Islands That Are Good for Investments

The island nation of Indonesia is a major agricultural producer.

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Whether you are enamored with the romance of owning a piece of an island or are interested in it from a purely dollars-and-cents perspective, island investing offers its own set of advantages. The concept of using an island as a tax haven is largely obsolete with the enactment of the Foreign Account Tax Compliance Act. However, the unique nature of owning island real estate or investing in island companies remains. Just about any island can be a good place for investment, given the right strategy.

Investing On Islands

Once, islands were popular places for investors to stash money. The concept of offshore banking comes from the Channel Islands, which sit between France and England, and have tax codes that allow Europeans to save their money there without reporting to their home countries. Some islands, such as the Caymans, are still known as tax havens. However, the enactment of laws like FACTA has reduced the value of islands as tax havens. This law requires foreign banks to report to the Internal Revenue Service on their American customers -- regardless of their own countries' bank secrecy laws.

Island Investments

Islands offer many of the same investment opportunities as mainland countries or states. They have companies that make products, agricultural and extractive operations that farm food and mine minerals, and service providers that provide everything from call centers to financial services. Islands also have unique characteristics. By definition, they offer a higher proportion of oceanfront real estate. They frequently have different economic focuses, as well. For instance, a tropical island's agriculture industry may produce palm products and fish instead of wheat and beef.

U.S. Islands

Investors can put their money in the islands without leaving the United States. While Hawaii is made up of islands, states like Florida and Massachusetts also include islands in their economies, and four of New York City's boroughs are on islands (Manhattan, Staten and Long). As an example, Hawaii has its own banks and airlines in which one can invest money. Forbes' list of the most expensive ZIP codes in 2013 includes islands in New York, Florida, Hawaii, South Carolina and Washington, among others, in its top 250. Other U.S. islands include protectorates like Puerto Rico and the U.S. Virgin Islands, which use U.S. currency, follow some U.S. laws and have stable economies.

International Investing

Island economies run the gamut. According to the World Bank's 2012 world gross domestic product rankings, the world's number three and six economies are both island nations -- Japan and the United Kingdom. Indonesia, which is an archipelago of islands and a leading "emerging market," ranks number 16 with an $878 billion economy. Some of the world's smallest economies are also islands, with varying degrees of stability and opportunity.