Don't Put Your Nest Egg in One Basket Sovereign Society A Letter
Today's comment is by Larry Grossman, Certified Financial Planner, managing director of Sovereign International Asset Management Inc., and member of The Sovereign Society Council of Experts.
Dear A-Letter Reader:
I just returned from The Sovereign Society's Wealth Protection Summit in Ireland, where I was asked to consult with every participant to help point him or her "in the right direction," for their wealth protection plan. Part of that process was getting to know the attendees, so I could understand their wealth concerns and goals.
Amazingly, every participant voiced the same concerns: the deteriorating U.S. economy and the future of the U.S. dollar. They were all looking for an individualized plan which would help them not only protect their assets, but also allow them the flexibility to invest their assets on a global basis.
My personal role at the conference was to address IRA and pension plans. Most of the participants had some type of retirement plan and were pleasantly surprised to learn they could move that retirement plan offshore. I explained that there are countless reasons to do this, but the main reasons are:
It's Not Just Creditors You Need to Worry About
When people think about asset protection, they typically think about protecting themselves from frivolous lawsuits or creditor attacks. And while these are legitimate concerns, you also need to protect your retirement plan from even scarier prospects - namely, a weakening U.S. dollar and poor investment options.
If the U.S. dollar suddenly plummeted (which is a very real possibility), every dollar-based investment (including your retirement plan) would decrease in value. Plus, you would face a significant drop in your purchasing power. But you can protect your assets, including your retirement plan, from this nightmare scenario by holding your retirement plan offshore in a basket of different currencies. (The old saying about "not keeping all your eggs in one basket" definitely applies here.)
You also need to protect your assets from poor investments. But it's difficult to protect your portfolio from bad investments and bad investment advice if you are only dealing with traditional U.S. based stockbrokers. They tend to recommend investments that help their firms, not necessarily your portfolio.
Going offshore solves this problem. How? Non-U.S. banks (who can manage the investments in your retirement plan) are far more secure and have long histories of safety and security. U.S. banks are also far more leveraged then European Banks. European banks are much more conservative, with asset managers that protect your portfolio against poor investments.
The Unlimited Investment Potential of Millionaires
Most of you have probably heard this story by now. You should have part of your portfolio invested outside of the United States. The U.S. markets are not always the best places to invest and a properly diversified global portfolio can actually reduce your risk from the volatility in the domestic markets.
Well that's true but it's only part of the story. The truth is most of the best investment managers on the planet are located outside of the U.S. and can only be accessed by non-U.S. accounts (like your offshore retirement fund). Frequently these managers just don't want to deal with the incredibly complex regulatory system in the United States.
Don't get me wrong - these managers don't operate their businesses in a vacuum. Many operate from highly regulated jurisdictions and just don't want to deal with yet another list of regulations just to operate from the United States.
And many of the best investments with superior consistent performance are only available outside of the United States. The Hedge Fund industry recently announced they are now managing over 1.3 trillion dollars. Individual investors can only invest in these hedge funds through an offshore entity, like a retirement account.
The "bursting real estate bubble" seems to be the buzzword of the press these days. But did you know you can invest in real estate anywhere in the world with your retirement plan? Imagine owning your own tropical waterfront paradise with pre-tax dollars. It can be done if you work with the right custodian.
To Wrap Up
I urge you to take action. Move at least part of your retirement plan offshore while you still can. Protect it from frivolous lawsuits and greedy creditors. Diversify outside of the dollar to protect your purchasing power and invest in the best investments available around the world that aren't dependent upon a climbing U.S. stock market. Stop having unnatural and unnecessary investment restrictions put upon you by a custodian who puts their interests before yours!
LARRY GROSSMAN, our "Retirement Guy"