Legit reasons to use offshore banking

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Offshore investing involves various strategies of investing that capitalize on benefits gained in a foreign country by an investor. There is no deficiency of bond, money market, and equity assets that time-tested, legal, and physically sound offshore banks offer.

Offshore banking has been demonized by the media. They’ve painted an image of business people hiding their funds with some illegal organization abroad where the tax rate is almost nil. Whereas it is possible to find illegal business activities, most of the business activities are legal. Therefore, depending on your circumstances, investing abroad may offer various benefits that you would otherwise not find in your domestic country.

1. Sounder banks and banking systems

Most of the banking systems in the West are unsound from a fundamental point of view. The leverage they have done for themselves is to the hilt. All that backs the banks are the promises of insolvent government administrations. Moreover, these financial institutions keep limited amounts of cash on hand for clients to withdraw. Therefore, in case there is an economic problem, you might have an issue accessing your funds.

Think through about the bank you will choose to be the custodian of your money. There are banks in stable countries that have low borrowings, and they do not gamble with your savings. Most of these banks which have more cash at hand are more conservatively run than the Western banks.

Offshore banks are more responsible keepers of your savings.

2. Diversification of currency

Having foreign currency is a great way to internationalize your savings, spread the risk of your portfolio, and guard your purchasing power. While offshore banks offer various convenient online platforms for holding foreign currencies, domestic financial institutions have few or no options for holding foreign money.

3. Higher interest rates for your savings

Banks like the Fed and European Central Bank have controlled the interest rates and made them an all-time low. These low interest rates have transferred potential earnings away from savers – who would have earned higher interest returns on their savings – to borrowers.

The interest rate earned in the West is likely not matching the real inflation rate. Therefore, if you look into offshore banks, you can find banks that pay higher interest rates which are not present at home.

4. Ensured access to medical care abroad

Timely medical care could mean the difference between life and death. Therefore, if you are not able to get timely medical care in your domestic country, it would be advisable for you to seek medical attention abroad. If it happens and you are not able to receive medical treatment at home, it would require you to transfer funds abroad so you can receive medical treatment outside your country.

However, if the government in your country of residence has capital controls in place, this would make it difficult to pay for the medical care. Therefore, an offshore account, which would not be subject to capital controls, would assist with paying the medical bills abroad.

5. Ability to act swiftly and peace of mind

An offshore bank account works like an insurance cover. It will guard you against banking systems and banks that are not sound and the ruining actions of a broken administration. It also ensures that you can pay for medical care abroad, as well as ensures that you can transfer funds overseas quickly, whenever you want it. This big step to guard yourself should give you peace of mind.

Despite controversies, offshore banking is legal. It is about diversifying your portfolio risk by putting your money in sound financial institutions where they are handled best. However, it is becoming harder to open bank accounts abroad, and soon it could even become impossible. Therefore, it is wise to open one now even if the account will remain dormant.

The government in your home country might even fail to freeze deposits or implement capital controls, but you are safer having this haven for your savings. Having an offshore bank account is an excellent and prudent step that makes a lot of sense no matter what the media says.

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