Is Your Money at Risk? Protecting Your Assets through International Diversification

It Could Happen to You

Today, in 2016, we live in a world of constant flux. The greater recession, that began in 2008, continues to plague the world economy, forcing governments to participate in unprecedented ‘Quantitative Easing (QE)’ to stabilize their economies and weaken their currency. The stability bought with QE has come at an enormous price, as the amount of debt accumulated to keep their markets from imploding is reaching crazy levels. The debt overhang will have to be dealt with at some point, and when it does, the government could seek out your savings to pay for it.

Sounds crazy? Well, it isn’t Ask residents and bank account holders in Cyprus circa March 2013. Their bank deposits became the cash used to bail-out their “too big to fail” banks and government. Bank accounts were frozen and 10% removed as a levy or ‘bail-in’ tax to the Cypriot government, which was severely impacted by the struggles of Greece’s economy, the downgrading of their bond credit rating, and finally, exposure to an over-leveraged housing sector.

Living and investing all within one country leaves you susceptible to the whims of that one country’s governing body. Changes in capital gains taxes, dividend taxes, income tax or the dreaded ‘bail-in’ tax are all possibilities when living and banking/investing in one country. Diversifying yourself and your assets internationally can reduce this risk and put you in a position to prosper, or at a minimum, lose the least amount possible. As the late Richard Russell used to say, “in the future to come, it isn’t who makes the most, but loses the least.”

Advantages of International Diversification

Diversification of your assets into multiple jurisdictions has a number of advantages, including:

• Reduce the Risk of Financial Chaos – these days, most economies are tied together, but the fact is, if you live in the United States, Canada, Germany, England, China and/or Japan (most countries in the G20), you are more susceptible to the turmoil. Picking a jurisdiction outside of these core countries can have a profound effect on minimizing the loss in your portfolio.

• Currency Diversification – The ability to hold your savings in another currency (provided it isn’t worse than the currency you primarily hold) will give you another added layer of protection against your own country’s currency devaluation. Examples: Norwegian Krone or Hong Kong Dollar.

• Access to Foreign Stock Exchanges and Better Interest Rates – Access to foreign stock exchanges opens up a whole new world of possibilities for speculation and investment. Example – The Australian Stock Exchange (ASX) in particular is home to some very good junior resource companies that do not have listings on the TSX or TSXv. Interest rates abroad are far greater than at home (for most, anyway); India in particular offers savings account rates upwards 9% right now – tough for western world banks to compete with that!

• Reduce the Risk of Capital Controls and/or Asset Seizures – The Cyprus example described above is the best modern example of asset seizure. As far as capital controls are concerned, I will make a prediction that G20 nations begin to force their citizens to purchase government debt as a form of retirement savings, instead of investing in the stock markets…just a thought, not yet reality.

• A Real Insurance Policy! – Who knows what the future holds, but having some cash in an off-shore bank account or trading account gives you options, and really, that’s all we can ever ask for.

My Thoughts on Internationalizing

I truly believe we are headed for higher taxes, on all fronts, as the government debts continue their steady climb upwards. I started my journey in internationalizing myself and my family in 2011, and haven’t looked back. I sleep very well at night knowing that I don’t have all of my political eggs in one basket. I will be reviewing some services and products that you can use to internationalize yourself, too. The first on this list will be…

Peter Schiff’s Euro Pacific Bank

I recently came across an internationalizing product that’s worthy of a further look; Peter Schiff’s Euro Pacific Bank (EPB),which is located in St. Vincent and the Grenadines. Whether you have a few thousand dollars or a few hundred thousand, Euro Pacific Bank is a great way to get started internationalizing yourself. If you are American, however, you may want to skip this review. Euro Pacific Bank does not accept clients located in the United States.
I’ll share my review of the Euro Pacific Bank here, very soon. Stay tuned!

Got a junior resource sector product or experience that you would like to share? Please let me know and I’ll share it here, at Junior Stock Review. You can get in touch with me through the contact form, located on the homepage or the bottom of this post, or you can email me at juniorstockreview@gmail.com

Until next time,

Brian