Internationalizing isn't a new concept. In fact, it has been around for centuries. People have always sought out different means to increase their freedom of expression whether through lifestyle or business.
Today there is more opportunity than ever to harness the power of global markets.
Creating a global diversification stratedgy is not only limited to the wealthy or corporate big wigs but is for the entrepreneur, online marketer, perpetual traveler, consultant, freelancer, or anyone seeking to leverage the power of global communication and digital services to reshape their life.
And That is what Global diversification is about.
It's about leveraging your business, finances and place of residence, to enable you the capacity to live a life in pursuit of (blank) however that may look.
Ultimately everything is a tool, whether that's a business, asset, a passport, a tool that gives you more control over your own life.
Going Offshore is not an end in itself, but a means to increase your agency so that you can get back to what really matters; whether thats more time with family, more freedom to travel, more energy to pursue creativity or just more space to relax.
And what matters for some people, might not matter for others; and though the tools are the same, what you do with it is wide open and left to you.
What would you do, with more time, more money, more freedom of movement?
Unfortunately these questions, we don't have the time to even consider. Because we live in a society of scarcity, which demands all of our time, occupation, energy, leaving us with very little for ourselves.
We all have the power to choose what we want; but society, taxes, jobs, slowly takes that away and replaces it with its demands. We become more obligated to follow what is demanded of us, and little by little we lose that choice.
Going Offshore helps to is reclaim your time, finances, and home by positioning them in a way that maximizes your time, energy and money so that you can live - as you choose.
Intro into Flag Theory
Flag Theory is one such idea, that practically shows how to begin this journey. Coined several decades ago, flag theory has gained popularity in rejection of to today's hyper-nationalistic furry.
There are 5 flags (or reference points) that are planted in different countries, and using offshore advantages by means of internationalizing across five different domains: business, banking, assets, residency and citizenship.
In this article we will be mostly discussing 3 flags:
- banking, and
There is some overlap, so for convenience, we will boil them down to three.
Flag theory is a very practical approach to international diversification.
By planting flags in different locations it frees you from being bound to any territory, government, bank, or revenue stream for your well-being.
This is done by redesigning different aspects of life (and thinking) step-by-step, showing how there are different very practical and realistic ways of structuring one's company, accounts and residency, to get the most out of local laws in foreign countries.
While Flag Theory and Offshore Living is rooted in very practical goal-orientated steps that reduce taxes, increases your bottom line, and secures your future; it sets the foundation for a whole new range of lifestyle options that are not available to one who lives, invests, and works all within the same country.
If you live, work and bank all in the same country, it's likely that you are comfortable with domestic institutions, and haven't yet seen the precariousness of this type of all eggs in one basket type of situation.
Which is also fine. International living and global diversification is not for everyone. (though it is, not everyone knows it)
It's for the one who wants to change. Because only if you see what's wrong in a situation do you ever seek to change.
While Going offshore can be a very literal and physical plan. You can literally change countries, swap currencies, incorporate offshore, open up different accounts, yet, that is not the full story.
What also comes is a change in mindset.
As one gets exposed to different ways of living, different avenues, opportunities, experiences open up to us that were just not there before.
This change is inherently different for each individual as everyone's desires, ambitions, and lifestyles, are different.
Built within this global redesign is that it emboldens the individual to become more autonomous and less dependent upon any external influence.
If we are dependent upon any single authority, whether that is a bank, government, spouse, state, or company we are bound to these influences. Our success becomes dependant upon their financial security.
A failure in any one of them and our life can be drastically affected.
And it's all due to unnecessary risk.
This is not some self-development hype that promises happily-ever-after, or Instagram worthy lifestyle hackers who spend their day capturing the perfect enviable backdrop.
Going offshore is not just an escape or a long exotic vacation.
And certainly not the social media version of what it means to live a global lifestyle.
Going offshore offers a practical solution for your assets, company and residence. It redefines these three flags and allows you the ability to live out any version of life you feel drawn too.
All it takes is one crack in the foundation of any one of these institutions and our whole life can be upended.
Going Offshore helps mitigate that possible scenario, by spreading risk and detaching ourselves from the institutions that bind us to it.
Global living isnt an exclusive pre-packaged model to be replicated and sold but fluid and forms to the individual and circumstance.
It also needn't be a far-off overarching plan but can start with one step - one flag at a time.
While we could all use any of the number of the benefits that come from diversifying offshore, whether that's asset protection, privacy, banking security, or lower tax-rates, going offshore becomes much more, showing that it isn't just about those means, but what those means provide.
Why Go Offshore: The practicals
As we have said going offshore is not just about hiding in a tax haven or running away to the other side of the globe, but about reaping some comparative advantages that are widely offered to those willing to take that step.
Offshore simply means to take you, your business and your finances where you can take advantage of local conditions. Conditions and laws that support you.
More opportunities, environments and circumstances that serve you and your business, your assets, and your life.
While most people recognize the downside of putting all your eggs in one basket, whether that is in any one commodity, checking account, or stock; what many are not aware of, is that this shouldn't just be limited to finances, but should be a holistic approach using different jurisdictions for company formation, find the best country for setting up an account and seeking out a place that is right for you.
1. Offshore Company
Creating an offshore company structure outside of one's primary residence is a good first step that helps the offshore transition.
Lets take a very practical example of what an offshore company can do.
