Dateline: Monte Carlo, Monaco
For years, Monaco has been a bastion of wealth and success. The Monte Carlo Casino in the city state’s main square is a legend of James Bond status.
In the 1980s, this tiny sovereign nation – all 0.6 square miles of it – was so flush with cash from the casino and its private banks that it abolished income taxes forever. Today, Monaco is among the most livable countries with no income tax.
You can’t walk across the street without seeing Ferraris, Bentleys, and Bugattis. It’s a paradise for so-called “ultra high net worth” individuals.
That’s exactly why I chose it as our latest meeting spot for Members of my private club, The Nomad Society.
As you can imagine, mixing a tax-free, wealth-friendly environment with the gorgeous beaches and glamour of the French Riviera turned an already wealthy enclave into perhaps the wealthiest nation on earth.
And not just for the 8,000 native Monegasque citizens, but for the endless number of tax residents who move to Monaco each year to pay less in tax.
Here’s where it gets interesting: as a result of having so little land and so many ultra-wealthy people clamoring to buy their tiny slice of tax-free paradise, real estate in Monaco has become a rather “sure thing”.
Sure, there are some bad deals, just as you’d find anywhere else. In the free market, anyone can ask for any price under the Greater Fool Theory.
But some of my friends and contacts here have shown me the deals they and their private clients are doing, and the risks are rather minimal.
It’s simple: as guys like Ed Miliband in the UK and Francois Hollande in France chastise the rich and threaten to take away any remaining reasons for wealthy people to stay there or immigrate there, more and more of the world’s rich will be seeking a new safe haven.
Take the UK Labour party’s announcement that it would disallow wealthy foreigners to essentially pay a flat tax to live and manage their foreign businesses in London, without paying tax on their worldwide income.
The result has been a huge London property bubble that has sent prices soaring and created quite an economic stir in the United Kingdom.
And what do the socialist politicians there and in France want to do? They want to shut it down. They want to tell the rich people to stop coming… all in the name of “fairness”.
Then when people lose their jobs because the wealthy left, the politicians will go after whoever’s left. It’s a vicious cycle.
This is the reason I frequently advise moving your assets out of countries that hate wealth, whether that country is the United States, Great Britain, France, or anywhere else.
However, beyond just the doom-and-gloom that others perpetuate, I am a believer in the other side of the coin: the solution.
As the oldest science lesson in the book tell us, for every reaction, there is an equal and opposite reaction.
Every rich “non-dom” resident forced to leave London in the name of “tax fairness” will be seeking a new place to go. For wealthy Russians and Middle Easterners who wish to live in Europe, Monaco is an attractive place to save millions of dollars in taxes while living in paradise.
That’s exactly why most parts of Monaco’s property market have tripled since just before the global recession. In the midst of bad economic times, the world’s super-rich have taken action to protect their wealth.
That has been very good for Monaco and other countries with non-domiciled tax policies or territorial taxation.
For instance, the guy here who bought a 1.6 million euro flat, did a few renovations and is selling it for 2.5 million euros a few months later. Those stories aren’t uncommon. In fact, people are buying up apartments to re-sell.
In many other countries, that might be a bubble. In a tiny tax-free country everyone wants into, the trajectory has been nowhere but up. And more people come here every year.
Most westerners are sitting fat and happy with their fiat currency, high taxes, and government benefits in Detroit or Paris or Glasgow. However, even those westerners who are “awake” to the disastrous monetary policies of central banks and bankrupt governments are often missing a key element.
Once you understand there is a problem, you need to know what to do about it. Not just what to do to stop or prevent the bleeding (the action), but what to do to actually profit and prosper (the reaction).
I absolutely advocate moving a substantial part of your savings to safe offshore banks (including, if you’re wealthy enough, those here in Monaco).
I absolutely advise structuring your business or investments offshore so you, too, can enjoy Monaco-style tax benefits even if you’re not a Russian oligarch.
Putting those strategies in place is more or less a one-time setup. I’ve helped our private consulting clients create their implement an entire offshore plan in anywhere from one to six months.
Once you have your offshore strategies in place and your income and wealth are optimized, you can start profiting like some of the people at my event who are reaping 500,000 to 1 million euro windfalls from a single property.
People here in Monaco are all so wealthy that they can afford to play the property game, and they tend to not like to lose.
While I have talked to people who are earned 50-100% cash-on-cash returns on multi-million dollar investments, you can benefit from western governments shooting themselves in the foot with much less money.
In the next few days, I’ll be sharing my favorite countries for investing for Monaco-style returns but at a much lower price tag.
My only advice is to look beyond the doom and gloom and ask yourself “What will be the reaction to the havoc being reeked by crazy politicians”. That’s how you follow the money.