International Banking and Offshore Finance for the Rest of Us

In a media storm of: “big bad corporations shelter billions in offshore tax havens”, one would think that you either have to be a “big bad corporation” or a “money-grubbing 1%’er with an overwhelming penchant for hiding money” in order to have an offshore bank account. Nothing could be further from the truth. Nearly anyone can and should utilize the services of an offshore bank.Why would you want to keep your money in an offshore account you say? One of many reasons could be concern for domestic bank stability, and unless you’ve been under a rock for the last several years, you are likely more than a little weary of domestic bank stability. And as of January 2013, the FDIC is rolling back coverage on individual accounts to a cap of $250,000. This is likely not an issue to most of us, but what’s the bigger picture here? What does this say about the solvency of the FDIC? How many near-simultaneous bank failures will it take to bankrupt the FDIC completely? What other policy changes are there that could; in the event of multiple bank failures, effect your hard-earned life savings?You’ve heard about diversifying your assets, between stocks, cash, and hard assets such as gold and silver, but what about diversifying your banks? I’m not talking about opening an account at your local Savings and Loan and an additional account down the street with Citibank, I’m talking about diversifying your banks in different countries. Don’t worry, I’m not suggesting you head out and convert half of your life’s savings to Icelandic Krona, you can keep your money in US Dollars, just don’t keep those US Dollars in a US Bank. Think about it, you wouldn’t keep your entire life’s saving in one company’s stock, or one mutual fund with one investment company would you? At least I hope you wouldn’t! (Bernie Madoff Investment Securities ring a bell?)Many international banks offer great lines of product with fantastic rates of return designed specifically to attract depositors with US dollars that just don’t exist domestically. Many of these programs are only available to account holders. Even if your credit rating has taken a beating in recent years, you may still be eligible for mortgage financing from your offshore bank when domestic banks won’t even look at you. Granted, the money may be pricey and may have steep equity requirements, but when no domestic lending institution will even give you the time of day… any financing is better than no financing.There are inherent risks with having your money in an offshore bank so take your time, do your homework. Just as you wouldn’t put your money in a domestic bank that appears unstable, or is on the FDIC list of troubled banks, you probably would be well served to stay away from banks like the First National Bank of the Democratic Republic of the Congo. No matter what fantastic rate they offer you! Find a good bank, in a good jurisdiction. Want to know why Swiss banks look so attractive to wealthy account holders? You would think from listening to the talking heads on the major network nightly news programs it would be hiding money… think about that one for a moment: Would you consider a place that has been demonized on the nightly news year-in and year-out; and that is known by absolutely everyone, a good hiding place for money? So what makes you think these wealthy account holders aren’t using the same logic? They didn’t become wealthy by making mistakes with their cash, that’s for sure. The number one reason for using a Swiss Bank is simple: they’re really good at banking. In fact, they’ve been doing it for longer than the US has been the US, and are rock-solid stable. In fact, when was the last time you heard of a Swiss bank failure, collapse or a call for a bailout of the Swiss banking system?And what about staying out of trouble with the IRS? Guidelines change all the time, so be sure to check, recheck and understand them thoroughly before sending your money to a foreign bank account. If you follow the guidelines, do your homework and report your offshore holdings, you can enjoy your offshore account hassle free for many years to come!

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