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How to diversify investments and provide security for investment?

The search for financial security is something natural. For many investors, diversification strategy involves a protection of their capital to ensure growth as comprising a number of countries and currencies fall and attenuate risks of all investments. To be part of the actual money you invest directly or indirectly in a stable country with a strong currency is the equivalent to insure there are reduced risks. As experts say "do not put all your eggs in one basket." This sign is a single good reason to invest some savings abroad.

Large companies seek the maximum benefit and try to minimize their taxes to the maximum. Relocate their headquarters to places where labour costs or more favourable tax treatment. At other times, looking for the best accommodation possible for your business when they are segregated into subsidiaries. Thus, financial services located in one country (the United Kingdom or the Netherlands), the plants in other (Spain, countries of Central and Eastern Europe), administrative services or computer in another (India, China, Russia) and Internet sales in another (Bermuda). Sometimes the seat or focal point is in another (Monaco) and the holding company across the business network is in another (Spain). As mentioned earlier, high-tax countries fight each other by offering tax benefits and courting big business, while attacking the low-tax enclaves accusing them, among other things, unfair and harmful tax competition.

On the other hand and in the past, there have been reasons related to the progress of the economy of our country that pushed to seek safer investments elsewhere. In Spain, for years, monetary instability and the decline and gradual depreciation of the peseta against the currencies considered "strong" and especially against the German mark, repeatedly put at risk the investment capital in our currency. The implant of the euro has simplified and reduced all these uncertainties. Fluctuations in the value of a currency are due to diverse factors. At the time of this writing, the dollar is at minimum about the euro (1 x 1.3). However, this is due to problems in the U.S. economy more than the goodness of the whole European economy. European investor it is important to remember that the euro is subject to strong fluctuations due to various reasons.
One is the lack of vitality and innovation of the European economy, the "European decline, which is due to factors such as labour market rigidities, high wages and social costs and the low mobility of labour between others. For years, the competitiveness of EU countries has tended to decline compared to the rest of the world. Ultimately, the strength of a currency is based on the economy that supports it. While it is true that investments in foreign currency and securities denominated in other currencies, issued or not from other countries can be done from home, economic shocks affect indirectly, via taxation, investments in these assets, so Direct investment abroad continues to be a reasonable way.

Another reason is the lack of stability of the euro, which may be subject to frequent turmoil in the European Union due to factors such as different economic (savings, development of economy mine regional imbalances) of the constituent countries and the failure of the adjustments in fiscal policy (particularly the budget deficit) of pals belonging to the Economic and Monetary Union, as is the case of large economies of Germany, France and Italy, who constitute 70% of euro area GDP. In November 2003, members of the ECOFIN (meeting of finance ministers from member countries of the European Union) decided not to sanction France and Germany for breaching the deficit targets. This requires years of instability and volatility in currency markets and especially in the euro / dollar. A reasonable degree of investment protection is to keep hard currency assets of non-euro area, as the pound sterling, the dollar, the yen or Swiss franc.

Another threat to economic stability comes from worrying signs seen in the public pension system, such as the aging population, the resulting greater number of pensioners and beneficiaries, along with the still high unemployment, leading to doubt of a pension system capable of fulfilling its commitments when the day comes. Spanish pensioners have the highest life expectancy in Europe, the pension expenditures will be increasingly higher. The Toledo Pact established a commitment by all political forces to maintain a public pension system with sufficient purchasing power, but experts doubt the feasibility of a public pension system that can meet these aspirations. A government, in need of money to pay their own pensions can cut down more and plus more savings of their citizens. Saving bags located within the country, either in mutual funds, private pension funds, or deposits of any type are always a tempting morsel. A time to pay the pensions of their own government officials would cut through taxes, the savings deposited in private pension plans. In fact, in 2004 even suggested a cut in tax benefits for pension funds.

Many experts are concerned that the public accounts and macroeconomic scenes  European countries do not include future liabilities increased government for which no reliable forecasts. These obligations relate to pensions, but also to health care. The usual way to meet these demands has been to resort to issuing debt and printing money with the result of uncontrolled inflation. The health care demands are rising and pharmaceutical expenditure and the costs of medical technology increasingly expensive, contribute to the growth of these obligations. On the other hand, the mobility of capital and labour arising from the relocation and the internationalization of economic activities become more difficult the collection of taxes by European governments.

The entry into the monetary union has resulted in a tightening and contained general government debt. While in Spain on public spending and a balanced budget has been controlled in recent years, in compliance with the Covenant of Economic and Financial Stability, high public spending is responsible for the increased tax burden, it is not enough to finance it, and adjustment falls on public investment. Increasing social spending, the problem of healthcare debt, state and regional governments, exacerbate this situation. The medium-term budgetary implications of current public expenditure can become financially viable and threaten the solvency of the system.

