The Ultimate Guide to

What You Need To Know about Good Debt and Bad Debt

From time to time many people usually have to go through debt and in this article, you will find out how the different types of that include good and bad debt normally differ. The moment you take debt and it is able to increase your net worth or assist you to bring in more money then it can be categorized as good debt since it brings value. A good debt is normally used by individuals to deal with unforeseen changes that may require financial attention or basically to manage finances. A mortgage loan is one of the good debts since it normally has low interest and an individual can benefit from it by selling the house at a higher price and making extra money from it. A mortgage loan is seen to be a good debt as long as an individual is able to manage the repayments comfortably. Bad debt, on the other hand, is whereby an individual gets into debt through buying goods or services which are not able to add long-term value to them. As you read on you will find out how bad debts can be more straining to the individual as opposed to bringing more income or value to them.

Payday loans fall in the category of debt and this is because they normally come with very high-interest rates and these strains an individual and ties them down into financial debt. Another bad debt includes credit cards and this is because they have very high-interest rates and one only gets to pay minimum payments and therefore it can end up growing over the years without bringing any value to the individual. This is why individuals are normally advised to take necessary debts and try to avoid high-interest rates that might lead to being financially constrained. For you to find out how you can select good debt, read more here.

We are going to find out how an individual is able to be assisted and ensure that they go for good debts that are more of investments and will be able to bring value to their lives. When going for debt it is essential to go for investments such as car loans, mortgage loans, and student loans because they will be able to add value since they are investments. It is important to do your calculations well before taking up any debt so that you can make sure that you will be in a position to make timely repayments. In this discussion, we have been able to find out how different types of debt are able to affect an individual’s life and why one should ensure they avoid high-interest debt.

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Guidelines on How You Can Choose the Best Contractor

The kind of plans that you would want to erect around your house and office block is one of the most important considerations that you must have in mind even as you construct your house or office block. It is important for you to take time and think about the current offense that you want to put up because the reputation and perception that people have of the house or office block that you will set up, will depend a lot on it. The contractor that you will use to put up the fence at your house or at your office block is one of the biggest decisions that you will be required to make as you get into this project, visit this website.

When you talk to all the contractors in your city, they will all guarantee you of the good work that they will do and this makes the process of choosing a contractor very frustrating. Instead of taking their word, a better approach would be set up a list of characteristics that you are looking for in a Good contractor that would then act as a criterion to help you narrow down on one. In this article, you shall get to read of the characteristics that you need to look for in a Good contractor that you can then use to come up with your list, visit this website.

If you have colleagues, relatives or friends who have used the services offered by a contractor before, they would be the best people to ask for references and referrals. You could ask them some questions that would then give you the answers that you require such as how stressful it was to work with the contractor and if they were satisfied with the job that the contractor did. If they have positive things to say about the contractor, then you can consider enlisting the services, visit this website.

Another consideration that you cannot afford to overlook is look for a contractor, is the experience that they have. If you can find a Good and experienced contractor, then they are likely to process the particular expect is that you are demanding for in setting up the fence for your house or office block. Fences are of different types and some contractors have decided specialize in one particular kind of fence and you need to have this in mind as you make your final decision, visit this website.

Before getting to giving a particular contractor contract, you need to get estimates for the pricing of the complete project. Professionals will advise you to get estimates from three different contractors of how much it would cost for the project to be complete, before making a final decision, visit this website.

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Offshore Online Banking Guide – Critical Information You Must Know

There are several legal and regulatory compliance implications with offshore banking that I’d like to cover in this article. However, please don’t construe information on this site as legal guidance. I am providing this information for free based on my own experiences. Please consult your professional attorney or CPA (accountant) before you get involved with offshore internet banking.

What is an Offshore Bank

To be over simplistic, an offshore bank is a financial institution outside the shores of your country. If you are in Australia, a bank in the United States is an offshore bank to you. If you are in the United States, a bank in Singapore is an offshore bank to you. Therefore, the idea of offshore banking is relative.

A business or an individual, in this case you, may select an offshore bank account in a jurisdiction that is typically favorable in terms of taxes (often referred to as a tax haven by media), as well as in terms of legalities. In addition to choosing a jurisdiction with no to little income tax, for many, privacy and “secrecy” of banking activities are two of the bigger key considerations.

