Offshore investment is an investment method that allows you to earn higher yields with less risk than buying financial products in your home country.
There are a number of financial products available when starting an offshore investment. Among those, the majority of people do not know what kind of financial products to purchase. Since you will be investing in a foreign financial institution, it is natural to think that you do not want to make a mistake.
I also use offshore investment, and there are products that are popular for many people. If the product is good, it is likely to be popular, and you should invest in popular products in the same way.
However, the specifications of each product are different. Therefore, I will compare and discuss what kind of offshore investment products are recommended in the popularity ranking.
Table of Contents
- 1 Mutual Funds and Lump-Sum Investments in Offshore Investments Are Divided into Four Categories
- 2 No.1 S&P 500 Index: Investors Trust
- 3 No.2 Evolution: Investors Trust
- 4 No.3 Life Brilliance: Life insurance by Sun Life Hong Kong
- 5 No.4 EIB: Hedge Fund Investment Account at Custodian Life
- 6 Selecting Investment Companies Based on Popular Ranking Recommendations
Mutual Funds and Lump-Sum Investments in Offshore Investments Are Divided into Four Categories
Before explaining the ranking, I will explain the product knowledge that you must understand. When you start offshore investment, you can roughly divide it into the following investment styles.
- Low-risk investment by principal protection.
- Mutual funds that aim for an annual interest rate of over 10%.
- Assured asset management through offshore insurance.
- Lump-sum investment in hedge funds.
There are investment styles that ensure the principal in offshore investments. In short, it is an investment product that assures you that your assets will increase and return to you if you continue to invest properly. Since the future profit is assured, it is popular among many people.
In the same way, offshore insurance (life insurance) also promises that your money will definitely increase. In the case of life insurance, there is also a death benefit.
On the other hand, it is also possible to invest to achieve an annual interest rate of over 10%. In this case, you can invest in mutual funds as a regular investment, or you can invest in hedge funds as a lump sum. This way, you will be able to get a higher return.
Investment Performance Varies by IFA
It is the IFA (Independent Financial Advisor) that you should be careful about. Whenever you invest offshore, you have to sign up with a financial institution through an IFA.
The investment performance will differ depending on which IFA you contract with. Even though you are contracting with a foreign financial institution, it is just a place to deposit your money. It is up to the IFA to choose which funds to invest in, such as global stocks, emerging market stocks, real estate, etc., and the agent will give all the instructions for asset management.
When it comes to offshore investment, the agency you sign up with is the most important. Therefore, although the following is a ranking of the most popular offshore investments, it is important to consider that the actual performance of the investment results varies depending on the IFA you contract.
No.1 S&P 500 Index: Investors Trust
One of the most popular offshore investment products for many people is the S&P 500 Index. The S&P 500 Index is a product of Investors Trust (ITA).
As I mentioned earlier, the investment performance varies depending on the IFA you contract. However, the S&P 500 Index is an exception to this, and it is possible to achieve the same investment performance regardless of the agency you sign up with.
This is because you will be investing 100% of your money in the S&P 500 Index.
The S&P 500 is linked to the stock prices of 500 leading American companies. It is a kind of index investment, and the price will move according to the stock prices of the 500 companies. As for the S&P 500, it has experienced many major recessions in the past, but over the long term, it has continued to grow as shown below.
An insurance company called Investors Trust (ITA) offers a product that invests in the S&P 500 Index.
Principal-Protected Mutual Funds Ensure Future Profits
The reason why so many people invest in the Investors Trust S&P 500 Index is that it is a principal-protected investment product. It is not possible to earn 10% annual interest, but it is a financial product that promises a risk-free and assured return of at least 4% annual interest.
The following is from the official website of Investors Trust, and it clearly states that it is a principal-protection investment product.
Note that 140-160% for 15 or 20 years is a minimum amount; if you have a better performance in the S&P 500, you will get a higher return at maturity. In fact, the average return on the S&P 500 is 7-9% per annum.
Of course, I also invest using the Investors Trust S&P 500 Index. Below is the actual management screen.
Not only can you invest in the world’s most trusted indexes, but you can also protect your principal and earn a loyalty bonus with Investors Trust.
The Risk Is Investing Until Maturity
Regardless of the IFA you sign up for, the Investors Trust S&P 500 Index offers high returns with low risk, but there are risks. One of the biggest disadvantages is that if you reduce or partially surrender your investment in the middle, the principal protection will be lost.
