Introduction
Well, what is your understanding of an Offshore savings plan? Offshore saving plans are investments wherein you choose financial products from a country other than your very own country of residence.
Suppose you stay in India and you invest in real-estate equities that are issued from a company that is based out of Dubai, then you are said to be owning an offshore investment plan or an offshore savings plan.
In this blog write-up, let us unveil different types of offshore savings planinvestment options while also giving you a rundown of the basics. Helping you get started further on the same:
Meaning and Conceptualization Explained
Offshore savings refer to investment plans that are taken by retail investors and businessmen outside their country of residence. Offshore investment plans are chosen by investors for a variety of reasons, such as:
- Tax optimization
- Getting access to international investment markets and for
- Diversification of investment portfolios
You can form a trust by which you transfer your financial assets from time to time. And, you can give standing instructions to your trustees to divert the funds into your offshore business units or franchisee outlets.
Else, you can invest your funds as a retail investor through banks and financial institutions that accept foreign deposits.
What are the different offshore investment plans?
These are the different types of Offshore Saving Plans for you to have a look at. Let us have a rundown of the same:
A- Regular Saving Premium Plans or RSPs
You can choose Regular Saving Premium plans or RSPs in offshore destinations. Here, you make a premium payment monthly, quarterly, or annually over a set term period of 5-25 years. You find high-profile investment banks across Zurich, the capital city of Switzerland.
Retail investors utilize the savings amounts to fund their children’s education or retirement. You may get loyalty and bonuses if you are a long-term and disciplined investor. High penalties apply for early withdrawals.
Friends Provident International, RL 360 and Zurich International are service providers that can help you get started with your offshore investment plan of this type.
B- Lumpsum Investment Plans
You must deposit a lump sum in one single go. The corpus amount is further reinvested into funds, stocks, bonds, and equity assets. This is a type of account that offers better flexibility to international retail investors. And, fewer penalties are levied for any number of withdrawals. Lump-sum investment plans come to you with lower cost slabs too. This is the best type of investment that can suit investors who want to invest their money offshore as a single shot payment. Expats or professionals can look for this investment plan.
C- Offshore Bank Savings Account
An offshore bank savings account works similar way to your regular savings bank accounts. Except for the fact that your funds are deposited in a foreign jurisdiction. The banks that offer offshore savings accounts can allow their investors to deal with multiple forms of international currency. And, you might be offered higher rates of interest over the regular savings account you may have in your home country. You may have to invest higher amounts of money as minimum deposits via offshore bank savings accounts. Investors who aim for capital preservation yet deal with multiple currencies prefer offshore savings accounts.
D- Structured Notes
Structured Notes are hybrid investment products that comprise a mix of bonds and stock indices. You have a promissory note that acts as the bond component for the note, while the returns are linked to the assets that the notes are tied to.
The notes can underlie stocks, credit notes, mortgage deeds, currencies, stocks, and shares, to name a few. The notes provide capital protection to investors. However, the upside potential or returns on investment depends on how the underlying assets perform in the market. Retail investors can diversify their portfolios and aim for customized investment solutions when they choose structured notes.
Equity Linked Notes or ELNs, Reverse Convertible Notes or RCNs, Auto Callable Notes, and Principal Protected Notes are classic examples for structured products.
E- Offshore Pension Plans- QROPS/ QNUPS
These are retirement plans that are particularly tailored for UK expatriates who wish to settle abroad. QROPS is the abbreviated form for Qualifying Recognized Overseas Pension Scheme, and when you are a part of this investment scheme, you can plan your pension transfers and remit them from any part of the world. You can also avail of a fleet of tax benefits depending on the jurisdiction you are in. In a nutshell, the QROPS or QNUPS are Retirement plans that are regulated but more complex than your regular savings plans. These investment schemes are particularly meant for UK nationals who wish to settle abroad.
F- Education saving plans
Education saving plans are meant for parents who plan funding for their children’s future education in abroad or foreign universities. For instance, a number of immigration centers in India offer flexible term loans or student loans to students who wish to pursue their education in New Zealand, Canada, the US and the UK. Educational savings program or student plans usually have trusts or insurance structures. These loans are also equipped with tools that pay for future tuition fees.
What are the primary considerations you look for while choosing offshore investment plans?
Here are the guidelines you should look for while choosing offshore investment plans. Helping you with a rundown of the same:
A- Look for the right jurisdiction
The choice of jurisdiction or domicile is a very important factor while you choose the offbeat or offshore destination where you plan to place your funds in. Specific offshore destinations like Isle of Man, Guernsey, Jersey, Luxembourg, and the Cayman Islands offer privacy, tax benefits and higher returns on offshore investments to foreign expats around the world.
B- Regulation
You must ensure that your investment plans are overseen by regulatory authorities who would monitor your investment funds in a legal and diligent manner.
C- Fees involved
You must read the offer documents carefully to analyze if your investment fees come with higher fees for withdrawals or charge higher slabs of taxes. The investment plans might come to you with higher fee structures and commissions, and you must be wary of the same.
D- Currency rates
You may get lower exchange rates if you deal with currencies that fluctuate frequently. As an investor, you must know local currency rates before you choose a viable offshore investment plan.
The Bottom Line
You must look at specific considerations while you choose an offshore savings plan or investment scheme. You must read the offer documents carefully before investing. What are your thoughts on this? Do let us know in the comments below!
