Viva Tropical

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.

James Bond is near the pinnacle of manliness. As the cliché hoes, men want to be him and women want to be with him. Suave and unflappable, he crisscrosses the globe in luxury, using phony overseas companies and passports as cover, maintaining an international network of contacts, and dating exotic foreign women.

He knows the value of the world on a string. His job demands it.

You can learn a valuable lesson from James Bond. In an age when the manly art of sound fiscal management has become a lost art, I’d like to suggest you brush up on the financial tools used by über manly spies and everyday men alike. Chief among them: the offshore bank account.

You don’t have to work for MI6 to have some dough offshore. While Hollywood has suggested that the only people engaged in offshore banking are tony art thieves cavorting along the Swiss Alps and wispy-moustached drug runners fleeing to Panama, the reality is anyone can have an offshore bank account.

Best of all, it takes as little as $100 to get started, and it’s legal when you take the right steps.

Offshore banking is all about diversification. For as long as humans have been subject to government, men have positioned their assets out of the hands of greedy kings and feudal lords. They built countless castles to protect their treasure going back centuries. These days, with the global financial market turned on its ear, diversifying your assets is a prudent move.

Why bank offshore?

To protect against “taxes”. Now, it’s next to impossible to hide money in your offshore bank account or avoid taxes. And I don’t recommend it; the fines and penalties Uncle Sam will slap on you if caught are outlandish. No, the kind of taxes I’m talking about are the ones you don’t know about yet: wealth taxes, retirement account taxes, and general wealth confiscation. Blue-chip countries like Ireland and Hungary have dipped their fingers into their citizens’ retirement savings when they “needed” the money. In the United States, Congress has dropped one IOU after another into the Social Security lockbox for years. Having money offshore (and not in an easy-to-grab IRA) means it’s a lot harder for them to impose a “tax” – read: theft – on your assets when they’re in dire straits five weeks from now.

Cyprus. One day, you have $100,000. The next day, you don’t. Or at least you have less. While banking officials in Cyprus eventually caved in and imposed a “wealth tax” that hit larger savers the hardest, they were more than willing to clip ten percent off everyone’s accounts. Legislators in Canada are now pushing a budget bill that would allow depositors to take the hit if banks go under. The whole government safety net is a lie.

It’s cool. Imagine you’re talking to the leggy blonde in the little black dress at your next cocktail party. You casually drop, “I was talking to my banker in Hong Kong the other day…” into the conversation. Instant cool. As the business lead who called my teenage home when I was at school told my mother, “what, he’s only 16?! He sounded like a billionaire!” No one has to know whether you have $500 or $500,000 in your offshore account.

As one who travels to a dozen or two countries a year, I have plenty of opportunities to open bank accounts in other countries. But what if you’re stuck in cubicle-land or chained to your desk working for the man?

How to Get Started

There are ways to open an offshore bank account from your couch. First, you need to decide what type of account you want. Do you just want to move part of your savings? Are you looking to diversify into a foreign currency? Perhaps you want to own gold overseas? You can do all that and more. Banks in other countries are amazingly more full-featured than those in the United States.

If all you want to do is move a few bucks somewhere else, you can do that with a multinational bank like HSBC. If you have enough money, they’ll open a “Premiere” account for you in your home country, then allow you to open other attached accounts in whichever other country you choose. You’ll get a personal banker in each country and no fees when transferring money through their system.

If you don’t meet their minimums (often $20,000 to $100,000), you have two options. One is to visit the country where you’d like to open an account. First, realize that the old-hat places that successful men of yesteryear relied on are largely gone. Switzerland has all but shut out Americans, and their continued defacing of their bank secrecy laws means you wouldn’t want to bank there anyway. Liechtenstein, Luxembourg, and many of the other old-money European jurisdictions you’d expect to find someone walking around with secretive briefcase in hand are largely inaccessible to non-resident foreigners.

The one exception is Andorra. Landlocked between France and Spain, it’s a tiny principality that still does banking old school. This is as close to old-school manliness as you’re going to get. There are about half a dozen banks mostly still run by the original banking families that started them. Huge mega-banks are kept away there, which means Andorran banks have been able to maintain huge capital ratios. Some of these banks are tight-lipped about their restrictions, but a reasonable chunk of cash will get you in. But you have to visit. Fly into Barcelona, mingle with some Catalan girls on the beach or head to the south of France, and make a weekend out of it.

Singapore and Hong Kong are also two stable jurisdictions that are open to foreigners. I met a banker on the street who said she’d open a savings account for me with $1. While many offshore banks offer foreign currency accounts, these two really take the cake. If you REALLY want to feel like a manly spy, open your account in Swiss francs or Chinese yuan or New Zealand dollars. Do your research on the best currency and go for it. You can even open an account denominated in gold in some countries like Mongolia or Malaysia.

And if you’re really adventurous, consider opening an account in a far-flung place like Mongolia or Ukraine, where interest yields in local currency can top 15%. Of course, a little discretion goes a long way. Countries with confiscatory dictators or regimes sanctioned by foreign governments: bad. Countries where banks need more money to lend to growing businesses: worth considering. In a few of these cases, you can also open an account from your living room, notably Mongolia.

Manliness is about defying convention wisdom

Moving some money offshore where you can diversify your sovereign risk is a prudent move. Most banks in established places have deposit insurance just like the FDIC, but make sure to check in each country and know the risks. It’s not like the EU or the US is the safest place in the world to bank, anyway. (The US is 40th, actually.)

Being well-traveled is a positive trait in a man, so I encourage you to find a stable country that interests you and check out their banking. There’s nothing un-manly about spending a week in Hong Kong hiking, meeting exotic women, gambling in nearby Macau, and buying gold or opening a foreign bank account.

Every country has their own reporting requirements for tax purposes, so make sure you’re in compliance. In the US, that means a couple different forms each year if your account values exceed a combined $10,000. Remember, you’re not trying to hide money; you’re trying to protect it. After all, it’s hard to keep your well-coiffed glow behind bars.

But play by the rules and you’ll be on your way to outpacing The Most Interesting Man in the World. You think he keeps all his money in a low-interest checking account at Wells Fargo?