Last week I discussed an investment conference in Zurich that I attended a few weeks back.  I came back armed with lots of new ideas and connections for those of us interested in the capital markets.  I don’t normally pontificate on money management, but after that conference in Zurich, my mind was full and I had no choice but to write about it.

Most of the presentations at Fonds were in German, but I attended two that were in English.  One was presented by Jim Rogers, former partner to George Soros at the Quantum fund and the other was presented by Robin Batchelor from Blackrock.  I was especially interested in attending these presentations because they focused on the future of commodity investing.  Considering the world we currently live in, commodities may be something you should personally look at from an investment perspective.  I know I am.

Rogers focused on foodstuffs and metals while Batchelor focused on energy.  They both had essentially the same message; we have a growing population and a shrinking base of investment into production of necessary commodities.  From a long term perspective, we have nowhere to go but up with commodity prices.  Think about it, how many people do you know tell their kids, go to school, get a good education, and work on the farm?  People need to eat and we need famers to produce.  Right now we have a shrinking base of farming activity, but the population of the world is projected to triple in the next 30 years.  We have to feed them somehow and the law of supply and demand says commodity prices must rise. 

The same holds true for oil.  Oil is primarily a transportation fuel.  Most of your developed nations are near a peak or even in a decline with oil consumption.  But China and India alone have nearly half of the world’s population with a hugely growing middle class.  Right now they are consuming the same amount of oil per capita as the US was in the ‘20s.  Do you think China and India’s consumption will go down, or up?  My suggestion here is to look into portfolio diversification and take a long, hard look at commodities.  There are many ETF’s now that track various commodities so it is no more difficult than buying Wal-Mart stock.

I also had a great meeting with a guy named Raoul.  Raoul runs a family office for wealthy individuals and families.  This is not a common practice in the US, but it is quite intriguing.  His firm does not actually manage your money, but they provide you with the tools to assist with asset allocation and risk management.  He also selects and works with your money managers, banks, financial planners, tax planners and anyone else involved with your finances to make sure you are getting what you are paying for.  He can help you find the best money managers, place your money in Swiss banks (or anywhere else), and make sure you aren’t taking unnecessary risks.  His firm can provide you with online access to your portfolio whether it is in real estate, cash, securities, gold, or cattle.  He can even tell you if you have too much money tied up in cattle at any given moment.  It is quite a revolutionary service he offers and for a very reasonable fee.  He charges a small fee based on your asset holdings.  He gets no commission for advising you to buy X stock, or Y commodity.  The more your assets grow, the more he earns.  And most importantly, he is connected.  Very well connected.  He can still provide American citizens with Swiss private banking services and connect you with money managers you would never be able to have access to otherwise.  If anyone is interested in contacting Raoul, please let me know.  I will make the introduction.

I would really like to hear from my readers.  If you have some specific topic of interest, please let me know.  I would be happy to discuss it with you personally, or I can write about it on our blog or in the newsletter.  Feel free to contact me today for your free 30 minute consultation.  Until next week, live well.

A few weeks ago I attended the Fonds Fair in Zurich.  I was there primarily to listen to a few key presentations including Jim Rogers speaking on the future of the commodities markets. While at the conference, I also attended a presentation given by the CIO of Blackrock discussing the energy market. It was quite enlightening and there will be lots of changes over the next 10 years in the energy market.

One of the most interesting things from the visit was the complete lack of interest in dealing with American clients when talking to Swiss private banks and investment advisors. Certainly you have all watched the news sometime in the past year and have heard about the situation involving UBS. This has had a profound effect on the offshore banking industry in Switzerland as the US tax department has bullied their way into getting the Swiss to break their own laws in order to not anger the beast.

And of course you can’t help but notice Obama’s vendetta against wealthy Americans who bank and do business offshore. He is trying to create a criminal image for anyone unpatriotic American who chooses to bank and do business offshore as part of their asset protection planning. Not to mention his proposed $1.9T (yes, that’s a T) tax increase on the wealthy.

