I often write on Quora.com, where I am the most viewed writer on financial matters, with over 553.9 million views in recent years.
In the answers below I focused on the following topics and issues:
- Do people who are rich know more than normal people?
- Should expats pay taxes?
- Are corporate bonds a good investment these days?
- Is Roubini correct in stating that the world suffers from too much supply and not enough demand leading to persistent deflation?
- What is Google’s moat?
- What are some of the best countries for an expat digital nomad who speaks only English? ‘Best’ can be defined as a combination of safety, low-cost, social life, ease of obtaining visas, productive work environment, etc.
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Source for all answers – Adam Fayed’s Quora page.
Do people who are rich know more than normal people?
The money isn’t in knowing more.
The money is in execution.
If knowing more was so profitable, then all scientists or historians would be wealthy.
You can get traction by having enough knowledge and experience and excellent executional skills.
I saw this online and it is very true:
Many people overrate the idea. You see people who start businesses focusing on some big problem.
That can be sensible as people pay for things if you solve their problem.
However, it is better to make sure that you focus on executing that idea.
Many businesses are making a lot of money starting businesses that really aren’t solving any problem.
Remember too that there are countless multi-millionaires and even 1–2 billionaires who got rich from the trash business.
They weren’t focusing on some grand idea. They merely got rich from execution in areas where ‘nobody’ seems to want to compete.
The key thing is also being consistent, persistent, taking risks and persevering.
This Mike Tyson quote is very true:
I have seen countless people who know a lot and start executing well, but give up after experiencing difficult times.
Or they sell up too quickly and take their feet off the accelerator.
The same is true for private investing. Many people know that you can get rich slow from investing.
Most of us also know that middle-aged, middle or upper middle-income, person, who is now wealthy in terms of assets due to playing the long game.
It could be our grandma, parents or whoever.
Putting it into action is the key, not just knowing about it in theory.
That is the difference between watching those who are no smarter or knowledgeable than you live a better life, just because they take more calculated risks or other forms of action.
Should expats pay taxes?
There are two things to consider here:
- The country you move to
- Your home country
In most countries, the rules for expats and non-expats is almost the same.
For example, there is no income tax in the Cayman Islands, the UAE or many others. That benefit exists for locals and expats alike.
The same is usually true for higher-tax countries as well. If you move to Sweden, you will likely pay the same taxes as locals.
What is true is that some countries have put in special measures to stimulate the economy.
After David Beckham moved to Spain, there was the so-called Beckham rule, whereby expats could elect to pay a flat rate of tax, as opposed to a percentage.
Portugal has had a non habitual resident scheme for a long-term, as have many others.
Even Italy, long seen as a high-tax country, has incentivized nomads and expats to work in some underdeveloped parts of the country.
In reality, what is “fair” isn’t always the same as what is rational.
Is it “fair” that local governments have long given sweetheart deals to companies to invest in the local area if they create X and Y number of jobs? No, but it can work, and even generate higher tax revenues long-term.
Likewise, is it “fair” that expats can get special tax treatment? No, but it can work for the host country, otherwise why would almost every country have some sort of golden visa scheme or short-term digital nomad offering, which is linked to paying fewer taxes?
There is a separate issue here as well. America and one or two other countries like Eritrea taxes expats, even if they never visit the country.
Some Americans have lived abroad for decades and still pay taxes to the government.
Many people think that is not just unfair, but makes no sense.
The number of high-net-worth Americans who give up their citizenships and residency for this reason is hitting record levels every year.
The co-founder of Facebook is one such example.
The key issue is if a policy works or doesn’t, not if something is fair or not.
Are corporate bonds a good investment these days?
They haven’t been in recent times, but that could be about the change.
They could well be one of 2023’s “star” performers.
The reasons are simple:
- Last year, bonds went down alongside stocks. Even government bond and investment-grade corporate bonds. Valuations look cheap
- When interest rates are going up, that is usually bad for short-term bond valuations. When they are due to peak and fall like now, that is usually a good time to buy
- As capital values have fallen, yields have actually increased. This often happens with bonds. It is similar to how rental yields usually go higher when real estate prices fall (rents can stay up even if the property is falling in value), and fall when real estate prices explode (rental yields are only 1%-2% in many Chinese and Korean cities). So, many funds with historic 5%-8% yearly returns, are now giving 11%+ yields.
