10 years studying finance, capital markets, taxation and expat entrepreneurship
2 years as a digital expat
Owning 5 businesses
I’ve also completed close to over half the plan outlined and have no agenda or products to sell (with the exception of two of my ebooks I’ll be plugging when relevant) in regards to this plan. Meaning the advice outlined is not geared towards getting you to buy into any product or financial service.
Unfortunately most financial advice online falls into four categories
Safe, middle class, get you nowhere garbage
Sales pitches for various financial products or garbage trading systems
Solid advice but only applicable for the wealthy man
White noise written by non-expert journalists
Purpose Of This Article
My goal in this piece is to give you, the middle class man, the most efficient, streamlined, stripped-down path to financial freedom and security.
Because without financial freedom and security, you have a 0% chance of living the good life which is why I recommend every man from the ages of 18 – 35 to make money his #1 priority.
In the article I give you my personal business, security, and financial plan – from jobs to businesses to taxes to bank accounts to investments, plus more – everything you can think of is covered.
This is the plan I wish I had at 20 or even 25. The one that’s going to get you out of the middle class and into the outcast class of freedom and fulfilment. So be warned, this is not your middle class financial plan, this is balls to the walls and it’s definitely not for everyone.
How To Use This Article
Just like everything else on this site, take as much or as little as is relevant to you and discard the rest. The latter half of the plan involves a lot of concepts related to expat living, a lifestyle that’s not going to be suited for everybody.
The move is to use the article as a sketch for your financial future, discarding what doesn’t apply and referring back to it over the years. Knowing how to play the financial game on the advanced level is the linchpin of playing the game of life – because without financial freedom you can’t live the life you want.
Also all the advice here is 100% legal, I never, ever advocate breaking the law, because the government has all the guns. And you definitely want to consult with your tax, legal and financial professional before implementing any of the concepts outline here – a lot of this stuff is complicated in practice.
Lastly, there is a lot of information covered, the key to remember is this is a lifetime plan and to take it step by step. Don’t feel overwhelmed by where you’re at right now, just take it day by day, one step at a time.
How To Plan Your Financial Future
Step 1: Cut Your Expenses To The Bare Minimum
If you want to get rich and live free, you can’t do it by spending money, you get rich by saving money. That means setting a budget and sticking to it. You can spend money in 5 or 10 years when you’re financially free, but not now. Especially if you’re poor, if you’re poor you need to be even more ruthless with your money.
I recommend cutting your expenses to the minimum and becoming a hardcore minimalist, not only do you not need 99.9% of the sh*t you see on TV, it just gets in the way and clutters up your home base. Cut your food and entertainment to a minimum, set a budget and stick to it like glue.
Step 2: Get Organized
Total financial freedom is the hardest thing you’re going to do with your life, without getting organized you don’t have a prayer. You need to get serious, get your mission together, keep your place clean, get up early every day, set yearly goals, and layout the big projects you’re going to be working on (more on those below).
I recommend the Wunderlist (now Tick Tick) task management and my organizational system which you can find in my book: How To Get Organized.
Step 3: Get Consistent Energy
You’ve got a lot of work ahead and you need to have a lot of energy to take care of business.
Unless you’re the CEO of a billion dollar investment bank, because then you can just get the government to bail your company out and still keep your 30 million dollar bonus.
What you want to do is start paying down your debt as soon as possible and sell anything that puts you in debt, including your car and your house. And if you have a demanding girlfriend, whose f*cking up your finances, she’s got to go to. Getting debt free is a matter of life or death.
And if you’re debt is too monstrous for you to see paying it off, there is the option (which I take no legal or ethical responsibility for) of just not paying it off.
*Despite the all consuming evil of debt, there is one exception to the rule, where having credit is useful, which is outlined in step 6 below.
Step 5: Start Saving
As much as you possibly can every single month. You will never regret not having saved more money when you’re out on your own without a safety net. What you will regret is not saving, or pissing away money on booze and girls and cabs and all the other sh*t you don’t need and can’t afford.
Step 6: Get Credit
Despite debt being the root of all evil, there is a benefit to getting as much credit as you can. This might sound like a complete contradiction to point 3, but keep in mind I’m not telling you to go into debt, I’m telling you to get access to an emergency lifeline for some time in the future, if sh*t really hits the fan.
