Is anyone here an "investor" nomad?

Question

Hi. Newbie here.
Wondering if anyone here has expertise in being an “investor” nomad where you travel and live off investment income? I’m contemplating fleeing the rat race and wanted to throw out a few thoughts and ideas.
Have a UK passport so don’t get taxed on worldwide income whilst non-resident.
I’m thinking of residency in Malaysia (MM2H) or Philippines (Retirement visa).
In terms of generating tax efficient income:

HK, Singapore and UK don’t withhold tax on equity dividends or preference shares
USA doesn’t tax capital gains (but has nasty estate taxes on equities) for non-residents
USA debt securities (CDs/corp debt) do not withhold tax (w8-ben)
USA based p2p lending should be same as debt securities asset class hence no withholding
Eurobonds do not withhold tax on interest payments  (look to have a spread of local currency bonds).

Would look to supplement by buying property (have my eyes on a few places in Philippines) to rent out.   Would also look to invest in local businesses wherever I find opportunities.
Appreciate any advise or insight people might have!

yanokwa · Accepted Answer

Study after study has shown that it’s nearly impossible to make consistent money actively investing in the stock market [1,2]. The recommendation from those who study these things is to focus on making money doing whatever it is that you are good at and that provides value. Then take that money you earn and passively invest it in diverse, low-cost, tax-efficient mutual funds [3,4,5,6].
The investment approach (a.k.a, Modern Portfolio Theory) I’m advocating for is very easy to implement and gives you the best chance at making consistent money. Anything else is gambling, which I do (Bitcoin!) and is fine, but you should be upfront with yourself when you are gambling.
Anyway, just a word of advice from someone who has been investing (in my opinion, successfully) for about 20 years and has been nomading (in my opinion, successfully) for about 2 years.
[1] https://corporate.morningstar.com/US/documents/ResearchPapers/MorningstarActive-PassiveBarometerJune2015.pdf
[2] http://www.indexologyblog.com/2015/04/23/spiva-interpretation-and-misinterpretation/#sthash.CFGFJ3sV.dpuf
[3] http://longbets.org/362
[4] http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
[5] https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy
[6] https://www.reddit.com/r/personalfinance

eri · Answer

Hi @pclondon76
I am a newbie as well here, this is my first comment ever.
Not an investor yet but there is this podcast and site that might help you:

Nomad Capitalist

Nomad Capitalist | Keep more of your money. Build your freedom.

Nomad Capitalist helps entrepreneurs legally pay less in taxes, build a freedom lifestyle, and create wealth... all while living anywhere in the world.

flyonthewall · Answer

yanokwa:

The investment approach (a.k.a, Modern Portfolio Theory) I’m advocating for is very easy to implement and gives you the best chance at making consistent money. Anything else is gambling, which I do (Bitcoin!) and is fine, but you should be upfront with yourself when you are gambling.

Fully agree. Passive investing (as with the markets lately) have been pretty flat though. However, I still believe that fund manager risk is way more important to avoid so passive (and low cost) is the way to go!
On the topic of being an investor, well I know wanderingtrader is a guy who trades stocks while traveling - so that’s one but it’s not quite what this thread is about.
USA estate tax is not an issue if you invest through Irish domiciled index funds. So if you invest into Vanguard ETFs via Vanguard Ireland (you can buy on the LSE), then your investments are not located in the US and therefore are not subject to the estate tax.
You’ll still unfortunately suffer from the 15% dividend witholding tax that the US-Ireland treaty enforces. So… yeah 15% less dividends but that’s the cost of participating in the US market as a foreigner. Or you could incorporate a US company and invest through that but then you’ll have to deal with a lot of US buraeucracy and that might not be so good. Overall the cost of Vanguard funds is so competitive that the 15% dividend witholding evens it out with other alternatives. That itself makes them worth it.

