The countries of the developed world are experiencing a new class of refugee – members of the middle and upper class. These rungs of the socioeconomic ladder are realizing that their countries of residence are in many ways going rapidly downhill without much hope of a short- or medium-term reversal. This is particularly true for national economies, taxes, and regulations, and in terms of deteriorating individual liberty.
As a result, many are seeking permanent expatriation, or a “back door” destination, should a sudden move become necessary. In fact, after internationalizing your assets, establishing a back door is the next most important diversification strategy for most. This article will provide valuable insights toward that goal.
The first big hurdle is determining which destination is the right fit for you and your family. This task can be time-consuming and frustrating.
Many in the developed West contemplating personal internationalization (particularly Americans) are saying, “There's nowhere to go – the whole world is falling apart.” This is far from the truth. Although much of the developed world is in serious decline, there are exceptions. Further, some of the world's developing countries are on the rise both socially and economically. However, some of the greatest opportunities for those hoping for a better life outside of Europe or America lie in less-developed countries.
The less-developed countries are generally perceived by dwellers of the developed West as impoverished nations, where ignorance and disease are the norm. This is certainly true of some countries such as Somalia, which is the far extreme. However, it is certainly not the case with other locales that technically fit in this category, such as Uruguay, which is almost entirely unaffected by the present First World crisis.
Perhaps your idea of a new home is on a beach in the Caribbean where there is minimal violence, and where your wealth is relatively secure. Possibly you would prefer a home where there are old-world values and traditions, where you can frequent cafés and surround yourself with the arts. Whatever fits your tastes and needs, such a destination is likely to exist. However, finding the right combination of ingredients is time-consuming and requires some research and a bit of travel.
Our first recommendation is that you begin with a list of what is important to you. This can include such items as low taxation and limited government. However, it may also contain gourmet food and good hair salons. While the latter may seem frivolous, it may not be. Many have expatriated to a new jurisdiction only to discover that it's the “frivolous” things that they miss most. Therefore, create a table that covers all these things for all who will be going with you. Below is an example of how you might go about this.
Possible Exit Destinations
The table shown here was used by a Scottish acquaintance of mine when he began his search for a second residence. In the end, his final choice was not even a country on this table. He decided on Chiang Mai, Thailand, also now home to the well-known contrarian investment advisor Marc Faber.
Using a table similar to the one above and ranking your priorities for each contending country is an extremely valuable exercise. While not entirely scientific and obviously subject to personal biases, by conducting extensive due diligence and applying the results to such a document, the person or family looking for a second residence will be less prone to making a commitment that is later regretted. You can ensure you cover all bases before making a decision.
Once the list of contenders has been decided, a bit of travel will be in order. While research can reveal information about any potential destination, getting a feel for the country and how things actually work requires personal experience. By planning a vacation at the place of interest, the priorities in the table can be confirmed and new ones added. Some time on the ground taking notes and refining the table will assist you in determining if a potential choice is a good fit for you and your family.
Once the decision on where in the world to settle is reached, other choices will surface over time: do you wish to work, start a business, or retire in the new location?; will you pursue citizenship or legal residence? As the answers to these questions surface, you will need to set the appropriate process in motion. In many countries, accomplishing some or all of these goals can take a long time, so plan accordingly and expect a few hurdles along the way.
Finally, you will need to rent or purchase property and set up a residence whether you plan to relocate fulltime or establish a backdoor destination as a nice place to vacation. If you select a destination where the economy is on the upswing, chances are even if you never need to move there, you can sell the property later at a profit. In the meantime, purchasing foreign real estate gives you diversification beyond one economy and one currency
Purchasing foreign property is one of the best wealth-protection strategies there is, but it's far from your only option. You can buy precious metals and store them abroad… invest in other countries' currencies… move your IRA to a foreign jurisdiction… or implement any number of other measures that your government would prefer you not know about. If you're at all interested in learning more about this increasingly important subject, you should check out our Going Global publication.