It goes without saying that access to your funds is important, as well as protection from corruption and stability in terms of certainty.

List of Common Offshore Online Banking Services

This is a brief list of services offered by offshore banks. This list is by no means a full comprehensive list of an offshore bank’s offerings, but rather a list of some of the most common offshore online banking services that businesses and individuals are offered:

  • Remote Deposits of funds
  • Direct Deposits of funds
  • ACH / Wire Transfers / EFT – Electronic Fund Transfers
  • Consumer and Commercial Lending
  • All Basic Credit Activities
  • Access to Capital – Offshore Debit Cards
  • Forex – Currency Exchange
  • Wealth Management
  • Offshore Trading Account
  • Offshore Brokerage Account
  • Administrative Services
  • Trustee Services

Note: Offshore banks typically tend to focus on either consumer or commercial banking. Within consumer, banks differentiate between retail consumer (the average individual) or private banking (meant for high net worth individuals).

Because each concentration involves a different cost structure from the bank’s perspective, when selecting an offshore bank for yourself, be clear on what type of consumer you are and what offshore online banking services you need. Gaining this clarity will ensure you are not disappointed in your choice.

List of Common Offshore Banks

No doubt the two most common names in offshore online banking are Switzerland and Cayman Islands. Just pick up any business journal or pop in a business based Hollywood flick. There is likely a mention of a Swiss bank account somewhere.

This is because as of at least 2012, these two jurisdictions held the most number of total deposits amongst all offshore online banks. Some other jurisdictions that offer offshore online banking are the following:

  • Singapore
  • Malaysia
  • Panama
  • Cook Islands
  • Dominica
  • Saint Kitts and Nevis
  • Antigua
  • Malaysia
  • Anguilla
  • New Zealand
  • Luxembourg
  • Bahamas
  • Barbados
  • Bermuda
  • British Virgin Islands
  • Cyprus
  • Cook Islands
  • Channel Islands
  • Monaco
  • Mauritius
  • Hong Kong
  • Malta
  • Macau
  • Regulating Offshore Online Banking

With complexity comes increasing regulation. The regulation around offshore online banking activities has steadily increased over the years, but according to many of its supporters it is still not enough. This means much more is in the pipelines. Regulation has particularly increased significantly after the significant events of September 11, 2011.

Regulatory guidance is issued and monitored by global bodies such as the International Monetary Fund or the IMF, who require financial institutions worldwide to maintain a certain level of operating or performance standard, specifically in terms of capital adequacy and liquidity. These key performance indicators are to be reported by banks on a quarterly basis to its designated regulator (such as the Fed or the FDIC in the United States).

The list of regulations is endless and quite comprehensive to say the least. Some notables are the Anti Money Laundering (AML) regulation and the Bank Secrecy Act (BSA). These acts require banks and financial institutions to immediately report suspicious activity resembling money laundering to local government authorities despite stepping out of the BSA jurisdiction.

Another example is the information sharing requirements between a certain group of countries with regards to capital flow and taxation which was initiated by members of the European Union. On the other side of the pond, the taxing body of the United States, the Internal Revenue Service (IRS) requires financial institutions to report to it names of businesses and individuals who benefited from interest income resulting from deposits in US based institutions.

The most notable in my opinion of recently enacted regulations is the US Patriot Act, which permits the US Government to seize all assets of a financial institution if it suspects that the institution holds assets that belong to a potential criminal. Several other countries have since followed suit.

I personally feel these regulations strengthen the global banking infrastructure. But then again I am just one person. There are others who feel in all sorts of ways about offshore online banking.

Interesting Fact: Did you know that just until the 1990s, individuals were allowed to create their very own offshore banks. This practice was stopped and now only large institutions are allowed to do so.

Connotations and Implications of Offshore Online Banking

It is not illegal to conduct offshore online banking, but such activities tend to carry with them a certain set of connotations and legal implications that you must be aware of and comply with. There can be severe fines, penalties and legal repercussions if you fail to comply with the legal and regulatory requirements.