gizmocaca · Answer

Hi - some great advice and links here, thanks.  Would also add http://www.financialsamurai.com/  as a link.  This guy is ex-finance who takes a conservative approach to passive investments (a bit US centric though for nomading).
What I’m likely to do is to (and will blog and geek out about it eventually).
1.) Setup brokerage accounts with likes of TD, Schwab, Interactive Brokers
2.) Try to replicate Bloomberg style market data sources using Quandl and maybe other cheaper sites (Stockopedia) to identify opportunities.
3.) Trading relatively passively rather than speculatively, in instruments that provide regular income (i.e. government & corp bonds/preference shares/REITS/p2p) in jurisdictions which are tax efficient for Nomads.  Irish Base ETFs are best for US equities I believe but direct buying works for Bonds in USA.  Other jurisdictions may also be interesting.
4.) Look to hedge out lifestyle choices i.e. invest in ZAR, BRL, IDR, TRY high yielding bonds if I plan to visit South Africa, Brazil, Indonesia and Turkey.
5.) Buy aggressively during market downturns (especially generally mean reverting instruments).
And maybe I can earn money through the blog too!
For most people passive ETFs added to and held long term is probably best/easiest though.

busdriver · Answer

Do you plan to do nothing at all as an investor? Or maybe be more like adding your life experience to it too?

busdriver · Answer

main rule - more important than ever - spread widely. Different kinds of investment projects, currencies, countries, … stocks can be part of it but you might want to look further.
I have my problem to see that nowadays traditional long-term investing actually pays off (see house price, £ and stock drop from time to time  -  the last one was because of Brexit).
But if you look, you can find interesting options, that are hands-off investments, that make 5-8% in interests instantly + have some potential and are fairly secure (urban property in mayor western cities).

gizmocaca · Answer

The plan is to create a core relatively passive income stream which takes care of living costs.
Then spend rest of time investigating different life options.  Business, learning, charity and building skills.

syneryder · Answer

busdriver:

But if you look, you can find interesting options, that are hands-off investments, that make 5-8% in interests instantly + have some potential and are fairly secure

You can find opportunities like that on the stock market too (at least on the Australian market).  One of my stocks now yields 15% just on dividends, and it’s a huge supermarket chain.  The key/catch is that I bought in at its lowest point during the 2008 Global Financial Crisis - as the company rebuilt & grew, so did its dividend payouts.
It’s worth filtering for companies with > 8% yield in case you find stable companies that are temporarily bargain priced. But you need to do your research - don’t buy into a company that’s about to go bankrupt!  I posted a little more about that over at Hacker News too.
I couldn’t live off my portfolio though.  It’s been helpful additional income, but I need to keep freelancing & selling products to raise the capital for investing!

gizmocaca · Answer

Thanks Eri.  I’ll check it out.
Once started I might blog about how to do it.  I know about financial markets but less about international tax and local investing.

simonl · Answer

Also new here and my first response. I’d be interested in your blog. I dont know about financial markets and investing but have some cash that I dont know what to do with but looking to maintain and improve my nomadic lifestyle.

miked · Answer

Another nomad investor here, but my investments are mostly passive, with a  few rental properties and index funds, in addition to my main business.
I’m always tempted to invest in some properties wherever I travel, but one thing I learned is you have to really know and understand the area if you want to get good returns from a real estate investment. I think it’s only worth investing in areas where you live, or at least spend most of the time, return often.

gizmocaca · Answer

Agreed.  I did buy some properties in Philippines.  Took a while to find right people / locations / buildings.  Might try to scale it up with other investors at some point but don’t feel comfortable yet until it proves itself over time.  The country is growing quickly so it’s an interesting bet.
Away from that gradually building a bond portfolio with investment grade and “high” non-investment grade bonds (and some pref shares too).  Mostly long dated.  Interest rate cycle / credit cycle at their peaks so not being particularly aggressive.

jessehanley · Answer

If you can pull a stable income from this and know what you’re doing, sure. I know people doing this and they love the game.

travelingpm · Answer

We come across a few nomad traders…not so much the real estate investors you speak of. I’m trading stock on top of managing our business, earning about $1400/m via trading. Would I invest in a property and trade 40-60% annual yield for maybe 10% and upkeep, hell no.

