Increasing numbers of successful professionals, executives, business owners, and entrepreneurs who have accumulated substantial wealth are considering global investment strategies to manage their wealth. Their primary motives are threefold: Expanded investment opportunities, increased diversification to reduce risk, and superior tax benefits.
In today’s rapidly evolving global economy, US-based investors are more critical than ever to expand their horizons and invest part of their assets in companies headquartered outside the U.S.
One way to implement a global investment strategy is with the assistance of a Swiss wealth management firm.
Read on if you haven’t previously considered working with a Swiss. We will describe some tangible benefits in this blog that may be new to you.
Let’s get started.
Read our popular Quick Guide, “Choose the Right Global Investment Strategy During Global Tension and High Inflation.”
Global Investment Opportunities
When properly deployed, a global investment strategy can generate several important opportunities that benefit savvy investors:
- Diversification in multiple countries and markets can reduce the risk of being too concentrated in a single market. We live in a global economy, but that does not mean all markets move up and down together.
- Emerging and growing markets could offer higher potential growth rates than more mature economies. By investing globally, you could access this higher growth opportunity.
- Think about this: You are already a global consumer if you live in the U.S., drive a German car, wear a Swiss watch, and dine at a French restaurant.
- Global investing can also diversify your currency risk. For example, holding assets in stronger foreign currencies can offset the impact of a weaker dollar.
- Global investing can also assist in hedging against economic risks. If the US is experiencing inflation and recessions, investing in other, more stable countries would be prudent.
- Certain global trends, such as digital transformation, renewable energy, or aging demographics, are better captured by some countries or companies than others.
- Some industries are more dominant in specific countries outside the U.S. For instance, you should invest in U.S. companies if you want exposure to the latest large-capitalization technology stocks. But if you want exposure to the best car companies, invest in German or Japanese companies. Keep in mind that tech companies are also global.
- Politics may also be a factor. Some countries are dominated by politicians who support policies that hinder the revenue and profit of those who do business there. Meanwhile, it pays to invest in companies headquartered in more business-friendly countries.
Global Investing has Tax Considerations
Global investment strategies can offer a range of potential tax benefits for savvy investors. While using a Swiss wealth management firm doesn’t automatically lower your tax liability, some benefits may be superior to an investor’s country of residence and its tax treaty with Switzerland.
As always, it’s advisable to seek the counsel of a Swiss wealth management firm or an international tax attorney knowledgeable about international tax laws so you comply with foreign and domestic tax laws.
- By investing globally, you can diversify your income sources, which could have tax benefits depending on the income tax codes in different countries.
- Some countries offer more favorable tax codes than the U.S. for its citizens. They might have lower capital gains tax rates, no dividend tax, or beneficial tax treaties that reduce withholding taxes on income earned from overseas investments.
- Many countries have bilateral tax treaties that can reduce your tax liabilities.
- In some cases, foreign taxes can be credited against domestic tax liabilities. This can significantly reduce your overall tax liability.
- Global investing also allows for currency management, which can have tax implications. Different exchange rates and tax treatments can be used on currency gains and losses.
- One frequently overlooked advantage of global investing is its potential for tax-efficient investments. Many countries, including the US, offer tax credits for taxes paid on international investment income, helping to avoid double taxation. While the application and benefit of these tax credits can depend on various factors, such as the type of income and the investor’s overall tax situation, they can provide a significant tax advantage for global investment strategies.
- Many international companies pay dividends to their shareholders, offering an income stream and favorable tax treatment. Depending on your tax bracket and the source of these dividends, you may be taxed at a lower rate than ordinary income.
The global trend for international investing is towards increased transparency and information exchanged between countries regarding taxation. The goal is to reduce tax evasion and more aggressive forms of tax avoidance. The OECD’s (Organisation for Economic Co-operation and Development) Common Reporting Standard (CRS) is a prime example, and Switzerland is a participating member.
While global investing can offer valuable tax benefits, international tax laws are extraordinarily complex, and investors need expert advice. It’s advisable to consult with a Swiss wealth manager or tax professional with international expertise to navigate these complex laws.
Why Use a Swiss-based Wealth Management Firm for Global Investment Portfolios?
With a deep-rooted tradition of financial expertise, neutrality, and stability, Switzerland has long been a beacon of transparency and trust in global finance.
A Swiss wealth management firm can provide US investors with various services to manage sophisticated global portfolios. These services include but are not limited to financial planning, investment management, estate planning, tax optimization, and risk management.
By leveraging the impact of diverse investments, including stocks, bonds, commodities, and alternative investments worldwide, a Swiss money management firm can help you mitigate risk, generate more predictable returns, and safeguard your wealth against geopolitical uncertainties, economic turbulence, and volatility in the securities markets.
Moreover, Swiss wealth managers are well known and highly regarded for their bespoke services, providing personalized strategies that align with their client’s financial goals and tolerances for taking risks.
Utilizing a comprehensive approach encompassing everything from the macroeconomic environment to the smallest financial detail, they can create a unique global investment strategy that is as unique as the investors themselves.
Swiss wealth management firms offer a proven and sophisticated path for global portfolio management, whether you are an individual seeking to protect your assets, a family planning for future generations, or an institution looking for strategic investment opportunities.
We invite you to connect with us to learn more about LFA’s global investment management services.
