Where can you find an easy, affordable, manageable, accessible offshore bank account? It’s closer than you think.
Just head north to Canada.
Before I continue, let me make something clear – our neighbor to the north is not a tax haven or ideal for asset protection. But for general diversification or to simply move some assets outside the U.S., Canada might be just the place you are looking for.
A Safe Haven Close to Home
Canada offers a sound banking system, conservative lending regulations and a currency that should continue to appreciate versus the U.S. dollar.
In fact, my colleague Sean Hyman believes the Canadian dollar will be the top-performing currency of 2011. For two reasons, rising oil prices and an economy that thrives no matter what’s happening in the world.
What’s more, Americans can look to Canada as a safe place to park some assets outside of the horrors of U.S. banking and the financial system.
It’s an easy-to-access banking destination that bears many of the same attributes you’ve become accustomed to in the United States — including the same language and deposit protection. The Canadian Deposit Insurance Corporation (CDIC) provides C$100,000 protection per account (US$100,000).
With 316 banks failing over the last two years here in the U.S., banks in Canada are now among North America’s leaders. Canadian banks are profitable and outperform their North American counterparts because of tighter government restrictions on lending capital requirements.
In the aftermath of the credit crisis, not a single Canadian bank collapsed thanks to the country’s responsible banking practices and conservative lending regulations. Financial institutions in the U.S., on the other hand, continue to founder and fail. In fact, 12 U.S. banks have failed this November and December alone.
One reason Canada has escaped the same fate is its foreign ownership law. This law restricts foreign banks from owning more than a 10% stake in domestic banks.
Because of this, Canadian banks are less dependent on risky foreign institutions and aggressive lending tactics.
Easily Add One of the
Top Currencies to Your Portfolio
Canada can also be considered a currency haven. The country has banks that are allowed to house accounts in various currencies. The Royal Bank of Canada (RBC), for instance, offers currency accounts in U.S. dollars, Canadian dollars and British pounds sterling. This is a good and simple way to diversify your nest egg.
In fact, some of the bigger Canadian banks may offer discount brokerage platforms. Using these low-fee services, investors can trade securities in Canada inexpensively.
In the last 12 months, the loonie has hit par with the U.S. dollar. As of yesterday, the loonie was hovering around $0.99 U.S. cents. The Canuck buck deserves to trade on par or at a premium to the greenback for many reasons.
Earlier this year, Canada also has a trade balance surplus with the U.S. compared to monthly trade deficits of over $40 billion here at home – and that’s to say nothing of the U.S.’s exploding budget deficits.
Canada’s economy, however, like most other economies, has been slowing since June. A high Canadian dollar continues to put pressure on exports and acts as a drag on employment growth in the country’s manufacturing belt in Ontario and Quebec.
But resource-driven exports — like oil and natural gas — have remained buoyant in 2010 and should continue to push the Canadian economy forward in 2011.
Bottom line: Canada is the nearby destination for “offshore banking.” Why not take advantage?
Bob Bauman, JD
Legal Counsel, The Sovereign Society