gizmocaca · Answer

Thanks!  Do you know if any make property investments whilst on the road? I would imagine it’s a bit of a minefield legally and you’re always a “dumb” foreigner.
I’m also interesting in micro finance, i.e. if locals or nomads have a good idea, which they are passionate about, then maybe help with the financing albeit with an ownership stake.   Suspect there are plenty of opportunities in growing countries.

busdriver · Answer

“focus on making money doing whatever it is that you are good at” - yes, I think so. Unfortunately it’s banks and investment firms that are good in being investors.
Can one really expect to make a profit of 2 digits without any risk (like the recent £ drop) ?
But yes, you can become good in making good money in a niche. Just before you have to become very good at it … Than you might even be able to sell that service to others.

gizmocaca · Answer

40-60% returns are fantastic!  I personally don’t have the risk appetite for that.
I see property as a nice tangible asset which is inflation linked and pays a steady income stream.  It’s less of an efficient market than finance too.  Though as a foreigner you’re probably getting screwed.

travelingpm · Answer

Max drawdown on the account has been 8%, so little risk thus far. That’s not to say next month I could draw down to 10-20%, but having a strong trading plan and treating it like a business helps prevent that.
It’s not just locals taking advantage of you as a foreigner. We bought property in South Africa, then the currency dropped 30% to the USD. We resold the house for the same price we bought it for, but ultimately lost 30% when we pulled our money out of SA. So yeah been there, got screwed, and now I prefer liquidity in this kind of market.

ms_maire · Answer

There are a great deal of people doing this, generally older people. NomadList is mostly younger people / millenials but if you were older and had a few kids you’d be meeting lots of people who do this.
In fact, I would say a decent percentage of nomad families with kids are simply living off the income of a rental property back ‘home’ wherever that is.

blueblueocean · Answer

Yeah I think I’d consider myself investment nomad supplementing with part-time and other passive income streams. You need an income stream. You can draw against your investments at the moment via  low interest margin loan but unless your investments grow in 1-3 years by the amount you need to get around, you will be pinched when markets are volatile.

gizmocaca · Answer

Thanks.  I’m going to give being an “investor nomad” a try.   I have plenty of experience in the industry and think a blog about income investing (rather than speculating) from a nomad perspective might be well received.   I’m not the biggest fan of stocks because of their volatility but they would certainly form part of the strategy.  Retail investors should be able to get access to other products nowadays if you look in the right places.
Currency is an interesting one.  I’ll probably benchmark myself against USD as that’s the world’s currency but I should be matching off against my local needs.   I’ll post a link here once I’m up and running (will be a few months yet).

travelingpm · Answer

Seaspan Corp (SSW) is in a similar position if you’re looking for US equities. The stock has a 10% dividend and .92 price to book ratio.

Nomad List

Is anyone here an "investor" nomad?

Suggested topics

Is anyone travelling right now?

Anyone up to explore some city which is kinda virus safe?

Anyone want to share an airbnb villa in Mexico?

Anyone wants to learn to sail in the Mediterranean? (Sep or Oct)

Any Ph.D students dissertating while a digital nomad?

How do you invest internationally as a nomad?

Has anyone created a list of co-living spaces around the world?

I dream of being a digital nomad? How do I do it?

Anyone know an accountant for Canadian nomads/expats?

Has anyone been terminated by Project Fi?

Do you "out" yourself as a digital nomad?

What's the best bank account for a global nomad?

Ko Lanta or Ko Phangan - which island is better for a digital nomad?

Can anyone recommend a good Spanish language learning program in Alicante or Valencia?

Where should I register my company as a digital nomad? Singapore, Hong Kong?

Shikoku,can anyone help me with information about living there please

Anyone have tips for preventing or getting over jet lag? 😓😴✈️

Can anyone recommend a good Swedish bank for European student?

Where to stay in Budapest as a digital nomad?

Does anyone plan on applying to the Vermont $10,000 remote work incentive?