Planting Investment Flags

Planting one or more Investment flags has several advantages

  • Investing in Foreign Real Estate
    • very difficult for the country of your citizenship to take or repatriate

  • Investing in Foreign Stock Exchanges
    • Avoid taxes
    • diversifiy the currency denomination of your assets
    • get exposure to foreign stocks in exhanges which may have trading restrictions in the country of your citizenship

Concerns with IRA Investments

  • In the opinion of this author . . . It's only a matter of time before the US government raids the retirement funds of all it's citizens fortunate enough to have any assets remaining in their accounts. You would be wise to NOT underestimate the tactics a bankrupt government may resort to!

    • In 2008 the Argentinian Government raided the retirement funds of their citizens . . . forcing them to convert to goverenment bonds.

    • Uncle Sam will likely follow suit and force U.S. citizens to convert their IRA assets to government annuities based on US Treasury bonds. They will literally take your assets and in return give you a "set dollar" "fixed payment income" until you die, which of course, will inflate to nothing in the coming hyperinflation.

  • Which IRA option protects you best from this potential theft ?

    • I perosnally believe that the smartest thing to do is to . . .
      Distribute your IRA now (cash out) and take the hit:
      • Pay tax for all deferred income
      • Pay the 10% penalty for early withdrawl.
      • Use the remaining funds to plant another flag!
        (Get as much as possible of your capital out of the country of your citizenship before it is too late!)

    For the sake of completeness, I have listed below other options:

    • Traditional IRA
      • You fund this account with your tax deferred income.
      • The idea is that when you retire and draw from the account,
        you will be in a lower tax bracket, so you will pay less tax on the income then, compared to if you paid tax on it at the time you fund the account.
      • But what happens if tax rates increase across the board resulting in you NOT being in a lower tax bracket at the time you retire ?
      • Uncle Sam will be very happy to have you for a partner and will take a bigger than expected cut from your appreciated account.

    • Roth IRA
      • The idea is that you pay the income taxe up front and in doing so cut Uncle Sam out of the partnerhsip altogether. . . so that when you retire, any gains you have earned are distributed tax free.
      • But who is to say that the rules won't be changed. They certainly could be changed at anytme and you could be taxed again on what you thought was "after tax" money.
      • This could happen at anytime and without any warning . . .
        • Look what just happened in the UK . . . On Jue 22nd 2010, George Osborne (British Chancellor of the Exchequer) announced that capital gains tax have been increased from 18% to 28% . . .
          effective IMMEDIATELY!

    • Self Directed IRA
      • Your IRA owns a limited liability company (LLC).
      • The LLC owns the investments you make.
      • The Custodian holds legal title to the LLC.
      • The Custodian considers investment suggestions by the investor.
      • Investments can not be made without approval by the custodian.

    • Open Opportunity IRA
      • Similar to a Self Directed IRA.
        • But . . .
          • The custodian's role is limited to holding legal title.
          • The investor personally manages the LLC without any custodial approval required.