3 Tips for Opening a Foreign Brokerage Account – and Why You Need One

01-Aug-2014

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By Jeff Opdyke, International Living,
The old notion that “when America sneezes the rest of the world catches a cold” is fading. U.S. businesses and consumers no longer rule the globe. And for smart investors everywhere, the message is clear: For solid profits, you must put some wealth to work in markets beyond U.S. borders.
Today, offshore investing offers many options. You can broaden your investing and trading with individual stocks of foreign companies, international mutual funds, and international Exchange Traded Funds (ETFs). While these come with special U.S. taxes and other considerations and risks, they also offer the potential for increased total returns.
These types of opportunities, and many thousands more like them, are available right now on any number of stock exchanges around the world. And the best way to access them is often through a foreign brokerage account.
Here are three tips for opening an overseas brokerage account.
These tips are based on my personal experience in opening numerous such accounts in countries from New Zealand to Africa to Eastern Europe. Follow these steps and you will be trading directly offshore in two weeks.
Tip # 1: Open One Account that Trades Many Markets
The first question to ask overseas brokers is which exchanges they trade. You want firms that offer multi-country access from your single account. Efficiency in effort and time is the goal when trading worldwide, so the more exchanges you can access through a single brokerage account, the easier it is for you.
There are offshore brokerage firms that trade across all or part of Asia. Some European firms allow you to trade across nearly the entire continent, including Russia. You’ll even find firms in Africa and the Middle East who gladly welcome Americans and offer multi-country trading accounts.
Tip # 2: Find Out if You Need an Offshore Bank Account
In the United States, dividends are paid directly into your personal brokerage account. Don’t assume the rest of the world follows this process. When opening your offshore brokerage account, always ask the firm whether dividends will be paid directly into your brokerage account, or if you must open a local bank account to receive payments.
Even with the difficulty Americans face opening offshore bank accounts these days, you may not need brokerage-firm help to set up a local account. Some brokerage firms offer a “call account” at a local bank that, in turn, is tied to your brokerage account. Others offer nothing and you are on your own in setting up a bank account.
But it can be simple to open a savings account at a local bank and then give the bank information and the account data to the company share-registry. Once set up, dividends and other payments flow into your savings account and you get confirmation from the share registry and the bank. (Note that you will need to report this income to the IRS—read how to do that when you subscribe. Find out more by watching this video presentation.)
Tip # 3: English is the Universal Financial Language
Don’t let your lack of foreign-language skills deter you from global profits. Finding an online, English-speaking, stock-trading platform is easier than you think. Most stock exchanges and foreign brokerage firms operate English-language shadow websites. You’ll often find the link on the homepage, marked by the British Union-Jack flag, the word “English,” the letters ENG, or sometimes a “Select Language” drop-down box.
Editor’s note: In his full article on this subject, Jeff brings you more on this topic…including how to navigate foreign share prices, what you need to ask your new brokerage firm, and what the cheapest way to transfer money internationally is.
How a Trust Protects Wealth
In modern times, asset protection has become a major goal of trust creation.
Through taxation and regulation, government excels in attacks on wealth. In the U.S. and Europe, there is now official talk of wealth and retirement-plan confiscation. Last year a large chunk of every bank account in Cyprus was subject to “bail-in” tax overnight.
The judicial system also has become a threat to prosperity. Especially in the U.S. and the U.K., courts are clogged with thousands of civil suits demanding enormous sums for sometimes-imagined injuries.
With TV commercials seeking plaintiffs, contingent-fee lawyers whip up billion-dollar class-action suits against persons or corporations they see as ripe targets, seeking outrageous jury awards and fat fees for attorneys.
These real threats have increased the popularity of the offshore asset protection trust.
The offshore asset protection trust (APT) is especially useful because it is, in fact, based in a foreign nation. That shields your assets better than any domestic trust ever can, simply because it is located outside the jurisdiction of your home country. Distance makes the trust grow stronger. The offshore APT shields business and personal assets against creditors, litigation, and disputed financial liabilities.
With the help of an experienced trust attorney, an offshore APT can be accomplished by little more than the signing of formal documents, transferring property, and opening a trust account managed by a local trustee in a bank in a foreign country you choose. Offshore multinational and local banks provide experienced trust officers and staff. For example, a simple trust registered in the Cook Islands (which I recommend) can cost less than $5,000.
Offshore APTs have proven so effective because: 1) courts of some foreign “asset-haven” countries will not recognize U.S. or other domestic court orders, so a plaintiff must re-try his case in a foreign court at great expense; 2) claims against a trust in such countries must be brought within a limited time. In the Cook Islands, the statute of limitations can be one or two years from the time the APT was created; 3) foreign trust laws allow a “duress clause” that allows the foreign trustee to shut down the trust if it is threatened legally in any way.
The key to creating an APT is simple: planning. The trust must be created long before it is needed, at a time of personal financial calm. As a belated response to a pending financial crisis, trust creation creates more problems. Last-minute attempts to create an offshore trust can lead to civil liability for concealing assets. So if you think you may need a trust, act now.
Editor’s note: Litigation is not the only thing you need to protect your assets from these days. It seems everywhere you turn, there is a threat to your finances: high taxes…an unstable dollar…and the government and IRS prying more than ever before into its citizens’ private finances.

 

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