An example would be, two years from now while you’re baselining your business in a foreign country and you fall off your motorcycle and break your leg. You’ll be happy you had that emergency credit to pay your hospital bill And because you live in Asia, where your rent is $300, instead of New York where your rent is $2000, you’ll be able to pay it back quick. It also helps that you’ll be operating a high margin business that scales up quickly as opposed to a static salary in an expensive country living paycheck to paycheck.
The move is get as much credit as you can while you still have a job. Banks don’t give credit to guys just starting their businesses. And of course, you keep that balance at zero to build up your credit rating and not fall into a debt spiral. It also helps to get a credit card with Air Miles. When I was still in Canada I used my card to pay for everything, including my rent, which eventually gave me enough points for a free flight to Thailand.
With that said you don’t want to get credit cards attached to your bank if possible. The reason being, if sh*t hits the fan, and you fall far enough behind on your payments, your bank will freeze your entire account, including your checking and savings. This is not a good position to be in, especially in a foreign country.
Lastly, if you’ve struggled with debt spirals in the past, I don’t recommend this option, better off to pay down your debt and cut up your cards. This is only for guys who have the required financial discipline.
Step 7: Increase Your Income
To get free you need to spend less and make more. Ideally that extra money is going to come from your own business, but not everyone is going to be their yet.
One option is to work a second job, but even then, two sh*tty jobs don’t add up to much.
The move I used was getting into sales, it’s the best way for a non-professional employee to make good money. If you work hard, and choose the right job, you can do 70k in year 1, and 100k in year 2 or 3. A sales job is also a good move because you learn how to get your balls up and you learn the most important skill for any business: how to sell.
To see how to get hired in sales, how to survive, how to thrive, how to set an exit plan, and how to take your sales skills and start your own service based business, check out my book: How To Sell.
With that said, don’t expect it to be fun, every job is horrible and a sales job is even worse. I’d rather put a hole in my head than to go back and work in sales. Add in the fact that you’re going to be running a business on the side and cutting your expenses to a minimum and your life is going to be sh*t for the next couple of years. But no one ever said getting free was going to be easy.
Ideally though, if it’s possible, I’d avoid working a job if you can and go straight to step 5 and start building a business. This is a lot easier if you’re a younger guy and still living at home without expenses.
My friend Josh is 20 and living here in Chiang Mai off of his ecommerce business. He got here by living at home, working sh*tty factory jobs to save money, building his ecommerce business on the side, and taking his savings and betting on Donald Trump winning the presidency – which netted him 5x what he bet.
The point is, there are a lot of options to get your income up, a high paying sales job was my path, but it doesn’t have to be yours, you just have to find a way to start getting paid.
Step 8: Start A Business
The only way to get rich and free is by starting a business. You can’t get rich as an employee, and you most certainly can’t get free when you’re tied to a desk. And believe me, the freedom matters more than the money. If you’re not their yet, you just have to trust me until you get to that first day of not having to go into school or the office.
The greatest thing in life is being able to take a day off whenever you want and take your girlfriend for a ride on your motorbike up the mountains. And the only way this is possible is when you own your own business and own your own time.
And the best time to start a business is now – today, not tomorrow – today. Tomorrow never happens. And all those excuses you have are bullsh*t. 99% of guys are destined to work a sh*t job, but if you’re part of that 1% who aspires to higher, the time is now.
Option A: Service Business
The business I recommend for the vast majority of guys is selling a service, ideally one you can sell online like copywriting or coaching. But, if you’re planning on staying in a western country, real estate and insurance can work well for you.
If you want to see an excellent example of how to do this, check out my 3 part series with Phil on how he built his online coaching business from 20 – 27. Phil never worked a job, and now he travels the world selling his marketing services.
The vast majority of young entrepreneurs I meet make their living off selling a service like copywriting, coaching or marketing.
Option B: Start An Ecommerce Business
The other option I recommend is an ecommerce business like dropshipping or Amazon FBA. If you can make it work there is a lot more money in ecommerce, you can scale up faster, outsource easier, and not have to sell your time for money.
With that said it’s a much higher level of difficulty and takes more money upfront, I would say the failure rate is 90% at least on the first store. On average, most guys have to start 2-3 stores to hit a winner, but that failure rate decreases from thereon in as you get more experience.
Also, I don’t recommend buying any of the expensive courses out there, I’d rather have you invest that money in the business and focus on getting that information for free from YouTube and relevant sites.
Ecommerce is a harder option than a service business, and it costs more, but it can be a bigger payoff when you hit a winner. Although that’s not always the case, most guys make 2-3k a month from each dropshipping store. However there are guys like Nick who makes 10k a month from his Amazon FBA store with 1-2 hours of work per day.
