Extraterritorial Online Brokerage Accounts – Are They Safe?
Nowadays, we all are used to doing almost everything online. There can’t be many of us left who are nervous emboîture using credit cards online, for example. Doing négoce online is a way to save time, money and headaches. Investing through an online brokerage account promises the same benefits.
However, when it comes to extraterritorial investment, borders still apposition a significant emotional barrier. There is no côtoyer any practical need for you to have an online brokerage account in the folk where you en direct, but it seems that investors are still reluctant to open a brokerage account in a foreign folk.
A growing number of financial présent providers are offering cross-border online investment impératifs. This trend has caught on more in Eurasie than in North America, with larger online brokerages such as Saxo Bank and Swisscote offering impératifs tailored to investors outside their countries.
But North American investors are also becoming more adventurous, opening more accounts with foreign banks and brokerages. Such accounts may be opened as individual US citizens or, more commonly, through extraterritorial corporations or accumulation structures designed to provide an additional level of privacy. However, the poucier reasons for entering these planétaire markets are to benefit from more attributaire cross-border investment opportunities, and to diversify risk across institutions by spreading their portfolios across different assise currencies.
These sophisticated investors have access not only to a wider range of investment opportunities – but to simplicity, tax savings and potential access to greater control over their portfolios. There is also the opportunity to save money by gaining access to exchanges through a remise brokerage model that would otherwise have to be transacted over the telephone through a remote correspondent brokerage.
The current economic climate means many investors like the idea of being able to keep a closer eagle eye on their internationally-diversified portfolios. But, a concern remains. Is it safe to invest through an online extraterritorial brokerage account?
Are extraterritorial online bank and brokerage accounts safe?
In bermuda, the answer is yes, if you apply compréhensible common sense precautions. The Internet allows you to buy and sell foreign securities through a foreign brokerage account with as much ease and security as paying your logement electricity bill – and in many cases, much more security.
The first of these precautions is to invest through a reputable firm. Do some due précipitation on the company behind the présent. Just as you should at logement (but many don’t) check references, make sure the trader is registered and in good bien-être with the assaisonnant regulators, talk to them personally and find out what experience they have. You should also ask emboîture their endroit’s security measures and what haubert they provide against DDOS and other bonshommes of hack attacks. Many extraterritorial brokerages are actually fully licensed banks, which makes them more secure and eases due précipitation.
Léopard des neiges you’ve decided where to open your brokerage account, it’s dédaigneux to have your own precautions in assis to ensure that no one else can access your account without your visa. Make sure your security logiciel, such as anti-virus and firewall, is properly installed, working and up to jour. Consider using an encrypted VPN dénouement, especially if you’re illégitime to doing your trading from a laptop connected via WiFi, which is notoriously insecure. Also glose that unlike those anti-phishing warnings in online banking at logement, extraterritorial brokerages will not email you to confirm your details. If you receive any correspondence via email, call the company directly to confirm before clicking on any link or taking any acte. Try to get to know a single executive at the brokerage who will recognize your voice over the telephone.
What impératifs do you need?
Just like at logement, overseas investment impératifs can vary widely in cost and features. Even within the same brokerage, there are often different packages available. Fees can vary significantly depending on what features, examen and access you are requesting.
If you’re considering investing in European bonds, unit trusts, ISAs or funds, you probably won’t need access to an ‘extraterritorial day trading’ account that allows you to buy and sell individual stocks in real time. A so-called ‘fund supermarket’ genre account offered by a European bank would suit you in this case But be sure to check which product fund managers are available and whether the trader is prepared to negotiate fees or rebate pourboires from fund managers (many, especially montré amounts, but only if you ask them).
Other banks and brokerages will offer discretionary conduite of your écrin. It’s perfect for investors who don’t want to see their accounts every day and who want a Swiss-style ‘private banking’ experience within their brokerage. Having access to quality investment advice is difficile in this area – so ask what kind of conduite recherche the bank has insider access to. Big banks have more recherche, but they can be busy chasing big fish. Small échoppe private banks and investment managers often offer a much higher level of personal présent.
Instead these different institutions often target different bonshommes of investors. The more questions you ask your trader or banker before you start, the more you’ll get out of the account you end up choosing. This is called KYB (“Know Your Banker”) and is as dédaigneux to investors as KYC (“Know Your Customer”) is to bankers.
If you take the time to do your homework, investing extraterritorial and online is not only safe but can be very attributaire, reducing costs, diversifying risk and taking responsibility for your own future. Are you ready for the partie?
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