Investors Seek Out Non-US Investment Opportunities: The Flight of Capital
Alan Guinn
March 23, 2008
Worldwide Investment Professionals are seeking alternatives to investment in US based Equities and Real Estate, and are finding that non-US based investments are offering larger--and, in some cases, guaranteed returns---something that the US Market is finding more and more difficult to do.
Although the blended Return on Investment for US-based products has historically been in the double digits, recent events and changes in the investment climate within the USA have worldwide entrepreneurial investors seeking the next true opportunity.
This sea change in thinking has been classified as the Flight of Capital, and it represents a change in the financial dynamics of countries ranging from Sovereign funds through money managed for private citizens and investment groups.
Ex-USA Investors see it as a simple diversification of investment and "following the money." With the United States long known as the safe haven, recent political turmoil in the USA has upset worldwide investors, bringing a variety of financial and societal changes to what had been accepted previously as "the world order."
First and foremost, a political election in the USA has upset the electorate of the USA, and as goes the electorate of the USA, as the old saying goes, so goes the world.
This concern is manifesting in a variety of ways.
First and foremost, an unpopular Middle-Eastern war is costing the USA both capital and prestige in the world — probably more than has been expended since the American Civil War in the 1860īs. Whatever the reasoning behind the Middle Eastern war-be it oil supplies, terrorism, or religion, a clear majority of Americans now seem to believe it is time to begin the disengagement process.
The Democratic Party—itself not democratic, nor a party-- with two valid political standard-bearers—one a woman, one a black, are ready to capitalize on voter discontent.
The challenge for Democrats is to be able to govern in a way which will be acceptable to their newfound majority. Already the leader of the Democratic Congressional House of Representatives, Speaker Nancy Pelosi, has fallen into the pit of blaming Big Oil for all of the ills brought on over the last 50 years. Again, government seems to have forgotten that taxing oil companies as "punishment" simply leads to higher prices at the gas pumps of American gasoline stations.
Nor, it seems, have the Democrats learned that larger government is not better government. Raising the minimum wage of employees, in an effort to appeal to the "fairness" of the American people, is driving prices for everything higher from food to clothing to durable goods, leading to inflation— or in the worst case, stagflation.
Tie all of this to the rising price of oil. OPEC has a noose around the neck of the USA---a change in the normal course of Historical events—and is not afraid to leverage the noose. OPECīs recent pronouncement that there will not be additional oil produced sent the price of oil skyrocketing into areas never before seen, and opening the door for global price leverage.
Against this backdrop of events, investment in the USA no longer represents the attractive investment opportunity it once did, and a variety of investment vehicles have opened the door for foreign investors to become innately involved in managing their own financial futures.
Foreign investment funds—especially those chartered overseas—generally operate with rules different from those in the USA.
Donīt expect any type of insured guarantee on your investment, similar to FDIC Insurance. Itīs not going to happen. Some lower dollar funds do offer a minimum guarantee on investment. Note that the rate of return on investment in offshore investment funds is significantly higher than that generally accorded to US-based funds. At least one investment fund will sign a Promissory Note setting guaranteed rates of interest in U$D denominations at double-digit minimum rates.
Depending on the amount of deposit invested, current interest payment rates can range from 12% guaranteed on a $10,000 investment, to as much as 25-28% on a $50,000 Deposit, dependent on the type of fund and the investment level chosen.
One will ask, "What are these funds doing with my money?"
Most offshore investment funds create several different niches for generation of revenue, and offer very clear explanations as to the amount of risk involved for return expected. Some will stipulate a specific use of funds and offer you a guarantee in writing as to the use of funds of the investment.
As is true with most investment, however, the higher the rate of return expected on the investment, the more volatile the vehicle for the investment. The highest rates of return, currently 25-28%, are paid for funds invested in FOREX exchange and in funding of Private Placement Memoranda. The FOREX trading is not FOREX trading at the lower levels, nor is it for the faint of heart. Huge sums of money are traded in FOREX trading every day. The equivalent of billions of dollars are traded, and much of this is in higher risk trading currency pairs.
Privat Placement Memoranda funds will invest money anywhere private funds are desired, and seek not only a rate of return equal to or exceeding US-Based capital, but also an equity participation in a business project or offering. This spread of cash enables the fund to not only attract other capital for investment, but pay the fund investors---also known as Investment Partners—a portion of the revenue realized from the equity participation.
What must one seek in a good offshore fund? Traders with experience. Well crafted and constructed documents. If you open a bank account offshore, use a reputable group of Attorneys or Chartered Accountants to handle the process. If you are trying to move money across borders, listen to financial advisors. Be interested in your investment. Learn about how your money has been invested, and watch the investment pattern. Get to know your fund manager.
