NW Insider – Guide to wealth management – offshore investments
4th March 2008
“In light of current market conditions, people are more reticent to invest their monies as they see volatility within the markets and negative comment coming from many commentators. Whether it is a good time to make new investments is a separate issue but, on the basis that people do look to make new investments, the off shore option is one that should be given consideration.
“Investing offshore, which is sometimes overlooked as an option, can be a great way to build wealth, enjoy greater privacy, and protect and secure your assets. Investing offshore, in jurisdictions such as Jersey and the Isle of Man, offers a long list of benefits for investors, the principal one of which is tax deferral. Monies are typically held within an off shore investment bond “wrapper” and are able to grow with little or no tax deducted until the monies are remitted back to the UK; this benefit, known as “gross roll up”, provides greater compound returns for investors.
“Investors are also able to benefit from the withdrawal facility that an off shore bond provides which enables them to draw an annual income of up to 5% of the initial investment on a tax deferred basis. In addition, a bond can also be used as part of an IHT planning strategy through the use of trusts and bond segmentation.
“These types of arrangement are available for UK residents and for expatriates.
“In terms of investing in alternative currencies or indices, offshore investment arrangements tend to offer wider investment choice, the use of diverse markets and the ability to invest in different currencies. Many off shore bonds offer what is known as an “open architecture” arrangement, whereby investors can structure their own choice of investments within the bond wrapper.
“A factor to consider when choosing an Independent Financial Adviser to advise and assist with your offshore investment planning is whether they operate on a fee or commission basis. Those working on a commission basis may be governed by selecting a provider that offers higher rates of commission and, as such, it is often better to select an IFA that works on a fee basis and is therefore truly independent.
“An unbiased IFA will be fully aware of the products available in the marketplace and will recommend the products and institutions that best fulfil your personal requirements. You can also directly approach any financial institution your IFA recommends to you, to ascertain whether the brokerage has placed business through the institution before.
“It is also worth asking your IFA for numbers, statistics and facts relating to their client base and that of the brokerage. A good IFA should be happy to divulge the size of their client portfolio.”
The information was correct at time of publishing but may now be out of date.