I Hate It When My Wife Asks Me These Questions
My wife has suggested I write a book.
The two of us are hunkered down in Panama together for the next three months. Seems like an opportunity for that kind of project.
“Begin,” my editor wife counseled, “by reviewing the big-picture benefits of organizing your life the way that you have.
“Think back,” she continued. “Why, originally, did you want to go offshore?”
In fact, I didn’t. At least not at first.
I simply had an idea that I wanted more out of life than growing up, going to school, working, and dying in the same place.
I had that idea for the first time more than 35 years ago, when I was in high school. I’d never heard the term “go offshore.”
I could have achieved my objective—of not spending my whole life in one place—by moving to another state. But something in my head told me to push for something more than that. I wanted options… as many as possible.
I heard about a school called, at the time, the American Graduate School of International Management. You might know it as Thunderbird. I decided in high school that that’s where I’d go after college. The school has since merged with Arizona State University, but it still offers one of the best international MBA programs in the world.
That was as far as my thinking went at the time.
After graduating college and getting into Thunderbird, my plan began to expand, but my focus was on job opportunities overseas, not “going offshore.” Let someone pay me to see the world, I figured… so it was find a job in another country or join the Navy, as my best friend had decided to do. I knew myself well enough to realize that I wouldn’t be much good as a link in the chain of anyone’s command.
I finished the program at Thunderbird and got what I thought was an ideal offer of employment from an international oil drilling company. Just as I’d hoped, they wanted to pay me to see the world… at least the world where they operated. The trouble, I found, is that oil seems to be in places where humans probably shouldn’t.
That drilling outfit sent me to work in Chad, the Tengiz fields in Kazakhstan (where it is minus 50 degrees in winter), and northern Argentina in a town so close to Bolivia that that’s where we shopped for most things.
The experience was great. Unfortunately, the company wasn’t. So I quit and returned to the United States.
But that initial international experience was all I needed to confirm that that was the life for me.
I spent the next four years living in Chicago (another place humans probably shouldn’t be in winter… at least not this boy from Arizona), regrouping. Finally, I felt ready to look overseas again.
I signed up for a tour of Ireland. I had an idea for a property development project… and, from my research, Ireland seemed like a good place for it.
That tour was led by Kathleen Peddicord, who, coincidentally, was also considering a move to the Emerald Isle. We met in June, were married in November, and headed to Ireland together two weeks later.
Whereas the jobs with the drilling company had been short-term gigs, that move to Ireland was indefinite. That meant obtaining legal residency, setting up a bank account, buying a car, getting a local driver’s license, and all the other fun things you do when you move to another country.
Ireland became my first real experience at internationalizing my life.
In the 22 years since, I’ve gone offshore completely and thoroughly. At this point, I’ve done just about everything one could think about doing in another country…
I have obtained residency (in 4 countries), opened bank accounts (more than 25 accounts in 15 countries), launched and operated businesses (in 7 countries), bought real estate (in 24 countries), educated my children (in 4 countries), and obtained a second citizenship (and am working now on another).
None of this happened overnight, and here’s a secret: Much of it was not according to any plan.
Kathleen and I have built our offshore life organically, step by step. Each step has opened new doors and led to more options… and we’ve sifted and filtered and made choices, one after another, that have gotten us from where we were 20-plus years ago to where we are today.
The offshore publishing industry refers to it as planting flags. Each time you take an action in another country, you are said to be planting a flag. I’ve come to think of it more cohesively as internationalizing your life.
Simply put, you are diversifying.
In the financial world, diversification is about spreading your risk around. It’s no different for your personal life. You need to spread the risk around.
Step 1: A Bank Account
The first step for many people who realize the benefits of going offshore is opening a bank account. One reason that opening a bank account can be a good way to get started at this is because you can do it without moving to another country. Of course, if you do move to another country, opening a local bank account is typically a necessity. I opened my first “offshore” bank account in Ireland, but it wasn’t offshore for me at the time because I was living in Ireland.
With bank accounts in different countries, you are diversifying your risk at several levels. The first is economic. You remember the U.S. banking crisis of 2008… and you probably have heard about the Iceland banking crisis, also in 2008… and the one in Cyprus in 2012… to give a few recent examples of why having all your money in one banking destination carries risk.
