Did you know that most people around the world are free to trade and invest as they choose, however, this is not necessarily the case for United States citizens! Thankfully, there are simple, and legal, alternatives!
Whatever benefits there are to being a US citizen, the ability to trade and invest as we choose, are not among them. However, Americans can open up an offshore trust or an offshore business called an IBC (international business corporation). Offshore entities have freedoms to do things that we as individuals only used to have. And as an offshore entity you’re allowed to trade the forex market any way that you like. Just like the motion of a powerful fast moving train is limited to the area of the tracks, so too the new restrictive laws of the United States are limited to the United States.
Generally to set up an offshore trust or IBC the setup cost is around $1500 with an annual fee of about $600. For those who have $100,000 to invest, it’s definitely worth going offshore. Plus the cost of setting up an IBC can be recouped in the very first year with tax savings alone. You can talk to your tax attorney or CPA about the benefits of an offshore trust or IBC, or use our recommended attorney ( http://www.orionibc.com ). There’s also plenty of information to be had by simply searching the internet.
For those Americans who want to start small and grow, you can still open up a broker account offshore. Most brokers are not available to US residents, but there are a handful that are still willing to do business with Americans. Most if not all are unregulated, meaning there is no governmental oversight, but also no outside governmental regulations, just pure market. This spooks most traders today, but when I started trading none of the brokers were regulated. We just diversified our holdings over several brokers but honestly, we never really had any problems worth talking about. That cannot be said for the period after the regulations took effect.
Some companies like IBFX have both a U.S. office and an Australian office, but their Australian office will not open an account with a US citizen or an off shore Corporation that has a US citizen as its director.
Another solution to the citizen problem is to get an off shore residency. This could be as a retired resident of a number of countries such as Panama and English speaking Belize, or a second passport for freer travel. (It is unwise to be traveling with a U.S. passport only as Americans are the favorite targets of terrorist.)
To get more information on this 3rd option, check out EscapeArtist.com
It looks like the US dollar will be in an uncertain state for the foreseeable future. When opening a broker account, it is recommended that the trader opens the account in the currency that is being traded if possible. But a second reason is to diversify out of U.S. dollar holdings. Opening a bank account in some other currency follows the same logic. We just don’t want to put all of our eggs in the same basket.
When you are just starting out, any added cost limits your options. However, as your net worth increases, you become more interesting to the IRS, opportunistic criminals and more. An offshore IBC is the most flexible path, once you start feeling like you need to look into security. However, if it’s smart to protect your wealth, it is smarter to protect yourself, so when the accounts begin to get sizable, a good fire escape is always a good idea because you never know what the future holds. When you hear ready… aim… the fire escape needs to be already in place.
You will find a number of lucrative options offshore, other than Forex trading, that just are not available to U.S. citizens.