Why would a person want to set up a trust?

I often write on Quora.com, where I am the most viewed writer on financial matters, with over 693.5 million views in recent years.

In the answers below I focused on the following topics and issues:

• Why would a person want to set up a trust?
• Is a comfort zone an enemy of success?
• Is criticism necessary for success?
• What are the justifications for the non-domicile tax status in the UK?
• What are the potential consequences of Argentina electing a president who has been compared to Donald Trump?
• How can I invest in American companies from Uganda?
• Do you think it’s better to start a business or have a stable job?
• Why do people want to live in Singapore, but not in Switzerland?
• How can you make money from the difference in interest rates in different countries?
• Why don’t people just buy existing businesses instead of building them from scratch?
• What are the biggest mistakes that people make when they get a huge amount of money, but never had it before?

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Why would a person want to set up a trust?

Imagine you are a wealthy person in Egypt and Tunisia.

Things have been working well in your business for decades.

Then the Arab Spring happens:

One thing leads to another, and you lose your business.

I also saw several people lose their businesses due to the indirect effects of the 2014 Thailand coup.

A trust can separate you from your assets, like how a limited liability company is a separate legal entity from an individual.

That isn’t to mention the potential tax benefits in some countries, and ease of passing on assets.

Is a comfort zone an enemy of success?

Most successful people don’t want comfort.

Now sure, maybe some want material comforts.

But few want to be totally comfortable.

Most want to challenge themselves and actually go outside their comfort zone.

Look at all the top businesspeople and athletes who refuse to retire despite being older than most others.

This quote from Pinterest says it all:

There is a simple reason why making yourself uncomfortable can be effective.

What do most people want? Comfort.

That is one reason Amazon and other tech firms are so big. People take the path of least resistance in life.

So, they buy products if it is made easy with one click, struggle to say no, don’t want to take risks etc.

Therefore, if you can do what others won’t do long-term, you are likely to suceeed.

The number of people who are willing to take a lot of risks and make themselves uncomfortbale is even lower than the number of people who are willing to work hard.

Is criticism necessary for success?

There is something called tall poppy syndrome.

As per Wikipedia “This occurs when their peers believe they are too successful, or are bragging about their success. Intense scrutiny and criticism of such a person is termed as “cutting down the tall poppy.

So, if you become successful, criticism is inevitable.

It isn’t so much that you actively need to become controvsual to succeed, even though it can help because there is no such thing as bad publicity.

It is merely inevitable that, due to envy, you will attract criticism if you succeed.

What is more, the bigger a person or business becomes, the more legitimate complaints there will be.

Amazon is known for great customer service, but i am sure they have tens of thousands of angry customers globally, because they probably have a billion total customers!

What are the justifications for the non-domicile tax status in the UK?

There doesn’t need to be a justification.

What matters is if something works or not is not if it is “fair”.

Since the UK Government made non-domiciled residency more costly and complex, their numbers have declined (Source, BBC).

With a future Labour Government planning to axe the status altogether, more will leave, especially with plans to add VAT to private schools as well.

The article below was featured in the FT this week.

There is currently an exodus of wealthy people leaving the UK (source Virtual Capitalist).

Per capita, the UK’s -3,200 millionaires are more than China and India’s numbers.

After all, they can pick another country and become non-domiciled residents there.

What are the potential consequences of Argentina electing a president who has been compared to Donald Trump?

In terms of his policies, the comparison with Trump is unfair, as few considered Trump a libertarian.

All I will say is this.

When you have a country which was once one of the richest countries in the world after World War Two, which now has 140% inflation and so many problems, I doubt the voters are fearful.

It is difficult, but not impossible, to imagine things worsening, considering the economic mismanagement in Argentina for a long time.

No wonder many people want to get their wealth offshore and get second residencies or passports.

It isn’t safe to have all your eggs in one basket.

How can I invest in American companies from Uganda?

Investing from Uganda and Kenya is simple.

The steps are

1. Find a company (a do-it-yourself platform or advisor) that can accept Ugandan residents.
2. Give the needed documents, such as proof of address and ID
3. Fund the account
4. Trade

One thing I would say is that the biggest reason to invest in international stock markets is diversification of risk rather than pure investment returns.

Huge currency depreciations and political risks have affected the region for decades.

Look at the USD to Ugandan Shilling rate:

The Kenyan Shilling has performed even worse in recent times

In the US, people expected an 8%-10% per year return from investing in stocks and ETFs.

In countries with unstable currencies, that is often 20%-30% a year in local currency and insurance in case things get extreme, like in countries like Venezuela.