Option C: Starting A Branded Hybrid Model
Of the three models, this is the last option I’d recommend if you only want to sell products. I sell ebooks, and last year, after 4 years of working on RLD, my goal was to do 4k a month in passive income which I hit. Now, I’m making more than a doctor in Thailand, and it’s all passive income, but it’s still garbage money for the amount of time I put in.
Also, those results aren’t realistic for most guys. I have a top 1% site and that is not an easy thing to do, especially in today’s ever more competitive marketplace. And to really make big money from purely selling infoproducts, you need a lot of products and a top 0.01% site.
Now, don’t get me wrong, I absolutely love what I do, and I don’t doubt I’ll be top 0.01% in the next two years, and I’m gearing up for releasing a ton of books on kindle, but that will have been 7 years in the game – not the path I recommend for most.
However that doesn’t mean I would rule out having a personal brand entirely. In fact a niched personal brand can be an awesome way to supplement your service based or ecommerce income.
For example, let’s say you start a copywriting business, and you grind hard, and by the end of year 1 you’re doing 5k a month and growing. Getting a professional looking site to sell your service is a great idea. And using a blog and a YouTube channel to generate organic traffic is a great way to get clients, especially if you’re selling an expensive recurring service. You also have the option to then start releasing courses and products.
Now, it’s unlikely you’ll ever become even a top 1% site, because your niche is so small, but because your services and products are expensive, even 10,000 a month in organic traffic will become very valuable to you.
Having a personal brand also provides a future avenue of growth, where you don’t have to sell copywriting for the rest of your life. And being a guru is a much more fun business than being a salesman (I’m speaking from experience here). In case you’re wondering why I don’t sell coaching, even though it would double my income, this is the reason, although I am considering testing the waters in the near future.
Step 9: Define Your Exit Plan
Your exit plan is your path to freedom. This means getting your money together, getting your revenue up, deciding if and where you’re going to move, and setting a firm timeline for exiting the workforce – for good. And by for good I mean not half-assing your exit plan so that you have to go back to work six months from now, I mean executing at 100% and never going back to working a job again.
You need a firm timeline for execution and detailed plan involving all of the following options (travel and geoarbitraging however are not for everyone):
Step 9 A: Your Savings Target
Your savings target is how much you need to have in the bank to feel comfortable quitting your job. Your savings target should lean towards the conservative side because you do not want to have to get out only to go back in. You should also include the amount of credit you want for your emergency lifeline.
Ideally you want to have at least 5 months expenses covered, but the longer the better. Savings should be looked at as:
1) Emergency cash
2) Runway to top up your expenses as you build up your business
3) Money to reinvest in your business
You might hate grinding it out at your job for another year in the moment, but you’ll never regret having saved more money, I promise you that.
Step 9 B: Your Business Revenue Target
This is the amount of money you’re bringing in per month where:
1) You can determine the business is a success
2) You can comfortably meet your monthly expenses
In the west this might be 5k per month, however if you’re planning to move to SEA it could be as little as 2k per month.
With that said, do not do what many guys do and fly to SEA to start a business with no savings and no revenue.
Get your business operational BEFORE you leave to where you’re making consistent and comfortable revenue each month.
Step 9 C: Structure Your Exit Plan To Minimize Your Tax Bill
Before stocks, bonds, currencies or any other type of investment, hands down the most important thing in your financial plan is legally minimizing your tax bill.
Too many guys spend way too much time researching the right investments when the government is reaching in and taking 30% to 50% of your income – insanity!
Minimizing your tax bill is something you should take into consideration before you even incorporate your business. For example, if you’re planning to move outside the country, you might even want to keep your business as a sole proprietorship and incorporate at a later date in a tax haven.
Or if you’re planning on staying in the U.S., you should look into Delaware, Las Vegas or consider moving to zero tax states like Florida.
Your best bet however is moving to a country that doesn’t tax foreign sourced income like the Philippines for example. If you’re prepared to live as an expat, and incorporate in a tax haven, it’s possible to structure your finances so that you legally pay no taxes.
With that said, you want to do a lot of research in this area, especially if you’re American, because f*cking this up means big problems and you do not want problems with the IRS.
The best resources for this information are sites like Nomad Capitalist, I highly recommend you do a lot of research in this area. I also recommend you talk to a tax professional who specializes in the plan you’re looking to put together, not some joker from H&R Block. You want a guy who knows what he’s doing and he’s going to charge you $600/hour.
