With today's volatile economic (and political) situation, wealth protection options for an average individual is limited at best. Protecting wealth offshore remains one of the best options available, but it's increasingly difficult for someone who has limited assets to access the services.
It's harder to go offshore
Let's take offshore banking in Singapore, for example. Not too long ago, it's easy for foreigners to open a bank account in Singapore. Requirements are not too difficult to fulfill and the minimum amount required to open an account is fairly low. Today, unless you have a sizeable assets – typically more than $100,000 which allows you to open a private bank account in Singapore – you are simply not eligible.
To make matter worse, big companies are seemingly invisible – and invincible: They (and their lawyers) seem always to find ways to cut their taxes to near-zero – legally. This pushes the global initiatives, such as those initiated by OECD and other organizations, to limit their wiggle room, such as ending offshore banking secrecy in Switzerland, and pushing for offshore jurisdictions to comply with the transparency rules – or else.
Unfortunately, such initiatives are not only impacting big companies, but also small companies. Some 'retaliate', but many just swallow it and work harder trying to win clients fair and square. Clearly, individuals are also facing the consequences, whether they like it or not: More roadblocks in their journey for moving (read: securing) their assets to other countries.
What are the options?
So, what are the options available for an average person? The answer lies in embracing internationalization. In this article, we'd like to look at how an expert does it; one of the best experts when it comes to internationalization is Peter Schiff.
Peter Schiff, a controversial figure that is known for accurately predicting the 2008 financial crisis, is a practitioner in offshore wealth protection and asset internationalization.
So, what do Schiff recommend for protecting your wealth via internationalization?
1. Minimize your purchasing power risk
As the Governments all over the world seems to print happily more currency to support the economy, your assets' value are declining accordingly. Trying to protect yourself, you often advised to convert your currency to foreign currencies. Schiff said that the conversions will eventually cause your Government to come in with capital controls – e.g. By taxing your foreign currency transactions.
This is just the beginning in the US, Australia, and other countries, but the controls will eventually be imposed, especially when economic crashes happen.
So, to minimize the potential of capital controls, Schiff recommends for asset owners to build a portfolio that consists of foreign assets – bonds, stocks, commodities or precious metals.
2. Worry of confiscation? Purchase foreign assets and precious metals
If you're worried about the potential for your Government to confiscate your assets – which could very well happen in a political turmoil, the not only diversifying your portfolio by purchasing foreign assets, you may also want to take your assets out of your country. The idea is to get your assets harder to track – and seized.
Schiff has these in his portfolio: A lot of foreign stocks, precious metals, mining shares; and he keeps on moving his business offshore – launched an innovative offshore bank in Puerto Rico, planning to move his asset management business from the US.
3. Protect your assets in a country (or countries) with proven track records.
Schiff explained that ideally offshore jurisdictions that are in the least bad shape compared to the others – the least reckless and irresponsible with their policies.
Some countries mentioned by Schiff are Singapore, Hong Kong, and essentially countries in South East Asian region in general, as well as other emerging economies.
Singapore and Hong Kong are the two that are high in Schiff' list because of the free market policies and plenty of freedom. Also high in his list are Norway, Australia, New Zealand, and Canada.
The emerging economies are attractive due to the hard working people who save what they earn for the future, produce export-quality goods and don't have trade and budget deficits. Moreover, Schiff added, emerging economies tend not to have people who are looking to be spoon fed by the Governments when they are retired.
4. Peter Schiff: “Get out of the window before they slam it shut.”
Schiff advises for us not to wait to move our assets offshore; because if we are playing the waiting game, chances are, it'll be too late. The whole idea is to take action to protect your assets before many others are trying to do the same. Why? Because when you do, the Government may make it nearly impossible to do so.
Takeaway
What we can learn from Schiff' strategy is that we need to have that sense of urgency. Not that we take action recklessly and emotionally; but when we know and feel that there's something wrong going on in the economy and politics, and we have to do our due diligence to back our worries with real data, then we need to take action accordingly.
In the example that we mentioned early in the article, it's now way more difficult for non-resident to open a bank account in Singapore. This is a common situation – going offshore is a lot harder today than ever; eventually, as Schiff warned, there will be a situation where taking you and your assets offshore is nearly impossible (either prohibited by law or doing so legally but very expensive.)
So, to conclude, the door of internationalization is closing; things will be harder in the (near) future; we have heard and seen proofs from the news, our clients and our partners. It's recommended to act swiftly. Talk to a lawyer, consult with your trusted advisors.
That said, if you are interested in going offshore but not sure how to go about it, we offer a free consultation to help you decide – regardless of your decision, whether you use our service or not; no catch, no question asked.
JAN
2016
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