As per my article below, I am bullish about many African economies, but that doesn’t mean putting all your wealth there makes sense.

Do you think it’s better to start a business or have a stable job?

Consider this.

You are the CEO of a big company.

You make millions a year like some of these people (Source: CNBC)

Yet you can easily become a corporate slave.

You need to:

• Be in certain places at specific times
• Dress in a certain way, at least in some industries
• Watch what you say with some exceptions

In comparison, if you run your own business you have more freedom.

The issue is making it work, because most new businesses fail.

A middle ground is having a lower paid job, where you ironically might have more freedom than the CEO.

Why do people want to live in Singapore, but not in Switzerland?

Some high-net-worth individuals and expats still want to live in Switzerland.

This is especially the case for French and German-speaking expats.

As per the Henley Group’s analysis, many wealthy people are still moving there.

Yet, it probably isn’t as sort-after compared to the past.

As per the data, Singapore, Australia, and the UAE are getting more wealthy people moving there.

That could be because the taxes aren’t as low as people expect, and the costs are even higher than in Singapore and many alternative markets.

Expat satisfaction is lower than in some markets, as per this InterNations survey:

What probably hasn’t helped is that more European countries have golden visa schemes, which often come with tax benefits.

NHR in Portugal is one example, even if it might close soon.

Historically, Monaco and Switzerland were two of the only low-tax options in Europe.

Now you have even places like Spain and Italy having their own special tax schemes to attract talent.

How can you make money from the difference in interest rates in different countries?

I wouldn’t do this.

Did you ever hear about Mrs Watanabe’s?

Japanese retail investors took advantage of Japan’s 0% interest rates in the 2000s.

The US and many other countries had positive real interest rates until the 2008 Financial Crisis.

So, many retail investors lent cheaply in Yen and bought dollars.

It worked for a while but then didn’t.

It wasn’t completely risk-free. All that needed to happen was for the USD to get stronger against the Yen for the whole thing not to work.

What is easier to make money on is betting that interest rates will fall.

For example, long-term bond ETFs have been hammered in the last two years due to rising interest rates.

Take the TLT ETF (Source Market Insiders).

If interest rates fall, which they surely will one day again, this ETF will almost certainly do very well.

What is more, bonds can form a part of a mixed, diversified, portfolio, and you aren’t taking currency risks, because there are Euro and Pound equivalents as well.

Why don’t people just buy existing businesses instead of building them from scratch?

There are many reasons.

Firstly, if you buy businesses from others, you purchase the liabilities and not just the assets.

If you, for example, buy a financial firm with a license, you can be fined (in some countries) for things that happened decades ago.

Moreover, the biggest gains are seldom from buying existing businesses unless they are struggling badly and you are a “turnaround specialist”.

That isn’t to mention that you won’t feel the same degree of satisfaction as starting something from scratch.

In addition to that

• If you want to buy other businesses (or the assets of other businesses), you can still do that after starting your own business.
• If you focus on buying other people’s businesses, you might not have the necessary expertise. For instance, if you purchase a farm, you might have no clue how to run it, unless you hire somebody to do it for you, which eats into returns.

• You inherit politics, toxic staff, and other problems, not just the positives.
• If somebody has a lot of money but has never run a business, starting with a medium-sized operation you have bought might be more complex than starting small yourself. Imagine you have a middle-aged executive who wants to start their own business. Starting small is probably a better idea than buying a random thirty-person company!
• Last but not least, a lot of people have delusional valuations.

That doesn’t mean buying other people’s businesses doesn’t work in certain circumstances.

It just isn’t a free lunch.

What are the biggest mistakes that people make when they get a huge amount of money, but never had it before?

This only tends to happen due to:

• Inheritance
• Winning the lottery
• Suddenly making it as a sports and entertainment star
• Selling a business after years of reinvesting revenue.

One of the biggest mistakes for the later groups is playing defence.

These people have made money from taking risks.

It makes sense to want low-middle-risk investments, rather than high-risk start-ups, but if you are too defensive it doesn’t make sense.

For the second and third groups, overspending relative to income that is due is a huge issue.

If you make $ 10 million from the lottery or a new contract, that doesn’t mean you can spend $ 10 million or even $700,000 a year.

You can’t unless you generate new cash flow or only have a few years to live.

Bud Post made over $ 16 million from the lottery (Picture Source: Medium).

He was broke a year later

Mind you, he had other issues.

Apparently, members of his family tried to sue and even kill him.

That leads me to another thing.

Be careful who you advertise it to, especially if you come from an unstable family.

If he sought advice from former lottery winners and advisors (legal, financial and others ones), I doubt he would have found himself in that situation.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.