‘Offshore investing’ or ‘international investing’ is often associated with the ultra-rich. In other words, the kind of people superyacht crew like you work for.
It’s not seen as something the ordinary person can do, nor maybe even should do. There’s an aura of mystique about it and, let’s be honest, a feeling that offshore is a bit out of the ordinary, maybe even a little outside the way things should be done.
None of this is true. Here we’ll unpack offshore investments and show how you can turn them to your advantage.
What is ‘offshore’?
In simple terms, offshore investments are investments you make in assets that are outside of your own country. In fact, a better phrase is ‘international investments’.
In essence, it’s a way of investing in anything, anywhere in the world, unhindered by your domestic rules and regulations. It provides you with a way of investing where you aren’t a resident, usually opening up a much broader range of investment opportunities.
Related to the notion of offshore investing is international banking. An international bank account is a bank account in a jurisdiction outside your country of residence.
For someone like you, who probably spends most of their time outside their home country, it makes more sense to have a banking arrangement that isn’t tied to home. You live an offshore life (literally), so international banking and offshore investment arrangements are far better suited to your lifestyle and circumstances.
Not only that, there are clear advantages in banking in the currency you are paid in- which may not be your “home currency”.
Some countries, often island states, have specialised for many years in offering international banking and offshore investment structures geared specifically to the needs of mobile expats—that’s you!
And before you leap to any conclusions about money bolt holes, these countries include places like the Isle of Man, between the UK and Ireland, Luxembourg and (possibly most famous of all) Switzerland.
Offshore investments are for superyacht crew too
Next, let’s get rid of the notion that offshore or international investments are the kind of thing only the super-rich can do. That would be saying only the wealthy can open a bank account or have a savings account. It’s not true. Anyone can have these things. And anyone can have offshore investments as well, including you.
It’s true that offshore investment structures can be more expensive than the equivalent onshore products. This results from them being geared specifically to the needs of mobile expats [ that’s you!] so providing greater currency and investment flexibility, coupled with a degree of anonymity and potential tax advantages. Consequently they are often thought of in connection with the über-affluent.
Not true. Te majority of offshore investors are mobile expats—just like you.
Cost-efficient structures do exist. YFSOL has partnered with offshore providers in different jurisdictions to establish investment structures specifically for superyacht crew. An upside of the ‘affluent’ perception is you can have access to funds usually only available to the very wealthy.
It also means you can consider a much broader range of investments worldwide. Which, in turn, wouldn’t be possible without the assistance of offshore-based investment structures.
Whilst lump sum investments are usually available for EUR 10,000 upwards, many YFSOL clients take advantage of the ability to fund offshore investments on a regular monthly basis from their salary – over a period of years it’s possible to build a substantial capital base from what may seem like a small amount, without normal living overheads, most yacht crew can save an amount far greater than ordinary folk.
International people think internationally and need international flexibility when investing and when withdrawing funds – many YFSOL clients end up settling far from their home country when they you leave yachting. Home country stuff doesn’t work well in these circumstances.
‘Offshore’ isn’t the same as ‘invisible’
Back in the day, offshore investments and banking were possibly hidden from your national authorities. That’s now unlikely – legislative demands for transparency have increased and international banking and offshore investment hubs are complying.
On top of which, you do have an obligation to declare your earnings wherever it is you pay income tax.
Some yacht crew may qualify for income tax exemption in their home country, simply because they aren’t there long enough each year to qualify to pay income tax.
Investment earnings will be taxed wherever their offshore investment structure is based, which usually means little or no tax at all. Low tax regimes are one of the things that draws wealthy people to offshore investing in the first place.
YFSOL are not tax advisers and you’ll need to get specialist advice relevant to your particular circumstances.
Offshore investments are subject to regulation and scrutiny where the investment structure is based. With that comes international agreements around transparency – however there is usually a greater degree of anonymity than investing in your home country. ‘Offshore’ does not necessarily mean ‘hidden’. Nor should you treat it as such.
Advantages of offshore investments
So why bother with offshore investments at all?
Well, we’ve already highlighted that investing offshore opens a much broader world of investing to you.
You have more choice and opportunity.
Second, you may benefit from lower (or non-existent) tax rates on the money you make from offshore investments.
Third, you will have a far greater degree of flexibility on withdrawing your investments. This is vital if, like so many YFSOL clients ,you wind up settling outside your home country when you hang up your docksiders.
Investing outside your national jurisdiction allows you to tap into global expertise that may not be available to you at home. Most YFSOL clients aren’t UK residents, but their savings benefit from the fabulous expertise of Momentum Global Investment Management in London. These people are top drawer. (Check out one of our quarterly market overviews with Glyn and Andrew, if you want a flavour of the deep knowledge Momentum offers our clients.)
If you’d like to know more about offshore investing, how it might benefit you or whether it is suitable for your circumstances, just drop us a line. The best way to do that is through the contact form here: get in touch.