One of the most enduring myths about offshore banking and investment accounts is that they are only helpful for the wealthy. In reality, this approach to banking and finance can be an excellent option for those in the middle-class bracket.
While you may begin with more modest balances, those accounts over time can go a long way toward ensuring you have financial stability. Here are some ways that this approach to banking is good for more people than just the rich.
Earn Higher Interest Rates
One of the benefits of offshore checking and savings accounts is earning interest once the balance is over a certain amount. It is necessary to maintain that minimum balance to continue earning interest. With some institutions, it’s possible to increase the interest rate as you continue to deposit more money into those accounts and reach a new tier or level.
If you don’t qualify for interest at first, don’t allow that to stop you from opening basic offshore accounts. Continue to add more to the balance until you reach the minimum required. After that, you may be surprised at how much interest you earn. You’ll also find the interest rates competitive, especially as they relate to what the same amount of money might earn in a domestic bank.
Build Reserves For a College Education
Massive college debt is all over the news these days. Many parents aim to set aside funds so their children can further their education without emerging into a mountain of debt. Have you considered how something like an offshore time-deposit account could help with that?
Place the funds in the account, then add to them when a new period is about to begin. Doing this every renewal period will help the balance to increase, thanks to the additional interest. Even starting with a small balance will eventually result in a cushion of resources that makes the cost of continuing education easier to shoulder.
Save for Retirement
It’s great to think about the kids, but what about you? The day will come when you retire from the workforce. As many have found, employer-managed pension funds can lose money. You may find that setting up an offshore investment or bank account would be a better way to take more control of your future.
By all means, continue to build resources at home. Even as you do, make the most of what those offshore accounts offer to create more financial resources. Even if your pension doesn’t hold up, there’s a good chance that the balance in your offshore accounts will offset the losses and ensure you have what’s needed to live comfortably.
Broadening Your Investment Opportunities
There are plenty of investment opportunities at home, but they are not the only options found in the world. By choosing to open bank accounts offshore and then use them to fund an international investment account, you have more options to consider. Some of them could have the potential to assemble a significant nest egg incrementally.
As with domestic investments, those offshore opportunities will come with varying levels of risk. It’s up to you to decide how much risk you’re willing to assume. Don’t hesitate to go with lower-volatility investments if that’s more appealing. The returns may be more modest than what you might earn with riskier ventures, but there is still money to be made.
Protect Part of Your Assets
Some people never consider asset protection. That’s an unwise financial decision. Every person who has a financial asset can potentially lose it. Choosing to set aside money in offshore accounts allows you to protect a portion of your assets in ways that cannot be managed domestically.
For example, what would happen if you were sued and the judgment favored the plaintiff? The court could order a considerable portion of your domestic assets to be sold and used to settle the matter. That would leave you with little to start over. If you have resources tucked away in offshore accounts, you can draw on them to get back on your feet. That’s because domestic courts don’t have the option of seizing offshore assets.
Avoid Higher Exchange Rates
Republic of Panama based attorney – Idaliz H. Guiraud Ortiz said that, “If you love to travel outside of your home country, you will jump at the opportunity to avoid some of the fees involved with exchanging currency. With an offshore account, it’s a possibility.”
Depending on the currencies the offshore bank deals with, you may be able to enjoy lower fees. All it takes is paying for items using a currency with a better exchange rate. Along with increasing your buying power, you’ll likely feel better about splurging on something you really want.
The Ultimate Rainy Day Fund
You may have heard of people setting up domestic savings or certificates of deposit at domestic banks other than their primary financial institution. If it isn’t associated with the accounts they use regularly, it’s easier to deposit money and forget the funds exist. You can use this same strategy with offshore accounts and possibly come out even better.
You’re not likely to think about using money in an offshore account unless an emergency arises. In the meantime, the balance accrues interest, often at a higher rate than it would at home. This makes offshore savings and time deposit accounts the ultimate rainy day funds.
Diversify Your Portfolio to Move Up from Middle Class
There are other reasons why opening offshore accounts is something that you should consider. It may lead to offshore investment opportunities that could move you up the income ladder.
Spend some time investigating offshore institutions and find out what it would take to open and fund those accounts. Ten years from now, you may realize it was one of the smartest financial moves you ever made.
Author bio:
Luigi Wewege is the President of Caye International Bank, headquartered in Belize, Central America. Outside of the bank, he serves as an Instructor at the FinTech School in California, which provides online training courses on the latest technological and innovation developments within the Financial Services industry. Luigi is also the published author of The Digital Banking Revolution, now in its third edition.
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Can people of middle-income open offshore bank accounts? Yes, they can! Find out why offshore financial accounts are great options for the middle class.
