Three Profitable Offshore Opportunities - Banking, Forex, And a Foundation
The world is changing and it is changing fast. Who would have thought that small Asian economies would be leading the way out of the worst recession in seventy-five years? Who would have thought that a country like Peru would be buying dollars to alter the exchange rate and help prop up the dollar? It is a brand new world where perhaps the best place to set up a banking operation is in New Zealand although an NZOFC cannot be called a bank! Still, a tried and true solution to offshore asset management such as a Panama Private Interest Foundation remains as a profitable and secure offshore solution along with offshore banking, and opening a Forex company.
More and more people are moving their assets, their talents, and themselves out of their nations of origin and into a busy, industrious, and profitable offshore world. The very wealthy have banked in tax advantaged jurisdictions for years. They have taken still take advantage of offshore asset protection and privacy vehicles such as trusts, international corporations, and foundations to shield their wealth from prying eyes and reduce the tax consequence of inheritance. However, it is the surge of expatriates from all over the globe moving and doing business all over the globe that opens the doors to profitable offshore investment opportunities.
Three profitable offshore opportunities are starting a bank, forming an offshore Forex company, and using a Panama Private Interest Foundation as a holder of tangible assets, businesses, and bank accounts. There are many opportunities in today's fast moving world. We choose these three for their combination of opportunity and security.
Offshore Banking in the 21st Century: an NZOFC
There are many offshore banking jurisdictions. There are also a number of jurisdictions where an individual or corporation can obtain licensing and set up business offering banking services. In choosing a jurisdiction for offering offshore banking services the individual or corporation will want to search out a democratic, politically and economically stable, business friendly country. A nation where English, still the universal language, is spoken is a plus. The nation will need to have at least adequate infrastructure to support the business and ideally will have first rate telecommunications, transportation, and support services.
A nation that offers a first rate offshore banking opportunity and also fits the necessary criteria for a successful offshore operation is New Zealand. This former British Crown Colony is located in the Southwest Pacific to the East of Australia. Its population is mostly descended from British immigrants and is mostly English speaking. The country is well governed with little or no corruption and its educational standards are as good as or better than the USA, Canada, and Great Britain. This is a business friendly country known for its innovative spirit.
Of our three profitable offshore opportunities we put the New Zealand Offshore Financial Company (NZOFC) at the top of the list. This type of company is not governed by New Zealand banking law nor regulated by the Federal Reserve Bank of New Zealand. There are no capital reserve requirements in setting up an NZOFC. The law in New Zealand is quite specific in that an NZOFC cannot be called a bank or intimated to be a bank. However, such a company can take deposits from anywhere in the world outside of New Zealand. It can pay interests, make loans, market investments, manage trusts, and provide virtually all services that a bank might offer. Anyone from any country is free to apply for a license to operate an NZOFC.
A Profitable Foreign Exchange Opportunity
So, the Chinese are trading the Yuan versus the Malaysian Ringgit. The Euro is periodically in free fall as Greece and the other PIIGS reveal more sovereign debt. A flight to quality sends folks out buying Yen, US dollars, and Swiss francs. So, how do you trade foreign exchange in this hectic and uncertain world of international finance? There is certainly money to be made in Forex trading. There is, however, steady money to be made in running a Forex brokerage offshore.
There are a number of jurisdictions still where it is possible to obtain a Forex license. Because of the variable degrees of infrastructure development, business friendliness, and political stability in some offshore jurisdictions it is wise to consult someone with experience to help choose a jurisdiction, obtain licensure, and initiate operations. There are a number good places from which to do business, depending up individual preference. There are also a few disadvantageous jurisdictions to be avoided. Starting out with good advice in this arena is wise.
The point of setting of a Forex company is that the fees and commissions are steady income. While trading can be profitable it can also be a drain on capital. This is the old argument about selling picks and shovels when everyone else is prospecting for gold.
Handling Offshore Opportunity in the Most Advantageous Manner
The third offshore opportunity we mention is the Panama Private Interest Foundation. This is not directly a business opportunity but it can be a "holder" of businesses, bank accounts, and assets such as art work, yachts, airplanes, jewelry, and more. A Panama Private Interest Foundation has no owner. It does have beneficiaries. Such an entity is often used in place of a trust to pass on inheritance with minimal tax consequences. The foundation is set up in such a way and with instructions so that beneficiaries change when the first beneficiary dies. Especially for those with concerns about asset privacy and security this type of foundation will allow for individuals to benefit from assets, businesses, and bank accounts without having their personal names or other details in any public registry.
A common use of a Panama Private Interest Foundation is in an integrated offshore asset protection solution containing offshore businesses, bank accounts, and other assets. Typically the foundation is the lynch pin in this solution as the holder of assets for the use and benefit of designated persons, the beneficiaries.