You don’t have to know everything or shell out all the cash up front, but you should have a general idea of how you plan on setting up your taxes over the next three years.
Step 9 D: Geoarbitraging Your Income
Geoarbitrage is a fancy word for moving somewhere cheaper while maintaining the same amount of income, places like Southeast Asia, Colombia and Hungary are popular choices for digital expats, which is really just a bullsh*t term for an entrepreneur who makes money online and lives abroad. An expat also gets to to reap the tax benefits as outlined above.
Notice I don’t say digital nomad, a digital nomad is just another name for a broke, homeless guy who wears soccer shorts every day and is eking out a subsistence level existence. You cannot build a business as a homeless vagrant, instead the move is to establish a base and take a few vacations a year if you can afford the time and the money.
The best site to find your base is nomadlist.com, despite being targeted at nomads, it has the best information available for expats.
But living abroad is not going to be for everyone, in fact I’d say most guys aren’t cut out for it long term. The easiest move is to going to a cheaper state, like a small/mid size town in Florida where can get you a decent apartment for $700 a month and no state taxes. If I was American instead of Canadian, I would have strongly considered this option as opposed to living in Thailand.
If you’re living in a major city like New York, or my hometown of Toronto, where you can’t find a decent apartment for under $1500, moving somewhere cheaper is almost a necessity. The cheaper you’re able to live, the easier it is to build your business.
Step 10 : Quit Your Job And Execute Your Exit Plan
Now that you’ve defined your exit plan, lets fast forward a few years and assume:
You’ve been saving hard for the last two years
You got the credit
You got the consistent revenue coming in
You’ve structured your plan to minimize taxes
You’ve done your homework and booked the plane ticket to your low tax/geoarbitrage destination (if applicable to you)
Lastly you want to make sure that you’ve handled everything that needs to be handled in your country. That means things like notifying your bank and cancelling memberships or anything else that needs to be done.
Now it’s time to quit your job and hop on that plane. Don’t question it, just do it. You’ve done all the hard work, you’ve built an airtight exit, now it’s just a matter of taking the plunge and making it happen.
You’ll be nervous, but just get on that plane and within a month you’ll have adjusted to your new life, and most of the things you worry about won’t happen.
Once you get to your new country I recommend setting up a new bank account and seeing if you can get paid through this account, and save yourself the ATM fees if applicable. If you’re just moving to another state this isn’t necessary.
As for adjusting to your new life. For the first two weeks, I recommend forcing yourself to go out every night and meet new people to prevent culture shock and homesickness. The last thing you want to do is be sitting at home in a foreign country questioning your decision.
Lastly, at this point in time, you should breathe in the moment. You’ve now joined the 1% of people who are no longer slaves. Not only that, but you now have the physical freedom to see the big wide world out there, a world which most people never see.
Congratulations! Enjoy your new surroundings and savor that victory, it’s a big one!
Step 11: Level Up Your Business
After you’ve made the move, and you’re out on your own, and you’ve given yourself the first two weeks to party and enjoy your victory, it’s time to get serious. You haven’t done all that hard work to waste all your money and have to go back home, you got free to work on your business and level up your income, and you want to do it as fast as possible.
This is the blast phase, you want to get that income up to upper middle class as quick as possible. In the west thats 10k a month, or in SEA, that’s 3k a month. Of course you’re going to want to make more, but when you hit those metrics, where you’re making doctor money, you can start to feel comfortable. Until then you should use a little bit of fear to get that money up.
Step 11 A: Secure Your Business And Your Identity
As your income starts to grow, your business is now your most valuable asset, and that means you want to protect it in every way possible.
I’m not a big fan of insurance overall, but depending on your industry it might be the right move. One thing I stand behind 100%, is if you have an online business, get Sucuri to protect against hackers as well as for their daily site backup service. I got hacked last year, and it wasn’t fun, but Sucuri cleaned up the malware within an hour and I tightened everything up from their on in.
I also recommend having multiple processors, I currently have paypal, stripe, gumroad, payoneer, ejunkie and amazon as potential avenues for my books.
It’s important to have as many payment processors as you can in case you have problems with one, because no processor means no money.
You’ll also want to back up all your important documents and videos to your google drive so if sh*t goes down you have backups of everything you need.
Also it goes without saying that you should have the highest security and encryption on all your passwords, I recommend lastpass, that way you only have to remember one password and can get super high encryption on all your other passwords through it. You also want to make sure to close and password protect your computer any time you leave it alone at a cafe.
