Is it possible to borrow money to invest in a foreign country?
Most likely, this will not work they way you think. First things first, to get a loan, the bank needs to accept your collateral. Note that this is not directly related to the question what you plan to do with the loan. Example: you have a portfolio of stocks and bonds worth USD 2 million. The bank decides to give you a loan of USD 1 million against that collateral. The bank doesn't care if you will use the loan to invest in foreign RE or use it up in a casino, it has your collateral as safety. So, from the way you describe it, I take it you don't have the necessary local collateral but you wish to use your foreign investments as such. In this case it really doesn't matter where you live or where you incorporate a company, the bank will only give you the loan if it accepts the foreign collateral. From professional experience with this exact question I can tell you, there are very few banks that will lend against foreign property. And there are even less banks, if any, that will lend against foreign projects. To sum it up: Just forget banks. You might find a private lender to help you out but it will cost you dearly. The best option you have is to find a strategic partner who can cough up the money you need but since he is taking the bigger risk, he will also take the bigger profit share. Yes it is possible. It would depend on Banks policies whether they would lend. Quite a few large corporations borrow money in one country for business needs in other country
"Theory of Levered Investing Borrowing in order to increase investment exposure is a time-honored and legitimate activity.  It's the optimal way to increase your exposure, according to finance theory (which assumes you get a good interest rate...more on this later).  In your case it may or may not be a good idea.  Based on the information in your post, I believe that in your case it is not a good idea.  Consider the following concerns. Risk In finance, reward comes with risk and in no other way.  Investing borrowed money means there is a good (not small) chance that you will lose enough money that you will need to pull significant wealth from your own savings in order to make up the difference.  If you are in a position to do this and OK with that possibility, then proceed to to the next concern.  If losing a lot of money means financial calamity for you, then this is a bad idea.  You haven't described your financial situation so I don't know in which camp you fall.  If the idea of losing, say, $100K means complete financial failure for you, then the strategy you have described simply has too much risk. Make no mistake, just because the market makes money on average does not mean it will make money, or as much money as you expect, over your horizon.  It may lose money, perhaps a lot of money. Make sure this idea is very clear in your mind before taking action. Rewards Your post implies that you think you can reliably get 10%-12% on an investment. This is not the case.  There are many years in which a reasonable portfolio makes this much or more, but on average you will earn less. No ones knows the true long-term market risk premium, but it is definitely less than 10%.  A better guess would be 6.5% plus whatever the risk-free rate is (currently about 0%).  Buying ""riskier"" investments means deviating from the optimal portfolio, meaning you took on more risk than is justified by how much extra money you expect to make.  I never encourage people to invest based on optimistic or unrealistic goals.  If anything, you should be conservative about how you expect things to go.  And remember, these are averages. Any portfolio that earns 10%-12% also has a very good chance of losing 25% or more.  People who sell or give advice on investments frequently get you charged up by pointing at times and investments that have done very well.  Unfortunately, we never know whether the investments and time period in which we are investing will be a good one, a bad one, or an unexciting one.  The reality of investing is...well, more realistic than what you have described. Costs I can't imagine how you could borrow that much money and only have an annual payment of $2000 as you imply--that must be a mistake.  No individual borrows at a rate significantly below 1%.  It sounds like it's not a collateralized loan of any kind, so unless you are some kind of prime-loan customer, your interest rate will be significant.  Subtract whatever rate you actually pay from 6.5% to get a rough idea of how much you will make if things go as well as they do on average.  You will pay the interest whether times are good or bad. If your rate is typical of noncollateralized personal loans, there's a good chance you will lose money on average using the strategy you have described.  If you are OK with taking risk with a negative expected return, consider a trip to Las Vegas.  It's more exciting. Ethics I'm not one to make people feel guilty for doing things that are legal but of questionable morality.  If that's the case and you are OK with it, more power to you. I'm not sure under what pretense you expect to obtain the money, but it sounds like you might be crossing legal lines and committing actual crimes (like fraud).  