How to Make Your Money Grow – Offshore and Online
More and more PTs are making a quiet, but very comfortable, living these days through online trading. Everybody wonders How Do I Make Money? Well, quite a number of our clients are doing so right now. As their skills and knowledge develop, they are requiring more and more sophisticated services – to create more and more wealth!
The good news is that technology and services are keeping up with demand. Whether you want to be an active day trader or simply maintain full control of your passive investments in a private, offshore and tax-free environment, there are good solutions out there which will meet your needs.
Unquestionably, the best way to make money from offshore trading is to be offshore yourself. To move your ass, as our American friends would say. To disappear effectively from the records of your home country’s government, buy or rent a desirable home in a country with lower living costs, hook up to the internet and an online trading account, and Bob’s Your Uncle!
But if your finance don’t allow you to ‘disappear’ just yet, there are still ways you can send your wealth offshore and let it accumulate tax-free. Here’s a simple 3-step plan…
1. The first, and most basic, step is to form an offshore company through which to operate. That way, you don’t have to do any offshore business in your own name. You don’t need anything particularly sophisticated here – just an offshore company from a respectable jurisdiction which can be incorporated for well under $2000. Depending on your personal circumstances and goals, there are various ‘optional extras’ which may or may not be useful, such as nominee directors. Bearer shares are one way to keep ownership a secret, whilst keeping ownership in trust is a more viable and secure option these days where higher profile businesses (read: larger amounts of money) are involved.
2. A secure, encrypted internet connection via an offshore proxy server is also highly recommended for anybody who values their privacy. This allows you to connect to your online bank or broker from anywhere in the world – with two big differences.
First, it prevents the authorities, or anyone else for that matter, in the country where you are physically located, from monitoring your internet connection and snooping on your online activity.
Secondly, it prevents your bank/broker from tracking your physical location via IP address – after all, I can see no legitimate reason why your bank needs to track where you are at any given time. You’ve nothing to hide, but then you’ve nothing to shout about either.
There’s a third advantage to using a proxy server too – your online account can be secured by limiting access to just one fixed IP address, which can be that of your proxy. This is the kind of security banks use between themselves, but is impractical for most home users because you are allocated a different IP address each time you log on. So the proxy adds to your online security.
3. A regular bank account is pretty much a necessity for any company. You can use the bank account as a passthrough for moving funds in and out of the brokerage account, and you can order a debit or credit card for easy access to your funds. This should be a secure and efficient bank in a respectable jurisdiction, but outside your home country. If you’re not the travelling type, then you need to find a bank which will open the account by mail. Whilst there’s technically no minimum deposit or balance, depending on the bank you choose, you should reckon on keeping around $10,000 or equivalent in the current account. Besides keeping the bankers happy, these funds will be available to you via the plastic in case you need access to your funds in a hurry.
With the above three steps in place, you need the actual mother lode trading account. In selecting that, we need to look carefully at the facilities you need versus what is available on the offshore market. Buying and selling stocks and shares on major markets is relatively simple. But if your investment and research skills dictate that you need to trade a specific commodity on a specific market in real time, then the search for the right brokerage becomes more complicated.
As an example of what’s available, I’ve recently been working with and referring clients to a European-owned brokerage house in Panama which welcomes accounts from offshore companies and focuses on cutting edge technology. They offer, for example, from a stocks and options point of view:
- US American Stock Exchange
- US NASDAQ
- US New York Stock Exchange
- UK London Stock Exchange
- France Euronext Paris
- Germany Xetra
- Switzerland Swiss Exchange
- Switzerland Virt-X
And many other International Exchanges available by online chat or telephone.
For Forex and Commodities trading they offer:
- Live trading of over 120 FX crosses on spreads as low as 2 pips
- Leveraged stocks from 19 exchanges around the world with CFDs
- Easy investing in stock indices with CFD Index-trackers
- Invest in Gold and Silver on live tradable prices
- Hundreds of online futures contracts on low commissions
I should add that this brokerage house is tried and tested, and works well. I’ve personally met the owners and they are good people.
If you don’t want to bother with any of that, we can arrange managed accounts with a conservative, through to a leveraged, growth program. These would need an investment of around $100,000 minimum. I tend to point clients in the direction of European asset managers (Austrian or Swiss) if they require portfolio management rather than sophisticated online access.
In order to open accounts, brokerages will, of course, need the standard due diligence package of a financial statement, notarised passport copy, and bank and professional references. Can this be avoided? The answer is yes, it is usually possible to disguise the beneficial owner through the use of trust arrangements, while still allowing online access for the day trading and via debit card. But this does bring with it a new set of complications and costs. So clients should seriously consider whether it is really necessary.
For the “average Joe” who wants to move a middle-class-sized portfolio offshore, the protection offered by taking an offshore company with nominee directors and bearer shares, then mixing and matching accounts across several jurisdictions, all of which offer statutory bank secrecy, is more than enough. Bank references may be addressed “to whom it may concern” so there is no direct paper trail.
The issue of “paper trails” brings us of course the question of how to move the money offshore in the first place. If you are starting out offshore trading with a seed capital of $10,000 – $20,000 that you are planning to grow, then it’s no major problem. If you have hundreds of thousands to move, that would be better handled via a personal consultation.
Made-to-measure solutions are always available and, at the opposite end of the spectrum, there’s always the option of going it alone and setting up bits and pieces direct with different providers. If you were to choose to do everything through my firm, by way of example, I could offer the following package deal:
- Panama corporation
- Nominee directors
- Bearer shares
- Registered office
- Power of attorney to beneficial owner
- European bank account in EUR, USD and other major currencies
- Internet banking
- Debit or credit card
- Secure offshore tunneling proxy, including support
- One of the following:
- o Opening of offshore trading account with specs, as above
- o Opening of European-managed account at a private bank
Total package price: $4,995
Ongoing costs after first year for renewal of nominee services, payment of offshore fixed tax, registered office and secure tunneling service: $1,900
If you would like to order the above package, or if you have any questions about it, please contact the Peter Macfarlane at the wealth creation Q Wealth Report office. If you would like to order an in-depth personal consultation (by email or at a personal meeting) with Peter Macfarlane, ask for the appropriate referral. By the end you may even be able to buy a private jet!
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