Why you must be thinking? Because offshore banking historically has been used and abused by those who intended to evade taxes, as well as those that used funds for illegal causes. For example, organized crime networks heavily use offshore online banking to launder money.

But like I said, conducting offshore online banking isn’t an illegal activity. All persons conducting offshore online banking are required by most countries (depending on their residency) to disclose the activities and the outcomes, such as interest income for example.

Specifically in the United States for example, a US resident’s income is taxed on a global basis. This means that even interest earned overseas is subject to taxation by US authorities. Now although financial institutions are not required to disclose this information to countries of interest due the bank secrecy guidelines, individuals are required to disclose this information.

Similarly, one can legally avoid taxes in certain situations. For example, a resident of Country X living and working in the United Arab Emirates (UAE) may not have to pay taxes if Country X does not tax the individual’s global income.

Because there is no taxation on income earned in many Arab nations, interest income earned from deposits in a UAE bank account is not subject to tax. Further, the income is also not taxed in Country X. This is a common reason why so many affluent folks change residency and citizenship status, one that resonates most with their financial goals and objectives.

It’s a very interesting dynamic and there is a ton of opportunity for strategizing as you can imagine.

Dollar Concentration in Offshore Online Banking

Although offshore online banking is not a subject delved into by the average individual, the numbers involved (concentration of wealth and financial activity) are quite significant. You may find a lot of these simply fascinating.

For example, specialized banking economists and analysts indicate that half of the global capital (money) flows through one of the many offshore banks out there. The so called Tax Havens (think Switzerland) have over a quarter of the global wealth (think high net worth individuals and big companies). These Havens also hold over 30% of profits generated by companies based in the United States.

And that’s not it. Over 6 trillion US dollars owned by high net worth individuals are also reported to be held in offshore bank accounts in one shape or another.

Illegal Monies in Offshore Bank Accounts

Opportunists have identified weaknesses in the offshore banking system and thus have taken advantage of the systems to launder monies generated through illegal means and used for illegal purposes. According to the IMF, this amount is as large as 1.5 trillion US dollars on an annual basis. To put things in perspective for you, this is roughly 5% of the world’s total Gross Domestic Product (GDP).

In addition to illegal monies, there are also monies that have evaded taxation as well as monies that were generated through fraud, graft and corruption. All in all, the amounts are super significant. And as I stated above, the two jurisdictions with the biggest concentration of these amounts are the Cayman Islands and Switzerland (as of 2012).

Offshore Internet Banking for Corporations of All Sizes

I have already stated this earlier, but offshore online banking is not only for large companies, but companies of all sizes as well as individuals. There are a certain set of requirements that any institution, an individual or a company have to meet in order to open and maintain an offshore bank account.

In fact, it is easier for individuals to open and maintain an offshore bank account before companies are required to complete additional forms in a specific manner when establishing an offshore internet bank account.

Corporations typically engage in offshore online banking when they contemplate one or any mix of the following purposes.

  • Cost containment (bank fees and charges)
  • Paying and receiving payments from vendors and customers in local jurisdictions
  • Asset protection strategies
  • International acquisitions and investments
  • Compensating local employees in an offshore jurisdiction
  • Political reasons – Stability and predictability
  • Establishing a local business presence
  • Again, this is not a comprehensive list of why companies engage in offshore online banking. There are several other reasons why a company may decide to establish an offshore bank account. The only true way to find out the best offshore bank for you, and whether your objectives will be met through offshore internet banking is by speaking to a professional who can walk you through the entire process.

Concluding Thoughts on Offshore Internet Banking

I gave you a ton of information to read and digest in this article. As you have read, offshore internet banking is used by several different constituencies for several different purposes with several different intentions.

There are some significant advantages that can be derived from opening an offshore bank account such as entering new global markets and some serious offshore tax planning. I obviously recommend opening an offshore bank account for the right reasons, with full compliance with laws and regulations. For those contemplating abusing the system, understand that bank secrecy is a weakening concept, and one that will continue to weaken over the years.

Countries are increasingly sharing information, some voluntarily and some while succumbing to pressure by more powerful nations such as the United States.

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