Step 11 B: Set Your Yearly Revenue Targets
Now that you’re an owner you have to start acting like one, and that means setting revenue targets for your star employee: YOU
In sales I needed to hit my targets to keep my job, and in my own business I treat my targets with the same if not more importance.
Now that you have a solid revenue stream, and you’re meeting expenses, and you’re still saving, you want to reinvest as much as you can in your business.
If you have a service business, or even in some ecommerce businesses, you might be able to get 1000% return on every dollar invested. The amount you can get back in the right business is unmatched in any other investment, it’s not even close, if you do 8% a year in the markets you’re doing well.
There is absolutely nowhere else you can get this kind of return, let alone the fact that every dollar you put in will compound yearly.
A great example would be setting up or scaling up your fakebook and google ads for your niche service business.
Step 11 D: Automate And Outsource Your Business
As you scale up financially, you can start to hire people to do the grunt work for your business. The best place to find them is on upwork.
This will make your business more efficient as well as free up your time to focus on the things that are the most profitable to you. Or to do work that is more enjoyable.
Again I recommend the Wunderlist task management app for all collaboration work, it’s #1.
Step 11 E: Develop Multiple Sources Of Income
Now that put your business on cruise control and automated/removed yourself as much as you can, it’s time to focus your new free time on new revenue streams.
Because until this point, all your eggs have been in one basket, and that’s ok, because you’ve been watching that basket like a hawk, but one is to close to none. And the more sources of revenue you have the better.
Sure you have your savings and access to credit if sh*t hits the fan, and your business is going smoothly, but in life you want to be as protected as possible. You also want more money because money either solves or helps every single problem in your life.
The first place you want to look is in your business. Right now I make money from selling my books on Gumroad, plus affiliate money on Amazon and advertising cash from YouTube. By this time next year I’ll be on Amazon and all the other available ebook retailers. I’m also considering adding coaching into the mix which would be getting money through paypal and working on a dropshipping business as well.
The ideal is having multiple income streams that are related to your business and can be amplified by your business but not dependent on them.
This means that your secondary businesses can benefit from your primary business, but if your primary business goes down or takes a big hit, you still have your other sources of revenue.
Step 12: Protect Your Cash
Now that you’re starting to get some good money coming in, it’s important to start protecting that cash. The first step in protecting your cash is getting bank accounts in different countries. Getting a foreign currency account in your home bank is just not good enough.
If you don’t believe me, ask the guys in Cyprus how things turned out during their bank run. It might sound like overkill, but make no mistake, this sh*t does happen, and if that American economic collapse happens in our lifetime it will be biblical.
Not only do multiple bank accounts offer protection of your cash, but you’re automatically hedged into different currencies. Don’t believe your financial planner when he talks about diversifying your assets. You can have cash in real estate, stocks bonds and whatever you want, but if all your assets are in US dollars, you’re not diversified.
It’s also a good idea to get multiple online accounts like Paypal in different countries. I have a Canadian and a Thai paypal account because I kept getting locked out of my Canadian paypal account because I live overseas. You don’t want to keep too much money in paypal, but it doesn’t hurt to have a bit of cash in their in case of emergencies or for easily paying for stuff online.
The other thing you want to check out is bitcoin and cryptocurrencies. I don’t have any money in bitcoin at the moment or in crytocurrencies, but it’s definitely something I’m looking into and something you should be looking into as well. With that said, I would always prefer a bank account with a solid track record of stability for the bulk of my cash.
Lastly, as long as you’re reporting all your taxable income, you have nothing to worry about when it comes to having multiple bank accounts, it’s completely legal. In fact every wealthy person in the world has multiple bank accounts, I guarantee it.
Step 13: Pay Important Bills In Advance
If you struggle with saving your money, one of the best ways to save is to pay your important bills in advance. It’s also a good hedge against a disaster scenario, the biggest one being rent. Let’s say you pay your rent a year in advance, and some black swan disaster happens, you know at least for that year, your major living expense is covered.
Another good example is paying your hosting for your website, especially if it’s an expensive hosting plan, that way no matter what, you’re paid up for your businesses’ online real estate.
Also when you pay bills in advance, you can usually negotiate a nice discount and save money in the long run.