Have we now produced the modern day Robin Hood? What you need to be aware of is that it is neither illegal nor immoral to diversify your assets offshore. In truth, offshore banking is one of the most prudent things you can do as part of your asset protection planning.  And with the internet and communication technology what it is today, it isn’t even difficult.

But you need to tread carefully in this water. There are many pitfalls you must be aware of. In order to maintain complete transparency, there are several details that must be attended to in order to make sure you don’t run afoul of any government agency. Properly set up entities and proper tax planning can reap huge rewards in both tax savings, investment opportunities, and asset protection. It seems the perfect storm is brewing for you to not just want, but need to diversify your assets offshore.

As I wrote about previously, there are legal ways to defer (not evade) taxation on your business and investments. There are also ways for you to move some of your banking offshore. The benefits from the tax savings alone can more than pay for your proper advisors to help manage this process for you.

Imagine compounding your earnings tax free for 10 years. What is that worth? With the increased taxation and likely stricter restrictions on moving assets offshore, now is the time to make this move. While this may seem complicated and not beneficial to some, it is really just an irrational fear.

Actually, many banks outside of the US are much safer than US banks. Many European banks keep 30% in reserves versus 10% reserves for US banks. And they are all guaranteed deposits by the ECB. And there are Asian banking options that are even more attractive.  If there is a run on the bank, who do you think is most able to weather the storm? If you wish to discuss your personal situation, I can advise you to your options. Contact me today for your free 30 minute consultation.

As I mentioned previously in my blog, I have discovered a way for some of you to defer taxation on your business income.  This, of course, requires an offshore asset protection strategy.  There are many details involved and lots of restrictions, but I am going to use a theoretical example to illustrate.

Joe runs a custom t-shirt company from California and sells his products all over the world through his website.  Joe has a very successful business and sells $2m per year in t-shirts with a 30% net profit margin earning $600k per year after his $100k per year salary.  After Joe takes advantage of his tax benefits, he pays 30% in tax or $180k.  That is a rather large check to write each year.

Today, Joe runs his business from Nevis.  He formed a Nevis LLC, rented a small office in Nevis to hire an administrative staff there to handle bookkeeping and customer service.  He sold his computer servers and has outsourced his server space to a firm in India.  He does all of his banking through Denmark and uses Paypal for website payments.  He has essentially severed all physical business ties in the US.  Granted, Joe still lives in California and still earns his $100k per year salary, for which he still pays his personal income tax. 

However, Joe no longer pays income tax on his $600k in net profit, saving his company $180k per year in taxes.  Joe now has reinvested his earnings into his business and expanded into a web based golf shop.  The golf shop operates on the same premise as the t-shirt shop and allows him to grow his business and his profits.

When Joe decides to repatriate some of his income from his offshore business he will certainly pay income tax on that amount.  But until that time, Joe can defer the taxation and invest his money as he sees fit in order to continue to grow his wealth. 

I understand this program doesn’t work for all of you.  In reality, it can only work for a few.  But for those few, it is a tremendous advantage.  For those of you that cannot take advantage of this, maybe it can’t be an option for your next business venture.  Certainly there are many variables to this situation and each must be individually evaluated. 

If you think this may work for you or if you have any other questions regarding your asset protection plan, contact me via email or at the number listed on our contact page.   Until next week, live well.

A few weeks ago I was  in Oslo, Norway and spent some time with some local friends.  These guys are not your typical Norwegian socialists (sorry if that offends anyone).  They are very much of the free market mindset.  These are entrepreneurs and investors.  This was my first trip to Norway and I was in for a shock.

The $11 beer and $50 pizza was a good starter.  And I don’t mean some exotic beer and pizza.  I’m talking Pizza Hut quality.  As I found out, Norway has a 200% alcohol tax because they determined citizens drank too much and wanted to eliminate this scourge of modern society, completely disregarding the concept of personal choice.  A basic Porsche 911 costs about $250,000.  A 700 square foot apartment in the city costs about $2500 per month.  Gasoline is about $9 per gallon.  And this is all created by taxation.  On top of that Norwegians pay between 35-50% income tax.  But they do have “free” healthcare.

