How Can I Avoid Financially Relying on a Single Country?

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Milujo
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Joined: Fri Nov 30, 2018 1:18 pm

How Can I Avoid Financially Relying on a Single Country?

Post by Milujo »

We talk often about the importance of having a diversified portfolio that includes, among other things, both domestic and international funds. But since my entire portfolio--including my international funds--are in retirement accounts held by financial institutions based in a single country, isn't this still equivalent to putting all of my eggs in one basket? Can nothing be done about this? Or are there concrete ways we can reduce our seemingly total financial reliance upon the continuing existence of whatever country we live/work/have residency in?

Note: This is not a political question. So please don't move the discussion in that direction. Rather, this is an attempt to start a discussion on an aspect of diversification that seems to never get discussed. Thanks.
muffins14
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by muffins14 »

You could buy physical real estate in other countries, and own foreign accounts while paying the required taxes.

For me, I feel like equities in vanguard or fidelity or Schwab would be safe enough
Crom laughs at your Four Winds
Doctor Rhythm
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by Doctor Rhythm »

What risk are you trying to mitigate against?

As you say, it’s easy to reduce idiosyncratic home-country stock market risk by holding a global equity allocation. Or are you worried about some kind of home-country socioeconomic implosion scenario? This starts straying into fringe political beliefs pretty quickly if you live in the US, so hard to discuss specifics. I suppose you could own international property and accounts held in the local currency, as has been suggested. I also understand this to be one reason some people hold gold.

It’s not something I ever think about, and it’s way beyond anything I’m willing to prepare for.
Last edited by Doctor Rhythm on Mon Aug 08, 2022 3:13 pm, edited 2 times in total.
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Lee_WSP
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by Lee_WSP »

Unless you're an oligarch, I don't think it's feasible.
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typical.investor
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by typical.investor »

Milujo wrote: Mon Aug 08, 2022 2:03 pm But since my entire portfolio--including my international funds--are in retirement accounts held by financial institutions based in a single country, isn't this still equivalent to putting all of my eggs in one basket?
If you are in the US, buy Canadian timberland (unless the price it too high now). It will have a return. Then, in a total collapse, you can pack up, drive there and build a log cabin.

Be careful clearing the trees for agriculture. If you use fire, as they do in the Brazilian rain forest to clear large swaths or dispose of the trees, it can spread unexpectedly. This explains the large scale wildfires in Brazil over the past three years. It's been a drought. So if it's dry, maybe build a really big log cabin and don't burn the wood.

In a collapse of the current financial system though, I'd worry if land ownership in a foreign country really would be respected. Maybe you are better off finding some timberland in the US.

Or go with Swiss Private Banking! They can do anything!!!!
Last edited by typical.investor on Mon Aug 08, 2022 3:16 pm, edited 2 times in total.
mecht3ach
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by mecht3ach »

I have a couple of bank accounts in foreign countries in which I have lived in the past, where, theoretically, I could send big wads of money in a hurry if I saw things tanking in my home country. I suspect, though, that those accounts would be harder to get now with FATCA (easier for non-US citizens, perhaps), and they do make my taxes a bit of a pain every year. (I hold on to them because it's nice to have the chip-and-pin card in those currencies, some organizations I still enjoy joining give a discount for direct debit from a bank, and, frankly, for sentimental reasons.)

If you have lots of money you want to spread around, I suppose you could look into a Golden Visa scheme. That certainly isn't cheap, but it would give you the option of having a lot of capital in another country, as well as access to that country.

IMHO, though, if the country in which you have most of your money is the U.S., if there was some sort of socioeconomic implosion, it would probably still have negative ramifications in the financial markets of a *lot* of other countries!
THY4373
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by THY4373 »

typical.investor wrote: Mon Aug 08, 2022 3:10 pm
Milujo wrote: Mon Aug 08, 2022 2:03 pm But since my entire portfolio--including my international funds--are in retirement accounts held by financial institutions based in a single country, isn't this still equivalent to putting all of my eggs in one basket?
If you are in the US, buy Canadian timberland (unless the price it too high now). It will have a return. Then, in a total collapse, you can pack up, drive there and build a log cabin.
One of the things Covid taught us was there is no guarantee you can enter a country unless you are a resident/citizen even then no guarantee (looking at you Australia). If one truly wants to diversify their risk I think they need to seek some sort of additional citizenship/residency in another country. One of my parents is a naturalized US Citizen originally from Europe and when I retire I intend to get my citizenship in that country mostly because I feel the upsides of more than one citizenship/passport outweighs the downsides to me. I want the diversity for a few reasons.
gavinsiu
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Re: How Can I Avoid Financially Relying on a Single Country?

Post by gavinsiu »

Dividing your asset into multiple country can also expose you to the risk in the other country? What if half of your money was in Sir Lanka? Not good.

I think your best bet is to have a second citizenship at some place stable, geographically distant. Let's say your home country goes south, you can travel there and liquidate your asset and transfer your money. You can also create an emergency fund in this new place just in case you need some cash for the short term.
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