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?

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.