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24 | International savings
In addition to providing tax benefits, offshore
funds can increase returns to the investor
through exposure to a wider range of assets.
Regulations in the UK can be restrictive, partially
to help protect what may be a vulnerable or
naive consumer. Therefore there may be con-
straints on the ways money can be invested.
These conditions are not applicable to offshore
accounts, resulting in a wider range of products
than would normally be available to the domestic
saver.
A diverse portfolio helps reduce the volatile
nature of investments. The variety of market
conditions and investment instruments frequent-
ly results in a higher rate of return.
It should be noted, however, that some off-
shore institutions are not covered by the UK
Financial Services Compensation Scheme.
What is the Financial Services
Compensation Scheme (FSCS)?
FSCS is the UK’s statutory fund of last resort for
customers of financial services firms. This means
that FSCS can pay compensation to consumers if
a financial services firm is unable, or likely to be
unable, to pay claims against it. FSCS is an inde- © Archerix | Dreamstime.com
pendent body, set up under the Financial
Services & Markets Act 2000 (FSMA). The serv- Checklist for Offshore Savings circle6Is there a limit on the number of with-
ice is free to consumers. Ac drawals you can make?
Many of the banks which offer offshore sav- circle6
counts
Do they have a minimum and maximum Some accounts may only allow a certain
ings are subsidiaries of the major high street con- balance? number of withdrawals over a fixed amount
cerns. This does not mean that the ‘parent’ bank With certain savings accounts you have to pro- of time. If this is exceeded then interest on
will meet liabilities that their offshore sub- vide a minimum balance that you must invest your savings can be lost. It is also worth find-
sidiaries cannot cover out of their own assets. to open the account. ing out if you have to give notice that you are
planning to make a withdrawal from your
Types of Offshore Savings period, regardless of fluctuations in interest
Accounts
rates. This type of account is ideal for circle6
account.
Check returns when bonus rate ends.
people who wish to know exactly how much Some savings accounts offer an attractive
Deferred Interest Accounts. These accounts they are likely to earn on their savings. return in the beginning, including a bonus
let you defer taking the interest on your Interest Paying Current Accounts. These rate over a certain period of time. This can
savings until a time that suits your tax accounts offer the ease of having a plummet once the bonus rate expires, possi-
planning. It’s up to you to choose when the chequebook and cash card and do not bly rendering the investment less worthwhile
best time will be. require notice to withdraw funds.
A Deferred Interest Account is ideal if Monthly Income Accounts. These circle6
than it initially appeared.
Does the account have a rate guarantee?
you’re thinking about moving, working or accounts pay interest monthly, rather than Some accounts will offer a guaranteed rate of
travelling extensively abroad, changing annually or when the account matures. interest, which is usually related to the Bank
income level for any reason or retiring. These are especially useful if you are of England base rate. These can have the
Euro Accounts. These accounts are looking for a regular income from interest
particularly useful if you are travelling payments on your savings. circle6
same effect as a bonus.
Does your provider offer any conditional
between, or planning on spending No Notice Accounts. Accounts which do bonuses?
significant time in a European country, as not require you to give any notice to If your current account is held with the same
they allow you to make transactions in withdraw funds and allow you to do this provider you may gain a higher rate of inter-
Euros. without any penalty. est. In addition, if only a limited number of
Fixed Rates Accounts. These accounts Notice Accounts. Here you must give withdrawals are made over a specified period
offer a fixed rate of interest over a certain notice to withdraw funds to avoid any sort of a higher rate may be earned.
Zurich Bank International
There’s strength and then there’s Zurich strength
R
Licensed by the Isle of Man Financial Supervision Commission to take deposits.
March 2009 Investment International www.investmentinternational.com
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