Offshore Portfolio Bonds

Over the medium and longer term, the growth from a balanced portfolio of stocks, mutual funds and bonds has exceeded that achieved by bank deposits. However, maintaining and managing a portfolio can be a huge task; an investor is constantly faced with the twin problems of how to maximize investment returns and how to do so with the minimum of complications, expense and time-consuming paper work.

An Offshore Portfolio Bond provides an answer. It can hold most of your worldwide investments in one place making for ease of administration, cost savings and tax efficiency. Offshore Portfolio Bonds are administered by long established Insurance companies experienced in dealing in the world stock markets. Such companies are based in the tax havens of the Isle of Man, the Islands of Jersey and Guernsey, and Luxembourg.

The Offshore Portfolio Bond provides a vehicle for the effective administration of the investor's assets while at the same time offering a full range of supporting services. The specialist administration service provided ensures that the client benefits from the worldwide portfolio of investments without the accompanying administration burden. Imagine, for example, going through the trials and tribulations of setting up brokerage accounts to deal in the markets of, for example, Germany, Singapore and Colombia, on top of accounts for the United States, the United Kingdom and Japan. There's a lot of work, frustration and uncertainty to that: an Offshore Portfolio Bond will allow you to invest directly into any recognised stock market anywhere in the world, on a daily instruction basis, and no administration hurdles at all.

INVESTMENT FLEXIBILITY
Offshore Portfolio Bonds provide the more independently-minded investor with the opportunity to hold a portfolio of stocks, Government and corporate bonds, top performing mutual and unit trust funds, capital protected managed futures, currency deposits and similar instruments that meet their own precise, individual needs. The scope for investment is very broad and by avoiding over-dependence upon one market, sector or country, investment risk is reduced. You can thus make use of investment opportunities as they arise, switching asset classes, countries and sectors, and moving from an aggressive to a defensive stance as conditions suggest. But, you might say, where, as a non-professional, would you find the time to do all the research and make the decisions? The burden of making investment decisions can be overcome with the appointment of a professional investment adviser who should have access to the latest information on markets and trading conditions, enabling a quick response to market changes and trends in order to maximize the earnings potential of the portfolio.

CONFIDENTIALITY
By setting up or transferring a portfolio of assets to an offshore insurance company in return for the issue of an Offshore Portfolio Bond, the direct link between yourself and your investment is cut. Furthermore, under the local laws of the offshore tax haven, there is no legal obligation on the life insurance companies domiciled there to report investments held with them to anyone. You can therefore invest with complete confidentiality. This factor has three important consequences. It increases your level of privacy. It increases your protection against losing frivolous law suits, since not only will your assets not be under the jurisdiction of the awarding court, they will in fact be invisible (investments currently in an investor's home country can be transferred into the Offshore Portfolio, achieving confidentiality). And it gives you tax advantages.

SECURITY and INVESTOR PROTECTION
But wait you say - stop! If the assets belong to the insurance company, and the link between yourself and your assets is cut, how can you prove they're yours? Isn't it unsafe?

In fact, an offshore portfolio bond is a life insurance policy which is worth precisely the value of the assets you have instructed the life insurance company to place within it. The assets are with custodian banks with high risk-quality ratings, so they themselves are safe. The life insurance companies themselves typically have a history of 150+ years and US$40bn+. Under management. Plus the tax havens where they are domiciled have either voluntary lifeboat agreements among all members of the life insurance industry working there, or are subject to statutory schemes insuring 90% of asset value in the very very unlikely event of a life assurance companies failing.

Nothing in this world is totally secure, but an offshore portfolio bond comes into the pretty-damn-close category.

TAX ADVANTAGES
By setting up or transferring a portfolio of assets to an offshore insurance company in return for the issue of an Offshore Portfolio Bond, investors enjoy the tax treatment that goes with offshore domicile. Different nationals are subject to different tax schemes, but for nearly all, while they are non-resident in their country of nationality, offshore investment brings with it tax privileges. Among these are freedom from capital gains taxes, which in the long term make a huge difference to the compounding capacity of capital appreciation. There is also freedom from income tax when an income stream is taken. And inheritance tax can be mitigated, as we will see in the next section. The one tax that cannot be avoided is withholding tax where it is deducted at source on bond coupons stock dividends.

EASE OF INHERITANCE
An Offshore Portfolio Bond can have one or two owners. In addition, four beneficiaries may be named. As the original owners die (yes, it happens to us all), they may be replaced by the beneficiaries, who may name new beneficiaries. Who in turn may replace the replacement owners. Which means that an Offshore Portfolio Bond can move down a family, or be passed through a non-familial relationship. As the assets are offshore with no reporting requirement, they are not subject to inheritance taxes. And the wealth contained in a portfolio can pass through a family, or group, without disruption. The portfolio need not be broken up on death. The minimum restriction on the longevity of an Offshore Portfolio Bond is 99 years; some have no minimum. The benefits enjoyed through a bond can continue for a very long time.

COST SAVINGS
There are set-up costs involved in going into an Offshore Portfolio Bond. Typically these are no more than the cost of going into an offshore mutual fund family and making one switch. Considering how long the Offshore Portfolio Bond will last, in the long run it is highly cost effective - nevertheless, anyone opening an Offshore Portfolio Bond should regard it as at least a medium term (5 years+) investment vehicle.

Once the bond is set up the investor no longer has to suffer uncertainty and unknown expense associated with undertaking the management of the portfolio personally. Dealing costs are often reduced by virtue of an Offshore Life Insurance companies' enormous purchasing power. These reductions in dealing costs are passed directly on to the investor. The typical 5% bid:offer spread on mutual funds is reduced to 2%, 1% or zero, depending on the fund family.

MANAGEMENT ASSISTANCE
Once you have set up an Offshore Portfolio Bond, you may need assistance in making management decisions on asset class, sector, country and market trends. Normally this would involve the services if an Independent Financial Adviser, who will either manage the Bond for you, or consult you on your own decisions.

Choice of an Independent Financial Adviser is an important, not to say critical, decision. You need to be sure that you trust the Adviser, that the Adviser is open with you, is easy to contact and is pleased to share time with you. In addition to which, you need to be sure that the Adviser is knowledgeable and has the facilities to make informed and up-to-date decisions. You need to be sure that the Adviser has the capability of coming to their own conclusions based upon up-to-date information. Let's face it, a lot can happen in the markets in a few days and waiting for a monthly bulletin to tell them what is already history is not going to do you a lot of good. So ask questions about how the adviser reaches their investment decisions. Ask how they monitor their recommendations. Ask if they have computer links with the markets.

If you can't visit them to see for yourself what systems they have, or more than likely don't have, ask them to send you a print-out of the price movement of the fund that they are recommending. Make sure the print out is up to the latest day, not something dated that they themselves have received from a life insurance company.

A good financial Financial Adviser will, in addition to the other qualities mentioned above, be aware of the best investment choices available, be able to track their daily movements. Only then will an advisor be able to offer the best advice.

SUMMARY
Offshore Portfolio Bonds offer the combined advantages of flexibility, tax efficiency, confidentiality and security. For investors with US$50,000+, they are the offshore investment vehicle of choice.

Offshore Portfolio Bonds

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