With Interest Rates Falling, It's Worth Looking Offshore; PERSONAL FINANCE Money Talk
Byline: andrew farr
ANOTHER week and another round of bad news, and many investors may be casting around - particularly in this climate of falling interest rates - for places where their money will prosper.
Could offshore or international investment bonds be a good bet at this time? Not so long ago, they were seen only as niche products for the well-off. Yet international bonds, like other so-called 'exotic' products, have moved towards the mainstream. This has helped to dispel the myth that there was something unfair with off shoring, associated as it often was with tax evasion.
Take-up in international bonds has increased in recent times for a number of reasons. They include the growth in personal wealth, a move towards tax planning (including payment timetables for gains and income and on inheritance tax), rising numbers of people choosing to live and work abroad, and a growing interest in retirement planning alternatives.
The demand has been mirrored by an expanded offshore investment market, with many leading banks, insurance companies and asset managers providing entry.
As a consequence, a competitive marketplace that is healthy for the investor has developed, with a wide range of products available for different investment needs.
A primary concern for investors is flexibility. So, for example, an individual may require a tax-efficient option to allow their money the best chance to increase while accessing a wide choice of investments, with fast access to their funds in order to mitigate risk.
How might this be done?
International bonds become attractive to investors once they have used their pounds 7,000-a-year allocation for individual savings accounts (ISAs) and made pension contributions, because they offer growth potential with hardly any tax to pay. Money that might have otherwise been used to pay tax can then be reinvested, resulting in an increased potential for higher investment returns - although the usual attendant risks that the value of an investment may fall as well as rise, leading to a lower amount returned than invested, still apply. …