The Benefits Of Diversifying Your Business And Your Assets Offshore

I’m “onshore” this week in Nashville for our once-a-year Retire Overseas Conference. We arrived in the States yesterday afternoon. Once we’d cleared U.S. immigration in Houston, where my wife was singled out as she is now every time she crosses the U.S. border for reasons no one with U.S. immigration seems to be able to explain, the experience of making our way to Nashville was painless.

The truth is, the United States is one of the easiest places in the world to live and travel. You might begin to wonder: Why do anything offshore in the first place? Easier, surely, just to stay put.

Overregulation and poor government stewardship of the people’s money are two reasons to consider voting with your feet and your finances and relocating yourself and your assets somewhere else.

However, I’d say that going offshore is better approached as an opportunity rather than an escape. Or, put another way, this isn’t a political decision. It’s apractical one.

In that context, what’s the real advantage of the Five Flags ideas I report on?

Diversification. It’s the key to success in all things, from personal happiness to a healthy portfolio. And you don’t have to go physically offshore, not immediately and maybe not ever, to reap the benefits.

That said, having a residence permit that allows you to stay in another country indefinitely should you decide you’d like to can be a good idea even if you right now have no intention of moving yourself anywhere. A backup residency, as I think of it, keeps your options open down the line. Many countries allow you to obtain legal residency without having to be resident full-time or even most of the time to maintain your residency status.

Furthermore, setting up residency in another country now can allow you to start the clock ticking toward a second citizenship down the road, and a second citizenship can open even more doors. An EU passport, for example, gives you the right to work and live in any of the 28 member states. A Panama passport would allow you to work in protected professions and to own protected businesses (retail, specifically) in that country.

That’s you. What about your assets?

Moving part or all of your business, if you have one, offshore can make it possible to defer taxes, helping your business to grow faster. Maybe it would also mean less regulation. It definitely would allow you to protect the business from the most litigious population on earth (that is, Americans).

Your non-business assets, including your IRA or equivalent, can be protected offshore, as well. Moving some or all of your assets offshore accomplishes two things. The first is asset protection (with the help of holding companies and/or trusts). The second benefit of taking non-business assets offshore may not seem as important but is. I’m thinking of the broader range of investments you then have access to. Your offshore investment options through an onshore broker are limited to those companies willing to go through all the SEC hoops to get listed on a U.S. market. Outside the States you have tens of thousands more mutual fund and stock options.

Lief Simon

“Lief, I’ve heard of homes available in Sicily for a 1 euro ‘pledge.’ Then 6,000 euro to upgrade…and it’s yours!

“What more can you find out about this for me?”

Y.D.

Selling houses for US$1 or 1 euro or whatever in exchange for a guarantee from the buyer that he will renovate the property is a strategy long employed by mayors of rundown cities and towns hoping to jumpstart a renaissance. In this case, the town in need of resuscitation is Gangi, Italy. The local authorities are offering a couple of dozen homes for 1 euro and another several hundred for as little as 15,000 euro. You have to leave a 5,000 euro deposit as proof of your ability to renovate the 1-euro houses. It’s estimated that the total cost of renovation in each case will be about 20,000 euro.

The problem with these types of offers is that they rarely accomplish what the guy behind them is trying to accomplish. The mayor of Gangi wants to reverse the decades-long trend of people moving out of the town. However, it appears that most of the buyers of these properties are foreigners with no intention of living in the town. They appear to be buying for vacation homes or to flip. It’s not clear to me who they would flip to, though.

If you’re interested in living in Sicily, then this kind of deal could make sense for you but don’t put the cart before the horse. Italy has thousands of properties in need of renovation that are fairly cheap (although not 1 euro) in many areas. Better to choose a location where you want to be rather than deciding on Sicily based on a property gimmick.