Furthermore, asset management is becoming increasingly international and diversified, so that investment in exterior systems are those who obtain more profitable results. For example, according to investment experts in a particular sector (telecommunications, energy and utilities) is always more cost effective if carried out worldwide in several markets and several countries, which if confined to a single sector a single country. A diversification joins the tax savings. In the absence, of tax havens in Mayona , Withholding tax on capital gains, which can be 15% or more in a country of high taxation, the end result of cumulative investment performance over time than investing it offshore profitability.

A threat to the maintenance and sustainability of investments is the restriction on freedom of movement of capital. In our country there is freedom of movement of capital, so that any person or entity may send money abroad and receive funds from another country. However, this freedom is not total.

Theoretically, freedom of capital movement exists in our in Spain since 1991, following the adoption of Legislative Decree implementing the Law 40/1979 on the control of change. Since 1991, the Spanish could make any movement of money following the Council Directive 88/361 of the European Community and ARTICLE 56 of the Treaty establishing the European Community the free movement of capital between member states and between them and countries outside Europe. This legislation was extended to the Royal Decree 672/1992 on the regime of Spanish investment abroad. The new Law 19/2003 imposes mandatory reporting requirements (see Chapters 4 and 15). The new European Constitution, in Article 156, prohibits the restriction models capital movements. However the scope of this article is limited in what concerns payments from or directed to third countries.

Although the European Union there is free flow of capital, goods and people, public opinion appears from time to time against the globalization of the economy and calls for controls on capital movements, such as the "rate Tobin". If a global financial crisis broke out, possibly again to consider the implementation of these restrictions, developing rules governing the transfer of capital and exchange controls implemented. It goes much further back, in January 2005, French President Jacques Chirac proposed the creation of an international tax to fight poverty. This new tax based in international financial transactions, or a voluntary contribution of countries that maintain bank secrecy, among other sources. The possibility of not being able to transfer our goods abroad or can not recover easily, without penalty, is a threat to combat international diversification and the use of unregulated financial enclaves in free and favourable environment for business.

In the context of European Union membership is unlikely to happen in our country. However, it is possible but not probable, that a government is actually using this idea in a moment of despair. In this case, the citizen would face enormous difficulties in carrying out financial transactions at a later time, are normal. When the employer is saving or losing benefits or may lose their money looking for solutions, especially the most effective and legal. It then turns to the legally questionable or illegal.

The massive flight of funds from one country, or "capital flight" is the inevitable phenomenon that accompanies severe economic, social and political. The money leaves the country in every way possible. Be remembered that capital flight is not a new phenomenon.

The case of Argentina is instructive in relation to some of the issues and others will be discussed later. It occurred between 2001 and 2003 a combination of abduction of savings in current and savings accounts ("yard") and deposit accounts ("pound"). Once the accounts are blocked, the funds lost value by eliminating the peso-dollar parity, which is equivalent to expropriation. No wonder the volume of money flew from Argentina. During the period 1992-2001 the flight of capital amounted to 60.142 million dollars. In December 2001, an estimated 20,000 had left the country millions of dollars. The Argentine took advantage of the absence of effective controls to salvage their savings from economic chaos and social and legal insecurity that, until now, characterized the country. The measures taken by the Argentine government reassured investors between January and September 2003, U.S. $ 3.816 million fled the country, as in the first half of 2002. Overall, an estimated total value of funds that Argentines held abroad is 100,000 million dollars. Argentina's situation goes beyond the economic crisis time or temporary and it is difficult to play in Europe or America, but is a good example of what can happen in some countries and why many people attend low tax centres services. The saver or investor has no time or interest for development or discussion of economic theories, or are interested in them. Concerned to recover their money and keep it in a safe place, to provide him with greater fiscal and financial profitability. It's easy to joke about the work ethic of the Argentine or their reliability as business partners, but it is more difficult to get into the skin of a saver who confiscated and depreciate their savings in the midst of great political and legal uncertainty.

In the Republic of South Africa the introduction of exchange controls has pushed out of the country 50,000 million dollars.

In our country, the Esquerra Republicana de Catalunya party proposed in October 2004, using tanks of Mutual occupational accidents and diseases, deposited in the Bank of Spain, to cover the deficit of the Samda public (The Gazette the little business, October 7, 2004). There are many politicians who dream, think and speak in terms of confiscation and expropriation.

The result is that many investors think it is better to have already invested funds and making profits out of their territory. Invest Online

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