Jason Mrachina

Editors Note:
Todays post was written by Andrew Henderson. International entrepreneur. Citizen of the world. Free man. Andrew Henderson is the Nomad Capitalist, traveling to dozens of countries each year to inform his readers about offshore banking, living overseas, international businesses, and other top secret manly pursuits.

I was all alone on the streets one day. Literally, it was just me. The weather was hot and balmy. Even in a T-shirt, I could feel the sweat sticking to me.

There was no place to buy a drink. Nowhere to sip from a drinking fountain. It was just me and the open road.

For on Friday afternoons, all of Bandar Seri Begawan – the Sultanate of Brunei’s only real city – shuts down by order of the Sultan. Every business is required to shutter for Friday prayers. And the streets are literally desolate.

To be honest, I just might get put in jail for writing this.

But for those who need to understand just how important diversifying your assets offshore is, your reading this information just might be worth it.

The Sultan of Brunei personally owns every inch of land within his tiny kingdom. His face adorns every single scrap of currency and every coin. He rules, despite having a constitution in place, with absolute authority, getting sweetheart deals for his family members and screwing foreign investors.

Can you imagine keeping your money in a country where speaking out against a Sultan could result in your assets being frozen?

On the other side of the world, Argentine president Cristina Kirchner has pulled out all the stops to wipe away any semblance of economic freedom in her country.

She’s forced people to turn in their US dollars and hold pesos, which are inflating at 30-100% a year. She’s snooped on credit card purchases of Argentinians who travel abroad to make sure they’re not moving money. She’s imposed almost every capital control you can imagine.

And, like the Sultan of Brunei, she is perfectly willing to throw people in jail if they disagree with her freedom-sucking policies. She bankrupts her own citizens, and economists who speak the truth get thrown in the pokey.

Meanwhile, the Vietnamese government is considering the world’s next great gold confiscation. In a country where the people shun the free-falling local currency in favor of keeping hard assets at home, the government needs something drastic to stop the bleeding and “stabilize” their currency.

The examples of wealth confiscation go on and on; the scope of the excuses that birth them is as wide as the list of countries who have tried to pull them.

Cyprus. Hungary. Thailand. The United States.

Fabo Lens

Each of us has the good – or not so good – fortune of being born between a couple of imaginary stripes on a map politicians call “borders”. It used to be, the United States was the best place to be born. They actually do a study.

These days, the US barely cracks the top twenty, alongside bastions of freedom like the United Arab Emirates. (At least the UAE has real economic growth prospects.)

Along with that sliding ranking is the ranking of bank safety in the United States. In 2008, US banks were ranked 40th most stable; UK banks came in right behind them at 44th.

Yet those lines we’re born between give us a sense of comfort. For some reason, we believe “our” country offers the best opportunity. It’s what we know best, and that makes us feel safe.

The reality is, just like Brunei, or Argentina, or Vietnam, chaos can strike at any time. Freedom isn’t exactly on the upswing in the United States or much of the western world. What is on the upswing is politicians saying “you didn’t build that” as an excuse to take money from your bank account for a “bail-in”, steal off the top of your retirement account, or confiscate your gold to “stabilize” the currency.

You may think “it can’t happen here”, but that’s exactly what people in all these other countries thought. Think of how many tragedies throughout history could have avoided if people thought “it CAN happen here.”

As a perpetual traveler who spends time in dozens of countries, I can tell you that your country – even if it’s the #1 world superpower – is just another country to the rest of the world. There’s no magic pixie dust that makes your banks safer, your money better protected, or your politicians less capable of theft.

My knowledge of this fact is why I recommend offshore finance to anyone with assets they want to protect.

It doesn’t have to be a lot. Heck, you can open offshore bank accounts with a few hundred dollars. To some people, a few hundred or a few thousand dollars may be able to give them a fighting chance if something happens to their bank account at home. For others, a more intricate plan is required.

Politicians and the media in their back pocket want you to think “offshore” is a dirty word. When Mitt Romney ran for President of the United States, the media took aim at his “evil” offshore accounts as evidence he was “unpatriotic”.

But patriotism has nothing to do with it. Your government doesn’t really care what happens to your money. They care about maintaining power.

Show me an example in history where governments did anything for their people when the currency collapsed, inflation devalued their life savings, their gold got confiscated, or their retirement account got seized.

I think you know the answer.

The reality is, there are countries that offer greater economic freedom than your home country. Countries like Singapore and Hong Kong have built themselves from muddy jungles into economic powerhouses because they’ve offered a better way to bank and invest.

Small countries know they have to be easy to work with, or else their economic engine could come to a screeching halt. Recently, for example, Singapore announced it wants to be the best place in the world to store gold. As part of that initiative, they’re working to increase gold holdings within the country by more than five-fold in about as many years.

They won’t accomplish that by telling people “they didn’t build that” or using Sultan-like tactics to make life difficult for people.

The bottom line is that you never know what could happen in one country. It’s easy to think you know your country well enough to keep your money safe, but take one look at Cyprus and see just how easy it is for you to be shut out from accessing your money.

Instantly. With no recourse.

Offshore banking is about diversification. You wouldn’t hold your entire net worth in one company’s stock. Or own mutual funds that only invested in one sector of the economy.

Yet you may be committing what I believe is the biggest diversification error of all – geographical diversification.

While the idea of offshore finance sounds risky, the easiest way to get started is by merely opening a bank account in another country. Nothing crazy about that.

Many offshore banks have much higher liquidity ratios than American or Canadian banks. Some banks in Andorra have ratios as high as 30%. That means they’re not teetering on the verge of insolvency, waiting for one bad loan to break them in half.

In Hong Kong, banks are turning away business because they’ve got too much money. They don’t need westerners money unless said westerner has a relationship with an existing depositor. It’s not worth their hassle.

That’s because wealthy Chinese are flocking across the border to put their wealth in Hong Kong banks. Give the Chinese credit: they know enough not to trust their government to keep their money safe. Having been to China many times, I can tell you it’s more capitalistic than the US in many ways. Even so, the Chinese haven’t bought the government propaganda the way most westerners do.

Banks in places like these are stronger and take far fewer risks than many western banks who had to be bailed out by the nanny state. While it may seem “risky” to deposit money offshore, it can actually be far less risky than depositing it in your home country if you know what you’re doing.

The world is a wide open place. Plenty of people far from where you live have plenty of money and they, too, want to keep it safe. I can assure you this: the vast, vast majority of them aren’t putting it in the same banks as you.

And their money is just fine.