When considering investments of any kind, the bottom line is, of course, the most important. But one of the most attractive advantages of alternative investments and retirement abroad is that they are not just digits on a screen. They often also carry important fringe benefits that, while not contributing directly to the bottom line, play an important role in the investment itself and in the investor’s long-term strategic planning.

These fringe benefits can be pure fun, or perhaps social status, like inviting friends to sample the latest vintage from your own winery. But with the traditional financial system far from predictable and the outlook for the rest of 2010 remaining bleak, you may be surprised to learn that savvy investors are turning to alternative Latin American investments as a conservative ‘safe haven’ for investors in droves. serious investments. international asset protection purposes.

International speculator Doug Casey, author of The International Man in 1976, recently wrote that “a wise man… does not allow himself to be limited by an accident of birth.” Casey predicts that “we’re headed for a currency crisis for the record books, and I think you can plan your life around some kind of currency controls. If you don’t get significant assets from your home country now, they may soon It’s expensive and very difficult to do.”

Whether you agree with that prediction or not (by the way, I do!), there are several very good reasons to diversify into hard international assets, such as real estate or physical gold bullion.

For starters, there are the tax benefits. If you currently manage an investment portfolio, your geographic location probably isn’t really that important. The day-to-day management of your portfolio can be carried out from anywhere there is a laptop and broadband. So more and more investors and managers have realized that they simply don’t need to be located in a country with high taxes and high costs.

Most Latin American countries have territorial tax systems, which means that if you are an official resident there, you are only subject to tax on your local source income. Anything you do outside of your country of residence is tax free as far as they are concerned, so you don’t even need to bother declaring it. This is in stark contrast to North America and Europe, where the general rule is that your home country taxes you on your worldwide income.

By living, even part-time, in one country while overseeing investments in another, you can legally reduce your tax bill in one fell swoop. Some countries, such as Uruguay and Panama, are particularly attractive in this regard, having passed business-friendly laws designed specifically to attract this type of international investment management business. They recognize that although it does not directly generate tax revenue, it stimulates the local economy and provides work for local professionals, banks and businesses.

Other countries such as Costa Rica and Belize offer ‘pensionado’ or ‘qualified retiree’ programs that grant specific tax exemptions to retired foreigners who take up residence. If you don’t feel ready to retire yet, keep in mind that some of these ‘retirees’ are much younger than you might expect and qualify for the programs simply by showing they have enough regular income from abroad to maintain a quality lifestyle. . For them, ‘retirement’ might mean waking up to the sound of the ocean in their beautiful beachfront properties, logging in to check how much money they made overnight, working on the internet for a few hours a day, and traveling a few days a month. to monitor your investments in person.

Ah, I hear you say, but there is a big problem with this strategy: if you happen to be a US citizen. The United States is the only country in the world that taxes its non-resident citizens. A British or Canadian who moves their official residence to Belize or Uruguay will no longer have to worry about home country taxes, but his American cousin will.

But it is not as serious as it seems. There are still substantial benefits for Americans living abroad that a competent international tax lawyer can help you with. In the end, however, the only way Americans can legally free themselves completely from the IRS is by relinquishing US citizenship.

Many are doing just that. But before taking the drastic step of giving up a US passport, another citizenship is required. Millions of US citizens are entitled to European or other passports based on their ancestry, although the red tape involved can be quite lengthy. That is why the Caribbean states of Saint Kitts and Nevis and the Commonwealth of Dominica offer ‘economic citizenship’ programs, which effectively ‘sell’ citizenships and passports for hundreds of thousands of dollars. Years ago most of the buyers were Russians, then the Chinese came, but today most of the buyers are Americans who are giving up their citizenship to become tax exiles.

All of this brings me to another great side benefit of investing in Latin America: Most Latin American countries are relatively liberal when it comes to naturalization: the granting of citizenship based on a period of residence or other “connection” to the country. country. 2-5 years is the norm. This already short period can often be further accelerated depending on, for example, marriage or the birth of a child in the country. Often, the processing time in addition to the officially designated residence period can be a year or more, but keep in mind that citizenship through this method is almost free.

Demonstrating some connection to the country is a must, but this requirement can easily be met by owning real estate or investing in a local business. So savvy second-citizen seekers should look to attractive business opportunities in Latin America rather than invest millions upon thousands in small, hurricane-prone islands in the Caribbean.

However, the biggest benefit of going global is intangible. If I had to sum it up in one word, it would have to be ‘freedom’. Tough economic times often cause governments to resort to patriotic calls to ‘come together’ and ‘band together’, something that usually ends as ‘do as I say, not as I do’. The ‘strong leadership’ demanded by majorities these days is bad news for entrepreneurs, libertarians, classical liberals, and all those who love freedom.

Doug Casey suggests that you should at least consider transplanting yourself, or at least start by transplanting some assets. “Don’t look at it as a negative,” he says. “The world is your oyster. Make the most of it.”

Although the bureaucracy in Latin America can be overwhelming at times, it is relatively easy to navigate. There is less regulation than in the US in particular, and more reliance on common sense and individual responsibility. People don’t care about the slightest thing.

Doug is currently involved in developing a community for like-minded people in northern Argentina, not far from Bolivia and Paraguay. The idea is that with the world in constant turmoil, it’s nice to have a ‘Plan B’, a place away from the madding crowd that is completely self-sufficient in terms of food, water and energy, and even wine!

Buyers in such communities, many of whom I have had the pleasure of meeting, are not crazy doomsayers. Most of them are patriotic Americans, serious investors and hard-working businessmen, who hope things never get too bad, but sleep easier at night knowing they have a shelter ready and assets in place if the worst comes to the worst. cases. And, lest we forget, they expect to make a nice profit on their real estate investment in Latin America in the medium to long term.

As with any investment, due diligence in this area is extremely important. But the next time you review an investment, remember to look for the hidden fringe benefits as well as the cold, hard numbers. Treat it not just as a way to increase the number of dollars in your bank account, but as a way to diversify, learn, and protect your family’s assets by investing in something with an ‘insurance policy’ built into it.

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