Practical Reasons to Open an International Bank Account
Contributed by Luigi Wewege At Caye International Bank
18 October, 2021
Establishing and continuing to deposit funds in offshore bank accounts is something that just about anyone can do. Even those who earn more middle-class income can benefit from opening different bank accounts in suitable international locations.
As you consider adding this option to your financial strategy, please note the reasons that many others have already set up accounts in the offshore location of their choice. You may find that more than one of these reasons resonates with you.
Potential to Generate More Interest Income
When you begin to look at offshore banks that operate in different nations, pay close attention to the interest that your bank balances can earn. Compare those interest rates to what you receive at home. In most cases, you'll find that the interest earned on international bank account balances is higher than anything you could hope to receive domestically.
Think of what that means in terms of your financial security. From year to year, the interest income that you earn can be allowed to remain in the same accounts or possibly rolled over into other international accounts that earn greater returns. As a way of making your money work for you, there's nothing domestically that can produce the same results with such low volatility.
Building a Nest Egg for Retirement
One of the primary reasons people in middle- and upper-class-income brackets consider offshore accounts is to establish resources for use during their retirement years. There's something about regularly depositing funds into an offshore savings account or placing money in a time deposit account that makes it easier to consider the funds to be hands-off.
In other words, while you may find it easier to withdraw funds from domestic savings accounts, you would likely think twice before making that same withdrawal from an offshore account.
It isn't because the process for withdrawing or transferring funds from offshore accounts is complicated. In many cases, it's as easy as moving money from a domestic savings account to the checking account you currently use to pay household bills.
This works so well because many people find it easier to distinguish between the purposes for domestic accounts versus international ones. Since you don't factor them into taking care of financial tasks at home, it's easier to let the money in your international accounts remain there and build more wealth for your later years.
Protection From Political Events at Home
You understand how political shifts can impact your domestic accounts. While the impact is minor in many cases, there are situations with the potential to affect the way your bank works adversely. The result is that you may not enjoy the best returns until those political factors are resolved, and more favorable ones replace them.
Looking closely at where you choose to open your international bank accounts makes it possible to insulate part of your wealth from political shifts. Opting for accounts in a nation with strong protections for depositors is a start. Add in the fact that the political climate in that particular nation has a history of being stable for many years, and you can see why adding to the balances in your offshore accounts makes a lot of sense.
Shifts in the Domestic Economy
Many factors can influence the direction of a nation's economy. You're aware of how inflation and the occurrence of a recession can make it harder to save money and may even weaken the purchasing power of the money that you do make. While economic shifts do eventually pass and things begin to recover, there's the matter of what happens to your financial security in the interim.
The thing to remember is that what's happening with the domestic economy is not necessarily happening everywhere. Depending on the nation you've chosen as the home for your international bank accounts, the money, and the ability to generate reasonable returns may remain intact during the worst possible domestic crisis. The funds in your offshore account remain safe, continue earning interest, and ensure you have what's needed to make it through even if things at home get worse than you thought possible.
Assets Safe from Domestic Courts
You've likely heard people with offshore accounts discuss the concept of asset protection. Essentially, this means that no matter what demands are made on your domestic assets, the ones you have based in other countries remain separated from those demands. No one can require you to surrender them to settle some financial obligation at home.
Consider what could happen if you were the defendant in a personal injury suit. The courts rule in favor of the plaintiff and order that your assets be liquidated to settle the judgment. You could be left with nothing by the time the suit is settled.
While the court does have the power to seize and liquidate your domestic assets, their jurisdiction does not extend to any assets held by an international bank. Even if everything you have at home is suddenly gone, the resources tucked away offshore remain under your complete control.
Superior Rates of Exchange for Traveling Abroad
Do you like to travel abroad? If so, you know you must exchange your domestic currency for the local currency. This exchange may be done using cash, but it can also be done using your domestic bank debit card. Depending on where you are, the exchange rate plus the fees involved can be less than in your favor.
People who travel internationally don't always opt to use their domestic accounts. That's because the rate of exchange with the nation where their offshore accounts are based may be better. There's also a chance there will be fewer or at least lower fees involved with those transactions. That's why it makes sense to include an offshore checking account complete with a debit card in your financial planning.
Better Management of Tax Obligations
There are often tax incentives related to placing money in offshore bank accounts. Depending on the banking laws that apply, you may owe little taxes in the nation where your accounts are based. Some countries have banking laws that waive many types of banking taxes for expats and offshore depositors.
At home, you may find that the balances in your offshore accounts are also subject to less taxation by the domestic revenue agencies. While an accountant can help you understand what laws apply in your case, it's possible to legally lower your overall tax obligation and keep more of your hard-earned money for yourself.
Build an International Investment Portfolio
Offshore checking, savings, and other accounts can also position you to take advantage of international investment opportunities. It's possible to identify investments that will yield reasonable returns while keeping the risk within your comfort zone. Many of those opportunities are not offered at home.
Since real estate is also an investment, you could purchase property with an eye toward retiring in that offshore location. In the meantime, that property can generate rental income that you use to pay off the purchase price and manage any annual taxes that may apply. By the time you're ready to retire, the home is free of debt and ready for you to move in.
Reap the Benefits of International Banking
These are only some of the reasons it makes sense to open international bank accounts and continue to deposit funds in them as the years pass. If this sounds interesting to you, the team at Caye International Bank is ready to help set up those accounts and show you how to make the most of them.
For more information, contact us today and compare the bank account options. One or more of them are likely to be just what you have in mind.
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