Dateline: Cairo, Egypt
The short flight down from Cyprus last night was uneventful, if not for the fact that no fewer than four gate agents insisted on checking and re-checking my boarding pass, seemingly expressing skepticism about why anyone would want to go to Egypt. Perhaps they haven’t heard of the Pyramids… or the recent 60% drop in Egypt’s currency that has created a giant sale here.
On board, I read an interesting article in a magazine picked up in the airport lounge. Written for wealthy Arabs, the article speaks of “The Davos Effect”, a recent phenomenon stemming from the World Economic Forum’s winter hangout where ultra-rich political creatures and bankers hob knob.
Recently, the article suggests, the post-Davos hype has been all about how the world’s rich are escaping the world’s decaying big cities and building boltholes in far more remote corners of the planet in places such as the far reaches of New Zealand.
There is no doubt that many formerly great western cities have nearly died off. There are those still living who can recall growing up in a vibrant Detroit, which in the 1950s enjoyed the highest standard of living and homeownership rate in the United States and quite possibly in the world.
In that post-war era, there were few places better to live than Detroit, and two million people did, buoyed further by the sounds of Motown that gave the place a sense of culture and pride.
Today, of course, Detroit is a total mess. Its population has shrunk to barely a quarter of its halcyon days just several decades ago. Even the homeless don’t want to squat in many of the city’s abandoned houses; it’s literally a buyer’s market for the homeless who can be pickier than ever about where they lay their head.
Even the most daring don’t dare set foot in some Detroit neighborhoods out of fear for their safety. In others, entire neighborhoods have become so abandoned that the distinction between forest and urban area has blurred. And not one supermarket chain has a single outlet in Detroit.
The story is true in other cities across the United States and western Europe where the offshoring of industry has left a mark.
Meanwhile, I’ve met numerous Latin Americans who grew up in the days of different problems: kidnappings, ransoms, and all other sorts of crime. These threats have calmed in many Latin capitals, but there are still plenty of places where they remain.
If you’re successful, the concept of decaying urban areas and rising crime is a concern. And while I doubt you or I will be speaking at the next Davos forum, there is still something we can learn from the so-called “Davos Effect”.
All of the strategies we talk about here at Nomad Capitalist are about creating more freedom and prosperity in your life, but also ensuring that you will be safe no matter what happens. An offshore bank account means that you’ll never be waiting in ATM breadlines for cash like one of the Cypriots I met last week did just a few years ago…
Holding foreign currencies dramatically reduces the risk that you’ll lose much of your fortune to a currency collapse if one affects you…
Having a second passport means that you will have an escape hatch from latest crazy regulations, taxes, or military service demands imposed by your home country in order to travel.
I could go on and on about how planting flags helps not only ensure greater wealth and personal happiness for you and your family, but protects you from any number of known and unknown threats.
In a sense, planting flags is akin to establishing a number of financial boltholes around the world, each there when you need it most.
However, the idea of establishing a physical bolthole is also attractive. While many of us live in cities, having a property to go to in case something happens isn’t a bad idea. That is one of several reasons I have purchased numerous agricultural properties and have plans to build homes on several of them.
While I’m not suggesting that you go so far as to insulate yourself against a nuclear war, protecting yourself from potential crime, pollution, and decay is a good strategy.
Last year, I acquired an entire cattle ranch in the Republic of Georgia for the tiny sum of $14,000. I’ve acquired other land – with utility access – for even less. Not only is land an interesting speculative investment and long-term hold to create generational wealth, but it’s also a place you can go in case you ever no longer feel safe anywhere else.
Having a place where you can grow fruits and vegetables, raise animals, and have access to clean drinking water and clean air is a reasonable investment if you do it the right way.
So is having a second residency in a country that is “off the grid”. If you live in the United States, you are subject to whatever the latest riot fad is during a Trump presidency or when someone is killed by the police. If you live in Istanbul, you are subject to the latest in a seemingly never-ending line of unfortunate attacks.
Sure, you could move to a remote part of the United States or Turkey, but having the ability to get on a plane and go somewhere totally detached from the mayhem where you live is liberating.
That mayhem could be physical riots or threats to your safety, or threats of the financial kind such as when French president Francoise Hollande imposed a super-tax on the wealthy a few years ago. It could also be protection from environmental threats, much in the way many Hong Kong residents have been fleeing for Singapore to enjoy less polluted air.
Having a place you’re legally entitled to go and land on which you’re entitled to live is a good way to protect yourself from any number of potential issues. It’s what the wealthy are doing as they buy up mansions along clean waterways in remote parts of the world.
According to my article, one part of rural New Zealand saw prices rise some 50% in only two years thanks to wealthy buyers flooding in to buy bolthole properties away from it all at prices, into the eight figures.
For the rest of us, a second residency or second passport and a small home and land away from it all could be an excellent investment in our safety and peace of mind. You can very affordably obtain residency in a country like Vanuatu or Chile that is far away from the flood of refugees, riots and wars, disease, and pollution. You can also purchase land for as little as a few thousand dollars, and build a home for as little as $5,000.
Having financial boltholes is important, but having a physical bolthole is quickly becoming a tool of the super-wealthy that is worth examining as well.