It is not a principal guarantee; it is just principal protection. It is the principal protection that is guaranteed under certain conditions. The following is clearly stated on the official website of Investors Trust.
Some introducers may scam you by telling you that it is better to accumulate a higher amount at the beginning because you can stop later. However, this makes it a meaningless financial product with no principal protection.
After understanding these disadvantages, it is important to set the amount of money that you can accumulate for 15 or 20 years without fail until the time of maturity.
No.2 Evolution: Investors Trust
The S&P 500 Index, which I mentioned earlier, is a very popular product for many people because it is low-risk, but it assures future profits. On the other hand, Investors Trust (ITA) has not only principal-protected financial products but also aggressive investment products.
One such recommended product is Evolution. Evolution is a mutual fund investment product that aims for an annual interest rate of over 10%.
There are other financial institutions that aim to achieve high investment returns by investing in funds. Why is Investors Trust’s Evolution so popular among them? The reason is simple: it has the lowest commission rate among all offshore mutual funds.
For example, the difference between investing $10,000 at a 9.5% annual interest rate and a 10% annual interest rate will be as follows after 40 years.
- 9.5% annual interest rate: about $377,200.
- 10% annual interest rate: about $452,600.
As you can see, the amounts after 40 years are completely different. You may think that it is a difference of 0.5% per year, but since asset management involves compounding interest, you should consider that the amount of money in the future will vary greatly.
Naturally, the lower the commission rate, the more your money will grow, and Investors Trust has the lowest commission rates among offshore financial institutions.
The IFA You Contract With Is Most Important
As mentioned earlier, the IFA you sign up with is important. This is because even if you invest in Evolution from Investors Trust, you will not necessarily be able to achieve an annual interest rate of 10% or more. The actual investment instructions are carried out by the IFA, so the speed of your money growth depends on the IFA.
In fact, when I invested in Evolution through my first referral, I had a pretty bad portfolio. Here is the actual portfolio.
As you can see, there is “US Dollar Cash: 79.6%”. This meant that about 80% of my USD was in cash, a strange situation that my funds were not invested. This situation had continued for years, and I had suffered a loss of opportunity.
Since the situation had not changed at all, I decided to change an IFA. At that time, I asked the new IFA to show me the past five years’ performance of the IFA and then reconfigure my portfolio with the new agent to determine which funds to invest in.
While returns over the past five years have varied from fund to fund, in my case, I have been able to achieve an average annual interest rate of 24.1%.
So my investment performance has improved significantly since I switched my IFA. Thus, when you apply for Evolution from Investors Trust, the most important thing to consider is who (which IFA) you are signing up with.
No.3 Life Brilliance: Life insurance by Sun Life Hong Kong
In addition to mutual funds, life insurance is also widely used in offshore investment. One of the most famous insurance companies is Sun Life.
Sun Life is a huge life insurance company and has branches in many countries around the world. It also has high ratings from global rating agencies such as Standard & Poor’s and Moody’s. Because it is many times larger than the life insurance companies in your country, it is safer than depositing your money with an insurance company in your country.
One of the most common is to use Sun Life Hong Kong. Hong Kong is a tax haven with almost no taxes, and even non-residents of Hong Kong can apply. Therefore, you should consider purchasing through Sun Life Hong Kong.
Sun Life offers a variety of insurance products, and a popular one for many people is Life Brilliance. I have also purchased life insurance through Sun Life Hong Kong as follows.
In the case of life insurance, unlike mutual funds, you can invest in a lump sum. You can increase your money by making lump-sum payments instead of monthly payments. In this case, let’s assume that your assets will roughly double in 20 years and quadruple in 30 years.
For your reference, the following are the insurance details of Life Brilliance that I purchased in the past.
The total payment is $30,873, which increases the asset to $70,545 after 20 years. Also, at the end of 30 years, the amount will have increased almost quadruple to $129,091.
What’s more, since it is life insurance, there is a death benefit. In the case of the death benefit, the death payment will be much higher than the total payout.
In addition to lump-sum payments, you can also make 5-year, 10-year, and 20-year payments on life insurance. Life insurance is suitable for people who want to increase their assets through a safe investment method, since it is an investment method that ensures asset growth.
Life Insurances for Overseas Individual Annuities
By the way, in life insurance, you can choose an annuity insurance product. Sun Life Hong Kong, they offer insurance products to create an individual annuity.