Step 14: Execute Flag Theory (Protect Your Assets And Your Freedom)
Flag theory, or the five flags theory, or the perpetual traveler model is a well known method of asset and freedom protection originally credited to Harry Schultz, Andrew Henderson over at Nomad Capitalist has taken the baton and ran with it, highly recommend you check out his site and book.
With that said, and like I outlined at the start of this article, this stuff is complicated, not easy to do, and definitely not for everyone. Getting my flags set up where I want them to be will take me the better part of the next decade.
Lastly, when you execute your flags correctly, and with the help of qualified professionals, it is 100% legal. Just don’t make the mistake of not doing a ton of research.
Step 14 A: Flag 1, Get Multiple Passports
The main reason you want multiple passports, is because if sh*t goes down in your home country, you have options. Also, having multiple passports makes living in different countries much easier. For example, having a passport in any EU country means you can live in Europe without dealing with all the Visa bullsh*t – that is a big win.
The easiest way to get a second passport is if your parents or grandparents are Israeli, Italian, Hungarian, Irish, Polish, Austrian or German. In any of those cases you have a straight forward path to citizenship.
Another way to get a passport is living in a country for a period of time: Paraguay, Uruguay, Brazil, Ecuador or Argentina all have that option.
Lastly if you have a ton of cash: Dominica, St. Kitts and Nevis, Malta will let you buy a passport for a few hundred grand.
Step 14 B: Flag 2, Get Offshore Residency
The 2nd flag to plant is a residency in a low or no tax jurisdiction – Monaco, Singapore and Hong Kong are all good examples but expensive.
For a cheaper option, the Philippines is excellent, residency is easy and there is no tax on foreign sourced income, it’s probably the ideal option for digital expats. Residency in the Philippines is also a lot easier to get than say my current home of Thailand and also doesn’t mean you have to live there year round.
With all that said, if you’re a US citizen you need to be extra diligent in this area, the US arm of the law reaches around the world, and you really need to make sure you set this up properly. You’re also on the hook for anything you make over 95k no matter where you’re living.
Step 14 C: Incorporate Your Business Offshore (Out Of Country If Possible)
The third flag of flag theory is an offshore company, placed in a jurisdiction with a low corporate tax rate.
Some of the most popular jurisdictions include Hong Kong, Singapore, BVI, Belize, and Nevis.
You can function as a sole proprietor in the initial stages of your business, but it’s better when it comes to asset protection to have your business incorporated offshore.
If you’re not familiar with this stuff, offshore incorporation might sound shady, but is 100% legal as long as you declare any and all applicable taxes. Meaning if you owe taxes, even if you have a business incorporated offshore, you still have to pay what you owe. It’s only when you try to hide what you owe that you get f*cked, this is called tax evasion and you do not want to start evading taxes, especially if you’re American.
With that said, having a business incorporated in say the BVI, can legally shield you from a lot of taxes. In fact every major company is incorporated in what they find to be the lowest tax jurisdiction. Google for example is incorporated in Ireland and The Netherlands. This is called tax avoidance and is 100% legal.
It’s very important to understand the difference between tax avoidance, which is legal, and tax evasion which is not.
Incorporating offshore is also important for asset protection be it from something like a divorce or a lawsuit. Many doctors actually have to incorporate offshore because the current climate in the US is so litigious.
I like the BVI, but it all depends on your business, country of origin, where you live and many other variables.
Other examples are:
When it comes to this stuff though, you have to understand it down to the letter, especially if you’re American.
If you’re American, the IRS has reach all over the world, that means extra forms and declaration of foreign bank accounts to the treasury department.
If you’re American, you have a worldwide tax burden, and if you form a foreign corporation, you have to be very careful to file the right forms to the IRS or risk getting bent over. Look no further than Wesley Snipes. Blade himself ended up doing 3 years in jail for trying to f*ck with the taxman.
With that said, that advice is for the average guy in the west. As we get to the more advanced section of this plan, for guys who are expats, and are financially secure, buying real estate becomes an option for a number of reasons:
A brand new condo in downtown Chiang Mai, with zero months of winter is 40 grand. In Toronto, the same condo, with six months of winter, and a much higher overall cost of living is 400 grand. That means, in Chiang Mai, you can buy a condo without going into debt. And assuming you’re doing well financially, 40 grand won’t set you back to far. Whereas for most guys 400 grand in cash is a lot of money, no matter how well you’re doing, and that means a mortgage.
Moving to a foreign country, especially one with less human rights than you’re used to comes with less security. Not to mention, the insecurity that comes with being a business owner. Or the insecurity on the world political stage.