For instance, if you are an American, and have decided to take residency in Panama, then forming an offshore corporation will allow for all profits above the Foreign Earned Income Exclusion (FEIE) limit to be retained and accumulated in an offshore corporate bank account while the individual draws upon the account and takes a salary that is under the exclusion requirement.
Offshore formation, while it can help in restructuring your tax obligations, it can also help in creating a separation between you as an individual and the corporate entity ensuring liability protection and asset security.
Creating a separation of entities helps to mitigate risk.
Offshore corporations while protecting assets, can also give privacy by removing an individual's name away from being directed connected with the entity. Privacy is a vastly complicated and very specific case by case situation, depending upon the jurisdiction and residency of the entities involved.
A properly managed offshore company no matter the circumstance still gives some form of discretion and keeps one's details off of public registries.
A corporation formed in a foreign jurisdiction creates a layer of legal and financial security that prevents harmful actors, whether that's corrupt governments or individuals from readily accessing your assets and information.
Sometimes things go wrong.
Assets can be seized, bank accounts can be frozen, and one's investment portfolio can be tied up.
An offshore company is not some golden bullet and won't save you from armageddon but will prove to be a great asset in your internalization process.
The next layer of offshore layering that is an essential piece in the puzzle, that we will explore - is offshore bank accounts.
2. Offshore Banks Accounts
Banking in a foreign jurisdiction often is much simpler and more convenient than many domestic banks.
An account formed outside the jurisdiction of one's primary residence gives more confidentiality and in some cases, personal details can remain completely anonymous (though this depends upon your nationality and country of banking, unfortunately for Americans that remains virtually impossible).
Naturally, this gives an added level of protection. Having a second set of laws surrounding your assets enables a fallback option in case your primary bank fails or becomes insolvent.
Restricting yourself to banking only in your home country makes you more susceptible to domestic economic downturns.
Having bank accounts offshore prevents such a scenario ensuring protection in case there is major currency devaluation, spiraling inflation or any form of currency manipulation.
Currency diversification helps secure one's wealth, especially if one resides in a volatile country where markets fluctuate dramatically.
A recent stud ranked the world's banking systems found that the US and the UK were ranked 40th and 44th out of a global list of 180. That would make anyone nervous.
While many western banks have reserves many hold less than one percent whereas many foreign banks generally are required by law to have upwards of 10-20%.
Along with holding hard assets, like gold and silver, holding several currency denominations generally helps to protect one's savings.
Spreading assets diversifying across different classes such as real estate, bonds, and stocks in both local and international jurisdictions can also help to assure your financial future.
An offshore account is an important step toward individual autonomy as it separates you from being financially bound to a single country and its financial system.
Diversity in financial investing is a well-known rule of thumb, though diversification is an integral approach used to ensure your freedom, reduce your risk, and secure your livelihood.
3. Location Independent
The last of the 3 flags is a second passport. While having a second passport might not be everyone's first priority, it is an important piece in the offshore puzzle.
There are three traditional ways to acquire a second passport that is through ancestry, investment, or time,
While there are several other ways, including marriage, giving birth in a country, or religious affiliation, they are understandably not as popular and require major life adjustments.
There are other options that are out there, like Panama's Visa program called the Friendly Nations Visa that offers permanent residency to members of 60 different nationalities with minimal requirements and a chance to get a second passport after 5 years. There are other such naturalization processes that, in time can lead to full citizenship in usually between 3-5 years such as Brazil and Argentia.
Being able to obtain a second passport, residency or citizenship has become a popular option for those seeking a safe plan B.
This is being pursued not by just celebrities and the ultra-rich but people looking to reclaim their sovereignty.
It is comforting to know that you have assurances of having a place to live in case you need to "get out of dodge."
In case you feel threatened in your home country, or find yourself in a situation which warrants immediate escape, having a second option is a life-saver.
Having a second passport also opens up a range of visa-free travel options, tax reduction possibilities and greatly enhances your international portfolio.
Investing in a second passport is offered in over a dozen countries around the world through citizenship by investment program like Nevis, and offers full-fledged citizenship in several months for a fee.
While not everyone is at the same place in their lives to be looking for a second passport. Finding a residence in a part of the world that suits you is an essential part of the offshore transition.
In today's rapidly changing landscape, going completely offshore means you often need to move more than just your assets.
As global transparency laws have made tax elimination much more difficult, residing in a foreign country can give you the last piece of the puzzle to free you from being taxed by your home country.
Not only that, but complete autonomy and independence can not be had if we remain subservient to just one government.
Though getting a second passport requires some effort, whether it's time or money, what you get is worth the effort.
If getting a passport or settling down to acquire a residency are not options, many nomads, entrepreneurs, and globe trotters become perpetual travelers or PTs who spend their time between different countries without staying in any one place for an extended period of time.
This enables them to technically be considered a tourist and escape all the complicated residency requirements and tax obligations that go with settling down.
Whatever the solution is for you whether it's buying a passport, settling down in another country, or traveling the world perpetually, there are several solutions that each allow you to plant that third flag to help you secure your life offshore.
One Step at a Time
Going offshore ensures you are not tied to a single country, a single currency, dependent upon a single bank, nor a single market.
Each step is played out differently, according to where you are at. Just be sure to walk each step with a plan that's right for you.
If you are looking to diversify your investments, restructure your company, protect your assets and ensure your future - your future might be offshore.