These three profitable offshore opportunities are available to anyone interested in pursuing them. It only takes an email or phone call to an experienced individual or company to get the ball roll
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Reminiscences of a Forex Trader, Part 1
Forex trading is hot, hot, hot right now. And one of the biggest reasons why is that traders are using leverage to amplify returns by 200 times - where $1 controls $200 worth of foreign currency. The returns can be staggering.
For example, on British "Black Wednesday" of September 16, 1992, George Soros made a single day's Forex profit of US $1 billion by short selling the Great Britain Pound Sterling.
At the time these kinds of profits were only available to large players.
But recently a major change in the way Forex trading is done has opened the trading desks to the little guy. The Internet has opened the door to the small investor into this $3.98 trillion daily market.
But Forex, or foreign exchange trading, has a reputation as "one of those" financial derivatives. And while much of its reputation is deserved, that doesn't mean you shouldn't be aware of Forex and its uses...
Forex Market Expert Thomas Fischer
Unfortunately, Forex isn't only intimidating to the average investor - it can be downright confusing for even the shrewdest money managers. So I sat down with an expert on Forex, Mr. Thomas Fischer, to clear the fog around this hot topic.
Thomas Fischer, of Jyske Global Asset Management in Denmark, is a veteran of the interbank foreign exchange market with a 22-year profitable history under his belt. I was lucky enough to talk with him at the Investment 2009 Conference in St. Petersburg, Florida last March.
I sat down with him last week to get his thoughts on Forex for Investment U readers because of his relationship to the Oxford Club and Investment U and because Mr. Fischer trades in transaction sizes that are nearly unimaginable to us mere mortal investors.
He considers a "light" day one where he's traded only $100 million in foreign exchange. And, he's been so kind as to sit down for an interview
Over the next two articles I'll get his thoughts on how he got started Forex trading, what traders need to be aware of, and some of the best ways to limit your risk if you decide to jump into this market.
What I've found most interesting, above all, is that much of the advice he gives about Forex trading can be applied to stock trading just as easily. A good investor is a good investor regardless of the security...
Here's part one of my three-part Q&A interview...
Q. So, Thomas how did you get started trading Forex?
A. Well Scott, after finishing my bank education in 1978 in Denmark I was "invited" to begin a trading career in the bank's newly established Foreign Exchange room. When I walked through the door and saw and heard (in those days trading was done with voice brokers) the noise I knew I had found my vocation. I remained a trader/broker for 22 years!
Q. You mentioned to me that small traders have to trade infrequently so that they don't get addicted to the "screen" - they have to try to get in on a trend where the profits of winning trades far exceed losing trades. Could you elaborate?
A. Sure, most novices in trading get pulled into the world of virtual trading. The [exchange] rates flash before your eyes and the trade is just one mouse click away. The worst-case scenario is that the first trade you make is a winner - you get hooked and start trading all over the place regardless of currency pairs. You have to get accustomed with the trading pattern before jumping in. Concentrate your efforts with a few currency pairs. The EUR/USD pair is a good starting point since almost one in three trades takes place in this currency pair. It is thus a very liquid and transparent rate. Get a feel for the movements and use tight stop losses. When you have a winning trade take profits and try to ride the movement/wave for as long as possible locking in profits as it moves in your direction. It does not matter whether you have 8 losing trades and 2 winning trades as long as the winners pay for the losers and some more.
Q. You mentioned to me in St. Petersburg, Florida last March that it's easy to get addicted to the screen and overtrade. What do you mean by that?
A. In the currency market rates are moving constantly. There's always an opportunity to make, or a trap to lose, money. You can have instant results because sometimes it only takes a minute to make a winning/losing trade. It becomes addictive - like being in a casino.
Q. There are a lot of things taught in university international financial management MBA courses about Forex ranging from interest rate parity to Big Mac indexes. And, economics professors love to say the markets can't be forecasted in the short term. Do you agree? And what do you feel are the most important things Forex traders should pay attention to?
A. Fundamental trading is a completely different animal. Here you make long-term predictions (Big Mac Index) and all things being equal you can make a good prediction 5-10 years out in the future. However most investors cannot wait 5-10 years and in between the rates could have been all over the place. I have heard speakers [Thomas is referring to Harvard University Economics professor Dr. Kenneth Rogoff, Ph.D.] say that making a currency prediction for less than 2 years is like flipping a coin! I don't fully agree - but there is some truth to that statement. However with experience and patience you can learn to read the market and make a profit. It is however paramount that you have a strict discipline and follow the strategy. You can never just log on to the computer and make a profit for a new suit or an expensive dinner with your wife - the market doesn't work that way.
--- End of Part 1---
I'll be going into more detail in the next part of this interview with Thomas Fischer, currency trader of Jyske Global Asset Management in my next column. Next time we're going to talk about setting trailing stops, Forex money management and analysis.
It's all starts with education,