A house provides that security, knowing that whatever happens, you have a place to live. To know that where you live, that aspect of your life, is handled.
Not to mention, if you buy in a gated community, or hire a company for protection, or have a stash of automatic weapons, your home base is going to feel very comfortable.
Land in a developing country, especially in somewhere that’s rapidly developing like SEA is something that will be hard to lose money on. Especially if you produce a valuable crop. Or just for growing your own organic vegetables. My friend Ryan bought a country house and is doing just that.
It’s another case where if sh*t hits the fan, you have your own food supply. Also land means space – a lot of land means no humans living next to you. I think that if you’re going to buy a house, owning farmland is a good idea, a nice, big, modern country house in a tropical country far away from other people breathing up all your air.
With the purchase of a property, certain countries offer automatic permanent residency and a possible path to citizenship. Permanent residency is a huge incentive for buying a property in that country, especially if that was already part of your plan.
With a property you can also get as many useful supplies in advance, stuff like non-perishable food, clothing, supplements, paper towels and all the other things you need. I currently buy all my supplies and supplements on a quarterly or yearly basis (see exactly how I set that up and what I buy in How To Get Organized), but my dream is to have a room dedicated to nothing but supplies for the next decade, I want a costco in my house.
Things To Consider
Due to the ownership restrictions in many countries, it’s worth examining different countries to see which may be best. For example, in Thailand you can own a condo, but buying a house means you need a Thai person to literally own the land underneath you – that’s not going to happen, unless they change the laws in the near future.
Lastly, by buying a house with farmland in a developing country you’ve got a good chance of getting some decent appreciation on the land, which is a nice bonus, but I didn’t want to use that as a selling feature because the idea of investment is not what should be getting you into buying a house.
Step 15: Get Commodities
Commodities, like gold and silver, specifically gold usually do well in times of crisis. Gold has a 1000 year track record of being a measurement of wealth as opposed to the system of numbers on a computer that we have now.
With that said, I’m not talking about gold as an investment, from years as a pro trader, I know it is not possible to predict the market, for gold or any other instrument.
I’m talking about gold as a hedge against a sh*t-hits-the-fan scenario, either in your personal life or a global crises. And not gold stocks or ETFs, but actual physical gold in a safe deposit box with a reputable bank, or in your house or a safe hiding place nearby. Ideally both.
With that said, I don’t think it’s in your best interests to become paranoid, and assume that disaster is imminent, and gold is your only hope, like many sites in the alternative media want you to believe (while they push their gold products on the sidebar). Instead, just look at it as a hedge.
The better you’re hedged, the better protection you have. When you have gold, and silver, and multiple bank accounts in different currencies, and real estate, and supplies, and multiple streams of revenue – you become antifragile. And antifragile is your financial goal. Where you can lose a stream of revenue, or a financial asset, or a bank account, or take a massive hit in any area and not only survive but thrive.
Step 16: Investing
Investing is probably the most misunderstood concept on this list, and the one that guys rush into way too fast. I’m saying this as someone who made a living as a pro trader – no one knows where the market is going to go. And the best investors like Warren Buffett will admit that freely.
You have to understand how Warren Buffett actually got rich. He got rich by owning a service based business. The service he sells is a 20% return over the last 40 years, or beating the S&P by 12% on average.
That extra 12% isn’t worth much to a middle class guy, but it’s worth an absolute fortune to the millionaires and billionaires invested in Berkshire Hathaway. And the same logic applies to any hedge fund manager.
Warren Buffett got rich through providing a superior service compared to his competitors, selling that service, effectively managing his clients, and most importantly getting OPM or other people’s money. Had Warren just invested his own money over the last 40 years, he’d just be another comfortable and wealthy man, instead of having 40 billion in the bank.
You however, do not have access to other people’s money, and therefore, you will not get rich off the market. And don’t even talk to me about day trading on credit, you might as well just flush that money down the toilet.
The truth is, investing won’t get you rich, it only gets you richer. To get rich, you need a business delivering you 1000% returns a year or more, not the 8%-at-best you can expect from the market.
For example, it costs me about $300 to produce an ebook, from the graphics to the formatting to the editing, and within one day of launch, I’ve made back my entire investment. And that asset will make me money for at least 3 years afterwards if not decades.
The same logic applies to a service business, let’s say copywriting, where your only business expenses are an internet connection and a skype account – maybe $100 a month, or $1200 a year. And within one year, if you grind hard, you can be doing $5,000 a month – an absolutely monumental return on your investment.