Make sure to check on whether what you intend is a white lie or something that can get you thrown in prison. For example, if you are proposing obtaining a subsidized education loan and using it for speculation, I could easily see you spending serious time in prison and permanently ruining your life, even if your plan works out.  A judge and 12 of your peers are not going to think welfare fraud is a harmless twist of the truth. Summary I've said a lot of negative things here.  This is because I have to guess about your financial situation and it sounds like you may have unrealistic expectations of the safety and generosity of investing.  Quite frankly, people for whom borrowing $250K is no big deal don't normally come and ask about it on StackExchange and they definitely don't tend to lie in order to get loans.  Also $18K a year doesn't change their quality of life. However, I don't know.  If $250K is small relative to your wealth and you need a good way to increase your exposure to the market risk premium, then borrowing and investing may well be a good idea." "Here are some reasons why it is advantageous to hold a portion of your savings in other countries: However, it should be noted that there are some drawbacks to holding funds in foreign banks: Don't worry; I haven't forgotten about the elephant in the room.  What about tax evasion and money laundering? In general, simply transferring funds to a foreign jurisdiction will do nothing to help you evade taxes or hide evidence of a crime.  Pretty much any method you can think of to transfer money is easily traceable, and any method that is difficult to trace is either illegal or heavily-regulated, with stiff penalties if you get caught. There are a few jurisdictions that have very strict banking privacy laws (the Philippines, for example).  If you can somehow get the money into a bank account in one of these countries, you might be OK... at least, until that country's government decides (or is pressured) to change its banking privacy laws. But, what would you actually do with that money?  Unless you want to go live in that country, you're going to have to transfer the funds out to spend them, and now you're right back on the radar — except now it's even worse, because the fact that the funds come from a suspicious jurisdiction will automatically cause your transfer to get flagged for investigation! This is where money laundering comes into play.  There are lots of ways to go about this (exceptionally illegal) activity, many of which do not involve banks at all (at least, not directly).  How money laundering works is outside the scope of this question, but in case you are curious, here are a couple of articles about the ""dark side"" of finance: In short, if you want to break the law, opening a foreign bank account isn't going to help much.  In fact, the real crime is that offshore banking has such a criminal reputation in the first place! That said, it is possible to create legal distance between yourself and your money by using a corporate structure, and there are legitimate reasons why you might want to do this.  Depending on which jurisdiction(s) you are a tax resident of, you can use this method to: Exactly how to do this is outside the scope of this question, but it's worth thinking about, especially if you have an interest in geopolitically diversifying your financial assets. If you're interested in learning more, I came across a pretty comprehensive article about Offshore Basics that covers how and why to set up offshore legal structures. (and yes, that makes now 4 links from the same site in one post! I promise it's just a coincidence; see disclaimer below) I am a US citizen with bank accounts in several countries (but not Switzerland; there are far better options out there right now). I have no affiliation with the website linked in this answer; while I was doing research for this answer, I found some really good supporting content, and it all just happened to be from the same source." There are two significant drawbacks to this type of transfer. They were the reasons why I kept my American 401(k) as-is and started funding my Canadian RRSP from zero balance. 1. Taxes - a large chunk of your 401(k) will be lost to taxes. There is probably no way to transfer the funds without making a 401(k)/IRA withdrawal, which will incur the US federal tax and the 10% early-withdrawal penalty.  When the money went into the 401(k), you got a tax deduction in the US and the tax break is supposed be repaid later when you make a withdrawal (that's basically how tax deferral works).  It's unlikely that any country will let you take a deduction first and send the payback to a foreign country.  The withdrawal amount may also be taxable in Canada (Canadians generally pay taxes on their global income and that includes pensions and distributions from foreign retirement plans).  Foreign tax credit will apply of course, to eliminate double taxation, but it's of little help if your marginal Canadian tax rate is higher than your average US tax rate. 2. Expenses. Your RRSP will have to be invested in something and mutual fund management expenses are generally higher in Canada than in the US.  For example, my employer-sponsored RRSP has a Standard & Poor's stock index fund that charges 1.5% and that is considered low-cost.  It also offers a number of managed funds with expenses in excess of 2% that I simply ignore.  You can probably invest your American 401(k)/IRA in mutual funds more efficiently. If you are paid by foreigners then it is quite possible they don't file anything with the IRS. All of this income you are required to report as business income on schedule C.  