’re denied medical coverage in your home nation? Regardless of the reason suppose you’re denied necessary medical coverage what would you do? Here’s a thought you may select to obtain that medical treatment in a foreign country and travel abroad. On the flip side of that coin at the same time what if you’ve done nothing to protect yourself and find you’ve become a victim of currency controls and are no longer able to reallocate sufficient funds to cover the costs. Your foreign account could be that life line especially if it’s been opened in an offshore corporation or trust. A thought you may want to consider. Are you that sure you want to put all your trust in Obamacare?
- Protection Of Assets: If you happen to be living in the litigation capitol of the world you may want to pay careful attention to the next few lines. While the numbers vary depending on the source it seems to be that over fifteen million lawsuits are filed in the US annually. Given that the population hovers around 321,000,000 as of 2015 leaves you with an eye-opening stat. One out of every 25 people is being sued every year in the land of the free. Ever wonder why over 45,000 new Lawyers graduate each year? Coincidence that over 80% of Lawyers are employed in the US? 1.2 million of them that could be competing for what you own. Owning a foreign bank account provides some form of protection from seizure. It’s quite a bit more complex for any US entity Government agency or Law firm exercising seizure laws in foreign countries. While nothing is ever guaranteed 100% should it ever become your turn as the lucky one in twenty-five you’ll be relieved to know you’re resources abroad should remain untouched.
- Peace Of Mind Capitalize Personal Freedom: Simply put owning a foreign bank account yields you more options. While it’s still one of the easier steps you can take to better protect yourself same as with anything has its time limits. By taking this ONE STEP ALONE you’ll be placing yourself in the top .03% of the class. More options lead to more freedoms more freedoms lead to more peace of mind more peace of mind generally leads to a better life and in the end isn’t that what it’s really all about.
While there are several more reasons for owning a foreign bank account I believe this would provide the open-minded person with more than enough to contemplate. In closing I’d like to mention anytime there’s no downside to doing something be like Nike and Just Do It! Owning a foreign bank account is completely legal. It’s a simple versatile tool that’s easy to implement and if done correctly will insure some added protection in volatile times and it’s those times when we all need that protection the most. I hope you found the above information to be useful.
Barry in DR