Offshore investing used to be something that made people raise an eyebrow or two, but today it is more like, “Why have not I done this yet?” It is no longer the financial bogeyman it once was, as more investors have come to realize that offshore does not mean “off limits.”
Even financial planners are starting to think beyond the usual local stock and bond combos, itching for something a little more exciting. The local currency taking a nosedive last year certainly helped open some eyes too.
One of the questions I often hear is, “What do you mean by offshore investing? Is it like buying a yacht?” Sadly, no. You could Google it, but allow me to save you the trouble. Offshore investing, as defined by Investopedia is simply putting your money to work in another country to take advantage of opportunities that you cannot find at home.
Surprised? You should not be. In fact, every country suffers from what is called “home country bias,” a fancy way of saying most people tend to stick to local investments because, well, it is what they know. It is not that they do not know what they are doing, it is just human nature to stick to what is familiar.
So why do I, your friendly neighborhood investor, spend so much time chasing offshore opportunities? Am I secretly collecting stamps from every country? Not quite. I just know that when things are rough at home, there is always something worth exploring abroad.
For those of you who are content to stash your cash in a local bank account or buy a house down the street, I get it. It is easy. It is comfortable. However, as the local economy wobbles, you have got to ask yourself, what is going to protect your hard-earned money from low interest rates, volatile markets, and a shaky currency? Parking some money offshore could help you sleep better at night, knowing that you are diversifying your risk.
With the way some local currencies are behaving, you might start wondering if your wallet has sprung a leak. By spreading your investments across borders, you are not just hedging against inflation or a local recession, you are giving yourself options. Whether you are living in two countries or just thinking about relocating, having assets in multiple currencies could be a smart move.