It’d be nice to think that going Barefoot is simply about floating around the globe wherever your desires take you but it’s not that simple. To do the floating part, you first need solid foundations to play otherwise you leave yourself exposed to the winds of circumstances that can blow you off course anytime.
If you are prepared, the winds of change can’t wipe you out. Being prepared gives you a better base to play from. It costs you little now but it protects you from the idiocy of governments and artefacts of control.
Too many “digital nomads” want the lifestyle but fail to build in these foundations. It’s a bit like wanting to play for the team but not wanting to do all that hard training repetitive training because it’s boring. Well, believe me there’s nothing more boring than being broke. I know that from experience.
What if I don’t have money?
If you don’t have money you probably have a pension/401k that’s sitting in the hands of a life/mutual/pension fund and you know how safe those guys are these days. There’s nothing stopping you internationalizing your fund.
If you don’t have money or a pension fund, you are at least reading this which means you have an interest. If you have an interest you can start planning. Even without money, you can set up a bank account overseas and start planning, you can open a gold bullion account and get $1 of free gold (okay, it’s not much but you’re in the game!)
Beware the Grubby Little Hands
Looking after your money is one thing, protecting it from the greedy hands of politicians is another.
* Why should you work 6 months in a year to fund corrupt bankers and wars?
* Why should you work 6 months in a year to fund those who don’t?
* Why should you pay for the recklessness of others?
That’s why we need to internationalize, live beyond the ideologically and financially bankrupt nation state politics.
OK, the advice I’m offering is not qualified beyond my own experimentation and experience. I am not a financial adviser. You need to go and research these things yourself before you commit to anything.
Firstly, why should you internationalize?
1) Avoid having all your eggs in one basket come the impending dollar meltdown
2) Take advantage of more liberal business and tax environments around the world
3) The fragility of the American and European economic system. In particular, the banks, the threat of future bail-ins like Cyprus and capital controls should any future banks go under.
So, here’s 4 ideas on you can do it:
1) set up a bank account overseas
This is relatively easy, requiring a bit of form signing and presentation of ID.
Most banks will facilitate overseas branches often for a fee unless you hold premier status. When setting up overseas you need to bear 2 factors in mind:
a) TIEAs – tax exchange agreements between your country and the foreign jurisdiction
b) The legitimacy of the jurisdiction. It’s not a great idea to set up a bank account in the Seychelles as transferring any money to/from here is going to set of major alarm bells. There are, however, robust jurisdictions like Hong Kong and Singapore whose banks aren’t ridiculuously exposed like those in EU and America.
It may cost you nothing and you’ll always have it as a backup. If the sh*t hits the fan you have an exit route before any capital controls are implemented to prevent you getting your money out. If you look at the Cyprus debacle, it was the Russians lining up at Laiki bank in Moscow withdrawing their money while British expats in Nicosia were locked down. You have to have an exit route.
Note that if you are a US citizen, most overseas banks will refuse to open an account for you. Unfortunately, this is the byproduct of the US government aggressively pursuing foreign banks for information on their citizens.
2) set up a business overseas
Hong Kong, Chile, Singapore, Malta are all good options for business that don’t carry the stigma of being graylisted by most jurisdictions. HK has 0% corporation tax on overseas profits and Chile aims to be one of the most red-tape free business environments in the world. Pay attention to CFC rulings as your opening a company overseas will probably still make you liable to tax at home.
Be careful: do not make the mistake thinking that you can set up a business to avoid paying tax. Just because tax in country A is 0% and tax in country B is 50%, doesn’t mean you won’t be paying 50% on your tax in country A. Most countries now tax income globally (although there are certain exceptions in the CFC rulings you need to explore). It’s far better to pay some tax in one country that has an agreement with your home country than none at all.
There are many countries where setting up and maintaining a business is a bureaucratic headache e.g. Spain and, believe it or not, the US. I’d strongly advise against setting up a business in the US. The bureaucratic environment is a nightmare and you’ll expose yourself to all kinds of taxes. I have the utmost respect for US entrepreneurs being able to bear all that nonsense – the land of the free needs to reestablish those great values it was built on, not red tape and taxation.
3) buy gold and hold overseas
There are many services available to the casual investor that enable you to purchase gold or silver bullion to hedge against currency meltdown or inflation. Why hold gold? Because central banks can’t print it. You may think, as of midway in 2013, the economy is due a recovery but don’t be fooled. The only recovery we’re seeing is a faux-recovery manufactured by the central banks who are pumping billions (trillions) into the economy to create an illusion of liquidity. It’s all going to end in tears.
Many analysts are advising against holding paper precious metals (i.e. ETFs/funds) and going for the real deal, so here are two of the best options. Peter Schiff’s EuroPac bank has a gold backed account which is an interesting option and Bullion Vault is one of the most straightforward online trading options requiring only hassle free verification.
Be careful: Some analysts warn of a potential scenario where governments can legally seize gold. It seems an unlikely scenario but given the recent clampdown on Bitcoin and the events in Cyprus, we know for a fact that governments don’t like competition. The last time it happened in the US was under the Hoover administration in 1933, under the pretense of “patriotism”. On that basis, you should consider holding gold in Zurich or Singapore not London or New York. EuroPac holds gold in the Perth Mint, Australia.
4) hold deposits in non US$ currencies (e.g. Chinese RMB)
Listen to any free thinking financial analyst on the squawk box (e.g.Peter Schiff, Marc Faber or Jim Rogers) and they’ll tell you one thing – the age of the US dollar is coming to an end. Now is the time to accumulate foreign currencies to hedge a potential meltdown.
Sure, it may be a generation before the dollars is phased out as a reserve currency but one thing is for sure – the constant printing of dollars is only going to wipe out its long term value. Prepare now.
Until recently, the commodity backed currencies like the Australian and Kiwi dollar were favorable but have lost a little shine recently. Some experts say the Hong Kong Dollar (pegged to the US) is a reasonable hedge.
You can open an RMB or HK$ account through Bank of China and HSBC in Hong Kong.
Be careful: the RMB is not fully convertible by design. The Chinese government doesn’t want to fully float the Yuan for fear of loss of control. That means you’ll be hard pressed to pay people in Yuan or convert it at your local high street bureau. For now and for the purposes of this discussion, consider it a limited currency for the purposes of storage. Of course, if the Yuan does become convertible, we should see a significant increase in demand (hence price).
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