These types of returns are nowhere to be found in capital markets. By the time a company goes public, the monumental growth and return on investment has already been absorbed by the company’s founders and early investors.
That’s why the move is to get rich through business ownership. But that money is no good unless you can protect it, that’s why you get multiple streams of income, and secure your assets and cash. And you get your personal position and base secure.
Then at the point, you can look into investing, at least that’s my opinion. You can start investing earlier, but if you’re still getting massive returns from your business, it only makes sense to take any cash you have available for investment purposes and reinvest in your business.
So let’s assume that you have your financial situation together and you want to invest the excess cash that can’t be put back into your businesses. And you want the benefit of compounding interest, perhaps the ultimate financial tool in the known Universe, you have two options:
Dollar cost averaging into An ETF or low MER passively managed fund tracking the S&P
A mid term bond fund getting on average 5%/6% year
Judging by historical returns you’ll make more money on the markets, but historical results don’t predict the future, and with the US 19 Trillion dollars down, I have no idea how the next 1000 years in America will pan out, but I would be they won’t be as good as the previous 100. With that said you don’t have to be tied to the US, in fact that would be wise, China or a world fund would probably be a safer bet.
With that said, buying an ETF, and utilizing compound interest is a 30 year technique. You can’t just sell when the market sh*ts the bed, like it does every decade. You have to have the financial discipline to power through down years, often times consecutive down years. Compound interest is only really effective over a long timeline, the longer the better.
The other option is your medium term bond fund, or what MJ Demarco calls, your money tree. This is buying bonds with a coupon rate of 6% a year, less than the S&P on average. You’ll also lose out on compound interest because you’ll be getting money back every year (assuming you’re not reinvesting it).
The upside is you get 6% a year to spend on expenses and your principle back at the end of the term. 6% when you’re poor is worthless, but 6% of a million is $60,000 a year – a small fortune in a developing country, and a nice cushion for your expenses in a western country.
Those are your only two options, if you’re considering options trading on credit, or etrading, or think you have a foolproof system to crush the market, please just flush that money down the toilet and save yourself the time. You will get your face ripped off with mathematical precision. Remember, the best investor of all time does 20% a year, and you have no informational edge, and no inside line to arbitrage/insider trade like hedge funds do.
Also don’t think your money is safe just because it’s in a blue chip tracking fund, or bonds that look reasonably secure. Anything can happen, the S&P can lose 15% overnight. The US can collapse. WW3 can start.
Instead think of your investments as another hedge, except a hedge with a lot of upside potential.
If you’re set up to be antifragile, you can afford to take a 15% hit in your ETF, if not a 50% hit, and that’s the position you want to be in, where you can afford to lose. Not the position of: “I’m financially ruined if I lose money because I’m day trading on credit like a retard”.
Step 17: Emergency Contingency Plan
Your emergency contingency plan, is the final piece in the puzzle.
Now, this is something you should always have in the back of your mind, and it’s something you can formalize earlier. But it’s definitely something you want to formalize once you have all the pieces in play. Factors involved should be:
A biblical collapse of the American capital markets
Major political problems and safety issues in you’re current country
Major problems with one of your streams of revenue
Having your identity stolen
Any other black swan scenarios that might apply to you
If you’ve got your finances in line with the plan, you’re going to be able to survive all of these potential disasters, however the better prepared you are, the better you’ll fare in a disaster situation.
Let’s say sh*t hit the fan in your country, either personally or politically. You should ideally be able to quickly grab your passports, your belongings (because you’re a minimalist), your stash of cash, get to an airport and know exactly where you’re going.
With that said, you don’t want to allow your thinking to drift into paranoia, but you should have a good idea of exactly what your plan would be in your top 5 to 10 most likely disaster scenarios.
Step 18: The Finish Line
Congratulations, you win the financial game of life, you get to live out your retirement peacefully and prosperously. And not just for you, but for your children and grandchildren if you choose to have them.
One last thing to remember, this is a lifetime plan, don’t let the scope of it overwhelm you. And not all of the plan might be for you. Just take things day by day. And don’t succumb to paranoia, most of the things you prep for won’t happen, in fact, you might get through life without any disaster scenarios. But it’s always good to plan ahead and protect yourself, because when you don’t prepare, you prepare to fail.
This article/video and audio are entertainment purposes only, the concepts presented are not intended to be legal or financial advice. Please consult a financial and tax planner before implementing any of the concepts presented herein.