The 7 Flag Theory Of Diversification: The Key To A Secure Retirement

How do you pack a go bag?

That is, how do you create a fully diversified, profit-rich, tax-light, bulletproof life?

Step by step.

You’ve heard of the Five Flags. In fact, there are seven…

• Banking
• Foreign Residency
• Dual Citizenship
• Earning Money Offshore
• Offshore Investing
• Asset Protection And Estate Planning
• Mitigating And Managing Tax Liabilities

You don’t need to incorporate all seven flags in your plan. Maybe you’re looking to retire and have no interest in doing business offshore, for example.

But the more flags you plant, the better protected you are.

A consulting client I worked with a few years ago had set the goal for himself of “being wealthy in at least three countries.” He had just sold his business and was working with me to formulate his offshore plan. One major goal he identified was to have enough money in three different countries where he wanted to spend time so that he didn’t have to worry about expenses or budget when he was in those places.

That meant not only moving a fair chunk of change to each of the three countries, but then investing the money in investments that would generate enough cash flow to cover the family’s spending in that place.

As I said, he had just sold his business and so was fully liquid. He was able to move quickly. He just needed to decide on the countries and then allocate funds for investment in each of those markets. The amount he placed was different in each case… as the cost of living in each country for the lifestyle he imagined for himself and his family was different in each case.

Another past client had little by way of current assets but was young and wanted to build a life overseas. His priority was flexibility. He wanted to be able to travel and invest as he identified opportunities. This agenda took him down a consultancy path. He was able to organize steady contract work as a remote computer engineer… meaning he was able to spend time in different countries and move around as he liked.

One thing to keep in mind as you make your plans is that diversification doesn’t mean selling everything where you live now, move to another country, and take all your money with you to that new country. That’s simply moving jurisdictions. You’ve relocated all your risk from your home country to your new country.

“Flag Theory” means planting flags in different countries… multiple flags in multiple countries.

The basic premise is that you hold citizenship in one country, residency in another country, keep your financial assets in yet another country, locate your business in a fourth country, and a fifth country is where you plan your asset protection strategies.

Of course, you can have more than one citizenship, more than one legal residency where you aren’t a citizen, more than one country where you own real estate, and bank accounts in several different countries… if your net worth and goals merit that many flags.

Or you could keep your Plan B much less complicated.

You don’t necessarily need to plant every flag… and you certainly don’t need to plant whatever flags you do need today.

However, you do need to get started… today.

One of the key getting-started questions is: Where?

Every flag must be planted somewhere.

Where you plant your residency flag(s) can be determined by how much time and money you want to invest in a backup residency… or, more simply, by where you want to live.

Those are the two reasons to invest in a residency visa—because you want a backup plan or because you want to live in the country full time.

An investment in real estate or a business, likewise, can be made because of local country (market) factors… or because the place where you’re buying property or starting a business is the place you also want to be living.

Budget, economic cycles, market niches, special offers and opportunities… all of these things factor into your choices for where to do what you decide you want to do… as does your personal timeline.

Maybe you’re on a mission and in a hurry. Maybe you want your go-offshore plan conceived and executed, your international bases established within a year…

Or maybe you want to work your plan over the next five years or longer. Part of the answer to the question how long will it take to internationalize your life has to do with your net worth. What level of assets are you looking to move offshore?

A lot of moving parts.

That’s why you need a plan, flag by flag, step by step, so that you can address every aspect of a fully customized go-offshore plan and pack the go bag that is ideal for you, given your circumstances and your objectives.

I recommend you begin with banking… and residency.

Lief Simon