This “free” healthcare system consists of wait times for basic procedures that can take from just a few weeks to several months before you can get an appointment.  Of course emergency care is quick, but what about an MRI?  Sure, we’ll see you in July.  They also have a great public transportation system.  But a one-way subway ticket costs about $5. 

Unfortunately this is the path I see for the US.  There are many similarities.  Norway even considers their system an improved American government.  Is this really the way we want to go in the US?  I have no interest in living in a place like Norway.  Sure their income is much higher.  A McDonald’s employee earns about $20 per hour, but a Big Mac meal costs $12.  How do they intend to attract competitive companies when the cost of doing business is so high?  Do we want to follow in those footsteps?

For one of my Norwegian friends, we were discussing a program that allows him to ‘escape’ Norway.  He sold his company a few years ago to a large tech firm in Norway.  This firm just recently sold out to a large US company and my friend’s job is now able to be done remotely.  We are looking at ways for him to invest offshore and defer his gains as well as structuring his life around a multi-flag lifestyle.  He will likely continue to work for his company in Norway earning a ridiculously high wage in Norwegian kroners, but he will move to warmer and cheaper climate where his income goes much further.  By doing this he can structure his own investment firm in one country, do his banking and investing in another, continue to earn an income in Norway, and live in another place.  There are also huge tax savings to be gained from this.  He is very interested in intelligent asset protection planning.

Now is the time for you to consider how you want to structure your life.  Maybe you won’t make such a drastic change, but you can too form your own offshore investment company and defer taxation.  You can restructure your business for maximum asset protection.  Or you can find a new country to live in.  But don’t wait until you cannot leave or you are paying $12 per gallon for gas and waiting 6 months for an MRI.  Live well.

Today I want to share with you a couple of options for legally and safely getting your assets out of the US without the requirement of federal reporting.  There are really only two ways to do this.  Buy real estate or hold precious metals like gold outside of the US.  If you hold any other asset like cash, securities, private businesses, mineral rights, or anything else, the US wants to know what you are up to.  They want to know what you own, and what’s more, they want their piece. 

Real estate and precious metals are the exception here. By holding real estate or precious metals outside of the US, this gives you significant asset protection from creditors and government intervention.   To be clear though, for US citizens or residents, all worldwide income must be reported and is taxable regardless of where you live.  So if you own a beach house on the coast of Spain and rent it out for holiday, you must report the income. 

I have been recently acquainted with a man in Costa Rica who is developing a very interesting wellness resort and spa on 83 acres of forest surrounded by protected areas and a national park.  He has already built several residences, a wellness spa, a bed and breakfast, and will soon be opening several restaurants and a medical facility.  This is a great opportunity for someone looking to retire, have a second home, go on a vacation, or take advantage of investment opportunities.  Hugo, the owner, is looking for business partners to develop additional amenities like a hotel and restaurants.  With certain qualifications, Hugo has even offered to pay for your trip to check the place out.

At this point I have not visited Hugo’s place in Costa Rica.  I have read though his investment offering and I have looked extensively at his business plan.  It is very appealing.  I will be making a trip there later this year to put my boots on the ground.  I would encourage any of you that may have some interest to at least check it out.  Do your due diligence.  Hugo is even willing to pay for your  plane ticket.

Buying real estate outside of the US is a great way to hold assets and minimize your US holdings while diversifying at the same time.  As stated in previous newsletters, this is not for everyone.  If you are a small investor or business owner and uncomfortable with offshore holdings, you should just disregard this.  But for many of you reading this, you already have a vacation house, or are considering buying one, liquid investments like securities, business holdings, and are interested in ways to diversify your holdings while giving you options.  You are the ones who would benefit.

If you want to contact Hugo, please send me an email and I will forward you his contact details.  If you have further questions or would like to schedule a free 30 minute consultation, you can contact me by phone or email.  Live well.