Although the blended Return on Investment for US-based products has historically been in the double digits, recent events and changes in the investment climate within the USA have worldwide entrepreneurial investors seeking the next true opportunity.
This sea change in thinking has been classified as the Flight of Capital, and it represents a change in the financial dynamics of countries ranging from Sovereign funds through money managed for private citizens and investment groups.
Ex-USA Investors see it as a simple diversification of investment and "following the money." With the United States long known as the safe haven, recent political turmoil in the USA has upset worldwide investors, bringing a variety of financial and societal changes to what had been accepted previously as "the world order."
First and foremost, a political election in the USA has upset the electorate of the USA, and as goes the electorate of the USA, as the old saying goes, so goes the world.
This concern is manifesting in a variety of ways.
First and foremost, an unpopular Middle-Eastern war is costing the USA both capital and prestige in the world — probably more than has been expended since the American Civil War in the 1860īs. Whatever the reasoning behind the Middle Eastern war-be it oil supplies, terrorism, or religion, a clear majority of Americans now seem to believe it is time to begin the disengagement process.
The Democratic Party—itself not democratic, nor a party-- with two valid political standard-bearers—one a woman, one a black, are ready to capitalize on voter discontent.
The challenge for Democrats is to be able to govern in a way which will be acceptable to their newfound majority. Already the leader of the Democratic Congressional House of Representatives, Speaker Nancy Pelosi, has fallen into the pit of blaming Big Oil for all of the ills brought on over the last 50 years. Again, government seems to have forgotten that taxing oil companies as "punishment" simply leads to higher prices at the gas pumps of American gasoline stations.
Nor, it seems, have the Democrats learned that larger government is not better government. Raising the minimum wage of employees, in an effort to appeal to the "fairness" of the American people, is driving prices for everything higher from food to clothing to durable goods, leading to inflation— or in the worst case, stagflation.
Tie all of this to the rising price of oil. OPEC has a noose around the neck of the USA---a change in the normal course of Historical events—and is not afraid to leverage the noose. OPECīs recent pronouncement that there will not be additional oil produced sent the price of oil skyrocketing into areas never before seen, and opening the door for global price leverage.
Against this backdrop of events, investment in the USA no longer represents the attractive investment opportunity it once did, and a variety of investment vehicles have opened the door for foreign investors to become innately involved in managing their own financial futures.
Foreign investment funds—especially those chartered overseas—generally operate with rules different from those in the USA.
Donīt expect any type of insured guarantee on your investment, similar to FDIC Insurance. Itīs not going to happen. Some lower dollar funds do offer a minimum guarantee on investment. Note that the rate of return on investment in offshore investment funds is significantly higher than that generally accorded to US-based funds. At least one investment fund will sign a Promissory Note setting guaranteed rates of interest in U$D denominations at double-digit minimum rates.
Depending on the amount of deposit invested, current interest payment rates can range from 12% guaranteed on a $10,000 investment, to as much as 25-28% on a $50,000 Deposit, dependent on the type of fund and the investment level chosen.
One will ask, "What are these funds doing with my money?"
Most offshore investment funds create several different niches for generation of revenue, and offer very clear explanations as to the amount of risk involved for return expected. Some will stipulate a specific use of funds and offer you a guarantee in writing as to the use of funds of the investment.
As is true with most investment, however, the higher the rate of return expected on the investment, the more volatile the vehicle for the investment. The highest rates of return, currently 25-28%, are paid for funds invested in FOREX exchange and in funding of Private Placement Memoranda. The FOREX trading is not FOREX trading at the lower levels, nor is it for the faint of heart. Huge sums of money are traded in FOREX trading every day. The equivalent of billions of dollars are traded, and much of this is in higher risk trading currency pairs.
Privat Placement Memoranda funds will invest money anywhere private funds are desired, and seek not only a rate of return equal to or exceeding US-Based capital, but also an equity participation in a business project or offering. This spread of cash enables the fund to not only attract other capital for investment, but pay the fund investors---also known as Investment Partners—a portion of the revenue realized from the equity participation.
What must one seek in a good offshore fund? Traders with experience. Well crafted and constructed documents. If you open a bank account offshore, use a reputable group of Attorneys or Chartered Accountants to handle the process. If you are trying to move money across borders, listen to financial advisors. Be interested in your investment. Learn about how your money has been invested, and watch the investment pattern. Get to know your fund manager.
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