A politically charged, but historically documented term, is the idea of having a 'plan B' or a back-up plan is oftentimes viewed as being prepared for the worst-case scenario. But in the world of investments, where investors deal with daily struggles and high-risk to 'just succeed', having a plan B might also be considered a weakness or seen as a lack of commitment to a current plan.
2020 brought us so far very different aspects. Social isolation and a declared national emergency have had an immediate impact on industries that cluster people; conferences, trade shows, airlines/cruise ships and all types of travel, the hospitality industry, sporting events, theater and movies, restaurants and schools. Large companies are sending employees to work at home. Large retail chains are shutting down their stores. Therefore it seems that a personal plan B strategy might become an integral part of your Flag Theory thinking; let's look at this in more detail…
Possible threats and their solutions
Typical crisis planning focuses on specific potential shocks or threats. But how do you prepare for an unforeseen "asymmetric" threat — one that comes out of nowhere, with no rule book to follow? This is not completely right!
|Taxation||Foreign Earned Income Exclusion, Domestic and/or Foreign LLC, Self-Directed Retirement Structure etc.|
|Inflation||Physical Precious Metals, Currency Diversification, Real Assets, etc.|
|Social Security||Self-Directed Retirement Structure, Offshore Real Assets, Value Investing, etc.|
|Capital Controls||Physical cash, Offshore Bank Account, Physical Precious Metals, etc.|
|Lawsuits||Domestic and/or Foreign LLC, Offshore Trust, etc.|
|Banking Collapse||Offshore Bank Account, Physical Cash, Physical Precious Metals, etc.|
|Natural Disaster||Insurance, Personal Resilience Measures, etc.|
|People Controls||Foreign Residency, Second Passport, etc.|
Rule No.1: Never lose money.
Rule No.2: Never forget rule No.1.
– Richard Branson
Strategies for every leavel of wealth
|$5,000 to 10,000||Take out and store at least two months of expenses in physical cash, as a crucial hedge against emergency situations. Purchase some physical precious metals as a long-term hedge against a weakening currency. Meanwhile, look into your ancestry to see if you have a shortcut to a second passport.|
|US$10,000 to 50,000||Consider all of the above, plus… open an offshore bank account in a highly liquid, well-capitalized bank in a safe jurisdiction. Consider moving abroad to take advantage of the Foreign Earned Income Exclusion (US only) to dramatically reduce your tax burden and start yourself on the path to a second passport through naturalization.|
|US$50,000 to 100,000||Consider all of the above, plus… begin to hold at least a portion of your precious metals in a secure offshore facility and to invest in a safe value investments. You may also want to establish a domestic LLC or foreign LLC for tax benefits and asset protection.|
|US$100,000 to 250,000||Consider all of the above, plus… maximize your investments by establishing a self-directed retirement structure. Seek higher-yield offshore banking alternatives (which typically come with higher minimums).|
|US$250,000 to 500,000||Consider all of the above, plus… set up a foreign trust, which is one of the best strategies available to protect your assets against government seizure and to keep your wealth intact as you pass it on to your children. Invest in private equity and foreign real estate.|
|US$500,000 & more||Consider all of the above, plus… employ a number of tax mitigation strategies. Invest in productive agricultural properties.|
Defensive & offensive strategies
Defensive strategies are designed to deliver protection first and modest growth second. With an offensive or aggressive investment strategy, by contrast, you try to take advantage of a rising market by purchasing securities that are outperforming for a given level of risk and volatility.
|Physical Cash & Precious Metals: Two to three months of expenses in cash and two months of expenses in precious metals.||Financial Education: Become financially sophisticated so that you can take advantage of the numerous global investment opportunities and get a basic .|
|Offshore Bank Accounts: A portion of your savings in a safe, stable, highly liquid bank account outside of your home country protected from bankrupt governments and financial crises.||International Brokerage Account: Expand your investment opportunities and hold your investment capital in safer brokerages overseas.|
|Offshore Gold Storage: Keep your gold and silver protected in a safe and solvent jurisdiction overseas where your home government can't touch it.||Global Investments: Invest in public companies worldwide that offer a superior risk/reward ratio to overvalued Western markets.|
|Foreign Residency: So that you always have a place to go – if you need to – and you can take advantage of living and doing business overseas||Safe Value Investments: Use the strategy that made a Warren Buffett one of the richest men alive by investing in capital preservation and steady growth without taking huge risks.|
|Privacy & Security: With so much of our lives and assets in digital form, make sure you protect your digital life from unauthorized access and abuse||Private Equity Investments: Allocate a portion of your capital to investments in private companies that can yield you multiples of what you put in, and can even go to the moon.|
|Personal Resilience: Take some basic steps to ensure your water, food, and energy security.||Overseas Real Estate: Trade your overvalued dollars for a beautiful tangible asset in a thriving place overseas.|
|Second Passport: Prevent any one government from having total control over your freedom of travel – the best insurance policy there is.||Self-Directed IRA: Take control of your retirement funds and invest them much more profitably by eschewing plain vanilla options of stocks, bonds, and mutual funds.|
|Insurance: Life, health, home, auto, disability, etc.. You may never need it, but it pays to have some protection just in case.||Tax planning: Employ numerous strategies to legally minimize, defer, or even eliminate what you owe in taxes.|
|Estate Planning/Offshore Trust: Ensure that you protect and stay in control of what happens to your assets after you pass away.|
|Crypto-Currency: The world is quickly moving away from centralized currencies, giving cryptocurrency a major role in a well-diversified basket of savings in the future.|
|Compliance: Follow the law, fill out the proper forms, and keep out of hot water.|
Website and the information contained herein is not intended to be a source of advice or credit analysis with respect to the material presented, and the information and/or documents contained in this website do not constitute investment advice.