When you hear the term "offshore," do you automatically think of something illegal or immoral?
A colleague of ours, International Living Editor Len Galvin, addressed this issue recently, and we're glad he did, because we encounter it all the time when we talk to people about living, working or investing abroad.
Here's Len's take on the matter:
If you believe everybody with an interest "offshore" is a crook... or that it's immoral to maximize your legal tax deductions... then you might as well stop reading right now. What I have to say here is likely to offend you. But if, by contrast, you're interested in ways you can go abroad and not only increase your quality of life by living better for less... but perhaps also protect your savings, grow your nest egg, and build a legacy for your children and their children... then read on.
There are benefits of having a foothold abroad -- advantages beyond the obvious ones like lower costs, a higher quality of life and the prospect of real adventure... like the idea of owning a home overseas because it could give you a place to live full-time in retirement where your expenses would be less than they are now... or it could give you a vacation home to enjoy part of the year and rent out for income the rest.
But what you may not have considered is that owning property overseas can deliver additional benefits as well. With such an investment, you can gain real diversity in your portfolio... and a hedge against an uncertain economy at home.
After all, when you invest wisely overseas, even if the U.S. economy takes a dive, you could watch the value of your property increase. And an investment outside the U.S. dollar provides you protection against currency devaluation, too.
By investing in property overseas, you effectively move some of your eggs out of the "U.S. basket." You "go offshore" -- and in so doing, you gain a measure of protection against the volatility of the U.S. markets and economy.
You can gain tax advantages abroad as well. You might base a business overseas in a jurisdiction with foreigner-friendly tax laws -- like Panama. Or retire overseas to a place where property taxes are relatively low.
As Len points out, "going offshore" isn't just about money. For example, a second passport opens doors that can be difficult to unlock otherwise. If you have one from a European Union country like Ireland, you'd have the freedom to live in, earn in and move about the E.U., just as native-born citizens do. It's perfectly legal, and a second passport offers privacy to anybody concerned about traveling as an American... and it's a sad fact that in some parts of the world, carriers of a U.S. passport can encounter problems these days.
The point is that in many cases, "offshore" isn't about banking and secrecy... it's really about internationalizing your life. It's about taking the best possible advantage of perfectly legal opportunities and structures in other countries that allow you live a better quality of life for less money.
And as Len says so well, "If you can minimize your taxes, maximize your privacy, grow your nest egg and protect your portfolio from uncertainty all at the same time... why wouldn't you?"