There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040.   You may still need a local business license to do the work locally, and may require a home business permit in some cities.  In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business.  This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses. Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway.  You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA.   If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income.  This does NOT apply if you live in the USA and are paid from Norway. If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR).  This is pretty important, there are some large fines for not doing it.  It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply. "This sounds like a FATCA issue.  I will attempt to explain, but please confirm with your own research, as I am not a FATCA expert. If a foreign institution has made a policy decision not to accept US customers because of the Foreign Financial Institution (FFI) obligations under FATCA, then that will of course exclude you even if you are resident outside the US.  The US government asserts the principle of universal tax jurisdiction over its citizens.  The institution may have a publicly available FATCA policy statement or otherwise be covered in a new story, so you can confirm this is what has happened.  Failing that, I would follow up and ask for clarification. You may be able to find an institution that accepts US citizens as investors.  This requires some research, maybe some legwork. Renunciation of your citizenship is the most certain way to circumvent this issue, if you are prepared to take such a drastic step.  Such a step would require thought and planning.  Note that there would be an expatriation tax (""exit tax"") that deems a disposition of all your assets (mark to market for all your assets) under IRC § 877. A less direct but far less extreme measure would be to use an intermediary, either one that has access or a foreign entity (i.e. non-US entity) that can gain access.  A Non-Financial Foreign Entity (NFFE) is itself subject to withholding rules of FATCA, so it must withhold payments to you and any other US persons.  But the investing institutions will not become FFIs by paying an NFFE; the obligation rests on the FFI. PWC Australia has a nice little writeup that explains some of the key terms and concepts of FATCA. Of course, the simplest solution is probably to use US institutions, where possible.  Non-foreign entities do not have foreign obligations under FATCA." Not necessarily. You can set any rules that you like, and you can get capital from other sources. In our company's case, you have to work there for a year before you are eligible to join the co-op. The buy in is given as an interest free loan taken through payroll deduction. We don't get to share the profits generated by the labor of people who are not members of the company. Those stay as retained earnings. We can take on loans as well as outside investment as long as the outside investors aren't given voting rights (via restricted preferred stock). "Been here in Japan 12 years mate, and you're right, the investment options here suck. Be very wary of them, they will take all your money in outrageous fees--3% in and 3% out of some ""investment"" options. It's a scam. Send the money back home and manage it there. I recommend setting up a Vanguard account back in the UK, then you can invest in Vanguard index funds. Vanguard charges no commission for buying and selling their funds when you have a Vanguard account. I have nearly all my money there (Vanguard US), and I use the free Personal Capital online software to understand how to best manage the allocations in my portfolio. Of course you'll lose a bit of money on wire transfer fees, but you'll more than make up for it if in the long-term, and they may also be offset by currency rate anyway (right now the yen is strong, so a good time to use it to buy GBP). Also you may never need to send the money back to Japan unless you plan on retiring here." Although not technically an answer to your question, I want to address why this is generally a bad idea.   People normally put money into a savings account so that they can have quick access to it if needed, and because it is safe.  You lose both of these advantages with a foreign account.  You are looking at extra time and fees to receive access to the money in those australian accounts.  And, more importantly, you are taking on substantial FX risk.  Since 2000 the AUD exchange rate has gone from a low of 0.4845 to a high of 1.0972.  Those swings are almost as large as the swings of the S&P.  But, you're only getting an average return of 3.5%, instead of the average return people expect with stocks of 10%. A better idea would be to talk to a financial adviser who can help you find an investment that meets your risk tolerance, but gives you a better return than your savings account. On a final thought, the exception to this would be if you plan on spending significant time in Australia.  Having money in a savings account there would actually allow you to mitigate some of your FX risk by allowing you to decide whether to convert USD when you are travelling, or using the money that you already have in your foreign account.