In the case of foreign annuities, there is no high death benefit. Instead, compared to the insurance product mentioned earlier (Life Brilliance), the speed at which your money will grow through asset management will be faster. Therefore, if you do not need a death benefit, choose these products.
Of course, if a death benefit is paid, the amount paid is larger with Life Brilliance. On the other hand, if you intend to use the funds as a private annuity, overseas annuities are a good option.
Sun Life Hong Kong offers the following private annuity products.
- Victory: An annuity that pays out money in a lump sum.
- Vision: An annuity that pays in installments.
You should consider which of these foreign annuities to buy according to your objectives.
No.4 EIB: Hedge Fund Investment Account at Custodian Life
The offshore investment allows you to invest in hedge funds. When you think of a hedge fund, you may think that you need to have millions of dollars in assets to invest. In reality, however, you can invest in a hedge fund with as little as $30,000.
There are many insurance companies that offer accounts for investing in hedge funds, each with a different product name. Among them, one of the best offshore insurance companies is Custodian Life. This company is registered in Bermuda, a tax haven.
Unlike mutual funds, which can be started with as little as $200 a month, not everyone can get started, as it requires excess cash of $30,000. However, if you are able to prepare a lump sum of money, the most recommended offshore investment is to open a hedge fund investment account.
Investors Trust also allows you to open an account to invest in hedge funds. However, in the case of Investors Trust, it is not worthwhile to open an account to invest in hedge funds because of the restriction that you can only invest in European hedge funds.
On the other hand, an investment product called EIB (Exclusive Investment Bond) offered by Custodian Life allows you to invest in all hedge funds in the world.
Types of Hedge Funds Vary from Low Risk to High Risk
There are many different types of hedge funds. Some are low-risk hedge funds, while others are high-risk and high-return hedge funds.
If you invest in a low-risk hedge fund, you will get an annual return of about 10-14%. In this case, you will not invest in a hedge fund that trades stocks or bonds, but in a hedge fund that earns interest income through corporate loans or investing in real estate.
With income from corporate loans and real estate investments, the price movement of stocks is irrelevant. Even if there is a global recession, your assets will continue to grow with almost no negative investment results.
On the other hand, there are high-risk hedge funds, which use long (buying) and short (selling) positions in stocks, bonds, futures, and forex. This is a typical hedge fund that aims to generate profits not only during booms but also during recessions.
For example, the high-risk, high-return hedge funds that I have invested in include the following.
In the case of this hedge fund, the assets have increased about 30 times in about 14 years. Even after deducting fees, you can expect such a large return.
In one year, the annual interest rate was 212.84%. In other words, your assets can more than triple in a year. However, there were two consecutive years when the return on investment was about -25%. Thus, you can understand that it is very risky. Even so, the annual interest rate is 29.20% if you average the entire return.
If you do not want to take risks, it is better to invest in hedge funds that mainly deal in corporate loans or real estate instead of these hedge funds. On the other hand, you can also invest in high-risk, high-return hedge funds.
As for which one you want to invest in, it depends on you. Make sure you understand how much risk you can accept and invest in more than one hedge fund. In any case, if you have a large amount of money, it is recommended to open an investment account with Custodian Life.
Selecting Investment Companies Based on Popular Ranking Recommendations
I have explained the recommended rankings of regular investment, life insurance, and lump-sum investments, which are popular among many people while comparing the product details.
Since many people are risk-averse when it comes to investment, the most popular regular investment products are principal-protected financial products. Specifically, the S&P 500 Index offered by Investors Trust (ITA) is assured to yield 140% in 15 years and 160% in 20 years.
Investors Trust also offers Evolution, an investment product that aims for an annual interest rate of over 10%. The IFA you contract with is very important, and if you build your portfolio correctly, you can earn over 10% per year.
Life insurance is a great way to increase your assets and also to add death benefits. If you want to give your family a death benefit, life insurance is an excellent choice. Alternatively, you can create an overseas annuity for yourself.
On the other hand, if you have a large sum of money, consider investing in hedge funds. There are different types of hedge funds, ranging from low risk to high risk. Among these, choose a hedge fund to invest in according to your risk tolerance.
When considering offshore investments, it is best to understand these characteristics before deciding on the financial institution to invest in. Each of them has its own points to keep in mind, so be sure to look not only at the advantages of high yield but also at the risks and disadvantages before investing offshore to increase your assets.