If COVID-19 brought a lesson for investors, it is that diversification is key. And, especially, that offshore investment diversification is even more vital.

Offshore bonds and offshore equities are among the top ways for investors to diversify their assets and increase their wealth. They are an excellent vehicle for family offices looking for top-level tax optimization.

Here we will explain what an offshore bond and an offshore equity fund are and their main advantages and disadvantages.

Offshore equities

An offshore equity is a type of offshore fund. These are mutual fund schemes that invest in international markets, especially in foreign equities.

They are beneficial for a simple reason. They allow you to invest in companies that you wouldn’t be able to invest in by regular means.

For example, imagine you’re an Indian financial investor. You cannot invest in an IT giant in Indian stock lists. Thus, an offshore equity fund will allow you to gain access to global markets, diversify investments, and receive higher returns.

Moreover, there are jurisdictions, like the Cayman Islands, where you can set up an equity fund quickly and easily with top tax optimization. And we can help you do so. Thus, you get a win-win: you access global markets, but with low regulations and little-to-no taxes.

Offshore bonds

An offshore bond operated under the same principle. It is a tax-efficient, deregulated vehicle to hold many investment assets, such as stocks, shares, and mutual funds. Thus, you can have an offshore equity under an offshore bond.

Why go offshore? Because it is a legal and tax insurance for your portfolio. For example, you can combine a life insurance policy with a portfolio created to an offshore bond and you will receive enhanced optimization.

An offshore bond is preferable than an onshore bond because it’s simpler, affordable, easily accessible, flexible, and tax-optimized.

What are the tax benefits of an offshore bond? First, they are rarely taxed at the source. Second, for example, bonds are considered non-income-producing vehicles in certain countries like the UK. Thus, there are no individual tax returns; they are only taxed at an individual level as dividends. Also, funds can generally be switched and exchanged within the bond without incurring in income or capital gains tax.

Which one to choose?

As usual, it depends. An offshore bond can include a series of investment vehicles, including mutual funds. Thus, it is not an either/or question. You can invest in an offshore equity fund that is under an offshore bond.

Offshore bonds are widely used for life insurances, while offshore equity funds are only one part of that strategy. In any case, you can use both of them. You’re not limited to choosing just one.

It mostly depends on your needs. But the key is understanding the significance of diversifying. Your strategy must include different bank accounts in different jurisdictions, with different currencies, and different investment vehicles under the same principle. And among those investment vehicles, you can find bonds and equity funds, which are not mutually exclusive.

The key is going for a first-level offshore jurisdiction that provides you with an easy process and unparalleled tax optimization.

That’s the case with the Cayman Islands. As usual, we can help you incorporate and structure your own fund in the Turquoise Paradise. You won’t find any kind of taxes on this island for your fund, and under certain circumstances, you don’t even need to register your fund there. You will enjoy top privacy and tax planning, and we can help you with that.

Whether you choose an offshore bond or an offshore equity, these can be excellent diversification vehicles. In today´s world it is important to expand your business but at the same time be in compliance with all requirements and regulations so that you can be part of the club of successful and rich businessmen and women. Contact us right now, and let us help you set up your investment strategy.

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