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The Globetrotter’s Quick Guide to Opening an Offshore Brokerage Account
Step One in Financial Freedom
After nearly 20 years of marriage, my wife still has to ask me why I do crazy things like trade stocks in countries like, say, Romania, Egypt or Thailand.
Last weekend, as I rattled on about trying to open a new brokerage account for us in Turkey, and wiring more funds to our Singapore account, she wanted to know why I bother.
My wife is not financially adventurous. She’s content with opening a savings account and CD at the local credit union. But being married to a globetrotting investor, she – kicking and screaming at times – has accepted that I routinely put some of our money to work directly overseas.
“Because,” I replied, “I‘m worried about the direction our country is headed. Too much creeping socialism. Taxes will only go higher. The dollar will only go down. I want some money overseas to protect our purchasing power.”
Naturally my wife has the same questions that most investors do. So I want to explain how I’ve managed to invest pretty much anywhere I want over the last 15 years…and how you can do the same.
It’s the End of The World as We Know It …
I’m not humming “R.E.M.” because I think the world will vaporize (despite that Mayan calendar thing in 2012).
But America as we know it is done for, unless Americans wake up and see the destruction Washington and state politicians are fostering.
Of course, I’m not terribly optimistic that such a change will happen. In fact, I’m not even sure the “average American” even cares this is going on.
Who is the “Average American,” Anyway?
Not many people know this, but roughly half of Americans don’t even pay taxes because of how the tax code is structured.
And think about it: These Americans who don’t pay taxes are, in many cases, quite content to live off the government (er, the rest of us). So why would they want to upset the apple cart that’s feeding them relatively well? That means it will be hard for those of us who want change to create that change, when so many like it just the way it is.
Look, America’s not returning to her roots any time soon. Our government is growing bigger, not smaller. Taxes won’t decrease for those of us who have to pay. And our so-called “mighty” dollar isn’t likely to look so mighty over the long-run.
That’s why I hunt for overseas opportunities. Ironically, these foreign opportunities actually reflect American values – hard work, opportunity and capitalism – far better than you can find in America anymore!
Sad really, but true nonetheless.
America is not progressing, but regressing toward a socialist welfare state. You can expect excessive taxation and a dollar that will lose its “reserve currency” status.
In this new broken America, I want some of my money overseas, insulated from toxic policies. And you have 120 trillion reasons to follow me – that being the sum of every dollar of U.S. debt and unfunded liabilities (Social Security and Medicare) that weighs mightily on Americans’ financial future.
Easier Than You Think …
When I tell people I trade from brokerage accounts in New Zealand, Singapore and Egypt, they either think I’m a financial genius or, more often, a financial daredevil
But really, owning an offshore financial account is a modern-day necessity. Far too many profit opportunities can’t be accessed in the U.S.
And aside from owning gold, putting some money in foreign assets is the best way to hedge against a falling dollar.
Best of all, setting up an account overseas is quite easy.
I’ve gone through the process dozens times, in every type of market you can imagine over the last 15 years.
Contrary to popular belief, I have NOT faced any significant hurdles along the way – aside from convincing my wife why we need money in, say, South Africa.
From developed markets to emerging markets to tiny frontiers, you’ll find local brokerage firms that will gladly work with Americans.
Most have online-trading sites, so you can trade overseas as easily as you do through your current brokerage.
The Best Way to Find a Firm Outside the U.S.
If you’re looking for an overseas broker, the first thing you do is visit the homepage of a foreign stock exchange. Find the link to local brokers/market makers. There, you’ll find a list of shops that trade securities for institutions and individuals in that local market.
Next, search Google for each firm’s website. Then use the “contact us” link to send an email. Ask the firm if it will accept U.S. investors.
You don’t need to send a novella detailing your financial life-story or your theory on the benefits of owning assets in Mongolia (and, yes, you can open an account in Mongolia, potentially the Saudi Arabia of coal).
All you need send is a short missive:
“I’m a U.S. investor and I would like to own shares in (name your country of choice). Can I open an account at (name of firm you’re contacting)? If so, please forward the necessary applications.”
That’ll do the trick. You’ll either receive “Sorry, no can do,” or “Welcome to (name your country of choice)!”
The Paper Chase …
The biggest challenge is collecting the paperwork for the application. Most overseas brokerage firms want a notarized copy of your passport and a notarized copy of a recent utility bill.
The agent opening the account can’t look you in the face. So firms want proof that you are who you say you are and you really live where you say you live.
This proof isn’t hard to come by either — though a notary public might not grasp why anyone would want to notarize a utility bill.
Next step: Return the documents by express mail. Usually within a few days you’ll get an email that your account is open. That’s your cue to hit your local bank and wire money to your new trading account.
Overseas firms usually have no minimum investment requirement. You can wire as much or as little as you like. Obviously, wire enough money to purchase whatever shares you will want to buy.
Following these steps, you can generally expect to start trading within 10 days to a couple of weeks.
15 Years of Profits from Unknown Companies…
Thanks to a Little Legwork
It really is that simple. I’ve been doing it that way for the last 15 years. In fact, I’ve grabbed big fat dividends and profits from companies most Americans never hear about.
Raise your hand if you’ve ever heard of any of these:
- Manila Water, a tap-water provider in the Philippines
- Glow Energy, a utility in Thailand
- Hyflux Water Trust, the world’s first water REIT in Singapore
- Maridive, an Egyptian oil-field services firm
- Banca Transylvania, a Romanian blood bank (Just kidding. It’s actually a traditional Romanian bank, so no Draculas.)
I own them all, and every week I uncover these same kinds of stocks across Asia for my Emerging Market Strategist subscribers. (My service is only available to our most exclusive readers at the moment, but watch your inbox for more information next month).
If you do just one thing this year to prepare for America’s financial future, put some of your wealth to work in an overseas brokerage account.
I’ll be back next week to tell you all the tricks for operating overseas, including how to handle dividend checks denominated in rupiah or ringgits (trust me, your local bank branch is clueless about that).
Until then, keep a global view…
Jeff Opdyke
Editor’s Note: EverBank offers one way investors can “go global” with world currencies within a bank account. To learn more about the options available, click here
Other Posts from the Author
- The Fed is Telling us the US Dollar is Toast - February 14th, 2012
- On Election Day, Don't Encourage the Bastards - February 13th, 2012
- Why the Chinese Yuan is the Currency To Own for the Next Decade - February 6th, 2012
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