This is true no matter what country you’re talking about. I knew Americans who had moved all their liquid cash from a U.S. bank to one in Cyprus. They wanted to take advantage of the very high interest rates being paid on Cypriot accounts at the time… and they thought that because the account was in Cyprus, rather than the United States, they were diversified… and safer.
Moving all your money from your home country to another country isn’t diversification. It’s just shifting all your risk from one jurisdiction to another. People with all their cash in accounts in Cyprus in 2012 learned that lesson the hard way.
In addition to diversification of economies, holding funds in bank accounts in more than one country can also allow for diversification of currency. Many banks around the world let you hold different currencies in your accounts with them. However, even if they only allow you to hold the local currency, you’re enjoying diversification from your home currency.
Another benefit of having liquid assets in different banks in different countries is access. If you’re unable for some reason to obtain cash or to make a transfer from an account in one country, you have other options for getting the money you need where you need it… and, remember, options is what going offshore is all about.
Step 2: Residency
Residency is another of the recognized five flags of going offshore. Like banking you can plant this flag in more than one country. However, most people obtain residency in just one country outside their home country. Which country depends on your personal goals.
Maybe you simply want to know you have a place to retreat to if things get too bad in your home country.
Or perhaps you want to be able to spend more time each year in a country than that country’s tourist visa allows.
Or maybe you’re looking to move to another country full-time.
While most countries offer viable options for taking up full-time residency, some countries make more sense than others as backup residency options.
Step 3: Investing
Making an investment in another country can be excellent diversification—of economy, of currency, of market cycles…
You could open a stock brokerage account and invest in a variety of stock markets around the world. Or you could purchase gold or other precious or strategic metals and hold them in different countries.
My preferred investment class, as I’m sure you know, is real estate because it’s a hard asset that can produce a cash flow.
I like real estate… and I like business. As I mentioned above, over the past 25 years, I’ve been involved in launching and operating businesses in 7 countries, each a chance to take advantage of a market niche while generating income in a different economy and, sometimes, a different currency.
Step 4: Asset Protection
Asset protection isn’t so much a flag as a strategy for keeping your assets out of the hands of anyone who might get it into his head to try to take them from you (think frivolous litigant).
Many Americans set up U.S. trusts to protect their assets. That’s a misguided approach. U.S. trusts can help with estate planning, but they do not protect your assets against U.S. threats. For that, you have to move the assets offshore… with the help of a foreign corporation, for example, or a foreign trust.
Step 5: Citizenship
Acquiring a second citizenship is typically a later step in any go-offshore plan. Most people don’t start here.
And not everyone is interested in the idea of obtaining a second passport at any stage. Understand, though, that this can be the single most powerful option for creating options, not only for you but also for your children.
The world is an ever-changing place. Your current country of citizenship may be great today, but what value will that passport have in 10 or 20 years… or a generation after that.
Impossible to say.
In the late 1800s, the U.K. was recognized as the major world power… and many probably expected that condition to continue. Today, the country is still economically, politically, and militarily strong, but it’s not a superpower.
The United States could still be the major power in the world in another 100 years but probably not. Will it still be someplace your great-grandchildren will be able to find economic and personal security, maybe. I hope so. But why not give them options and hedge their bets by obtaining a second citizenship that can be passed down to them?
A second citizenship also gives you immediate residency and the right to work in the country. Maybe those things are important to you now… maybe they’re not. But maybe they could be important to your future generations.
I didn’t start out with a big-picture ambitious plan to go offshore according to a strategy that would benefit not only myself but also my children, grandchildren, and beyond. I set out to have an interesting life.
Today, more than 35 years later, my agenda is more focused and for sure more about my kids and their kids than myself.
That’s not to say that I’m not enjoying the benefits of the plan, as it has evolved, along the way. Every step and every choice has created options and opportunities… for travel, for fun, for friendships, and for profit.
You don’t have to internationalize your life as aggressively as now, more than 35 years after I began this effort, I have, but I really, heartily recommend that you internationalize to some extent.
In our world right now, it’s critical to your and your family’s survival.
It’s also a lot of fun.