What does this mean?
This is a simple enough phrase but to the ordinary investor it probably doesn’t have any relevance. For international investors it may have a very big impact in terms of investment returns, growth, risk, tax liability and asset protection.

With the advent of technology and the world-wide web, information can be gained in seconds on any topic under the sun. It has changed people’s lives and the way they invest. The world of investment opportunity has opened up and accessible to everyone who wishes to become involved. However with this explosion in opportunity comes the spectre of higher risks. Investors can invest in anything or anywhere, buy stocks on any exchange, trade currencies, buy options and futures the list is endless.

Investing in this way will often involve organisations that the investor may not be too familiar with and may not have any real in-depth knowledge of the investment opportunity. Another factor is that professional advice may not be readily to hand to give confidence. It has become a classic example of ‘caveat emptor’ – buyer be ware!

Onshore Investing
Onshore investing is regarded as your home market which is heavily regulated to give retail investors some security and protection. In Hong Kong we are regulated by the Securities and Futures Commission (SFC) and it is their role to authorize financial products and services to ensure investors have maximum protection.

All financial products have to be thoroughly screened before they can be promoted and marketed to investors in Hong Kong. This gives the investor confidence that the product provider is reputable. However it is still the investors’ personal responsibility to understand exactly what the investment is and what the inherent risks are. An authorised financial adviser will be able to give advice and information to assist in this.

Offshore Investing
Offshore investing refers to the world of investments outside of any regulatory authority. Invariably investing offshore can be perceived to expose an investor to greater risks as there is little or no regulation in place to police global investment opportunities. However this is not strictly true. There are many places in the world that are commonly referred to as ‘Tax Havens’ (see Tax Haven section).

These are areas that have established a financial structure giving favourable concessions to financial institutions to attract investment into their country. Several of the most popular tax havens do have some regulatory control to give protection to investors and still retain the tenets of tax efficiency and confidentiality. Indeed some tax havens offer some of the most comprehensive investor protection anywhere in the world.

By investing offshore the investor can access a world of opportunity normally the reserve of global institutions and professional investors.