- Those funds that use leverage in a sensible way can increase the return without drastically increasing the risk
With do have to remember, however, some basic truths:
- Investment-grade bonds (A and B rated) are much less risky than anything with lower ratings
- Buying individual A-rated bonds with high yields is more risky than buying a diversified fund or ETF.
- Long-term, bonds are highly unlikely to beat stocks. The reason to buy bonds is diversification, an uncorrelated return and to get a good yield.
- They might be providing a great yield now, but that won’t always be the case.
So, it might look tempting when you see A-rated companies offering 7%-8% per year, but that doesn’t mean you should be 100% invested in bonds of course.
That is especially the case with very weak non-US stock markets, which look very cheap in USD terms, due to the strong (albeit weakening) USD.
Is Roubini correct in stating that the world suffers from too much supply and not enough demand leading to persistent deflation?
This question was asked almost a decade ago.
He might have been right or wrong.
I will say one thing though, and that is that Roubini is mainly a “one hit wonder”.
He is known as the man who correctly predicted the 2008 financial crisis, but he has predicted about 1000 other crisis that have never happened.
Past correct predictions are in no way an indication of future right one.
What is more, anybody who listened to Roubini when it comes to investing would have lost money.
In a CNBC appearance in 2009 with Nassim Taleb, both said “cash is king” and both of them predicted the financial crisis in 2008. When they spoke the Dow was trading at about 8,000. It is now at about 34,000.
Here he is saying that the recession might be prolonged:
It wasn’t in most countries apart from some parts of Europe. It was just sharp.
Here he is warning about a “double dip global recession”
It never happened.
I am not saying he will never be proved correct.
In fact, he has close to a 100% chance of predicting one of the next financial or economic crisis because he has gloomy predictions about almost everything. That is the point.
He isn’t the only one. Michael Blurry and others have lived on making one huge correct prediction, like one hit wonders in the music industry.
Peter Schiff is probably the worst case. Predicted 2008, but warned about the crisis for fifteen years before, and every year since.
He also predicted that gold would be at 5,000, the USD would lose value compared to other currencies and that silver and oil would be at $250.
As Buffett and others have pointed out, there aren’t many economists on rich lists, so it is better to listen to them with a pinch of salt, and not when it comes to unrelated subjects such as investing.
Being an investing expert and economist aren’t the same thing. One can influence the other to a certain extent, but that is about it.
Academic studies have shown that listening to economic contributors on CNBC and Bloomberg is less profitable than buying and holding (just buying and doing nothing).
What is Google’s moat?
Since Yahoo came and went in the early 2000s, Google has had no real global competition.
They aren’t number one in every country, but are in most, and by some distance:
Even the pie graph above is distorted by China, which bans Google.
In most countries, it looks more like this:
In other words, complete domination.
It isn’t easy to come in and compete with Google, just as it isn’t easy to go head-to-head with Coca-Cola.
When something already works well enough, and there isn’t an incentive to experiment, then most people won’t try out competitors.
What is more, Google has purchased over a 1,000 smaller firms since 2000. So, even if your technology gets good, there is always the risk that Google will just buy you out.
A bigger risk is that anti-monopoly rules will be re-established. Doesn’t seem likely at this point though.
Another risk is that something better will be invented. For example, we ask Alexa instead of Google in the future, or use the Metaverse to ask questions.
What are some of the best countries for an expat digital nomad who speaks only English? ‘Best’ can be defined as a combination of safety, low-cost, social life, ease of obtaining visas, productive work environment, etc.
In terms of obtaining visas, until recently, it was only the likes of Cambodia and Panama which had an easy regime.
Now there are over a hundred countries that offer digital nomad visas.
Of course, the best is very subjective, but nomads end up in places like Bali, Chang Mai and some parts of Mexico.
In Europe it is places like Spain, Greece and Portugal.
Dubai is getting bigger nomads with good salaries and incomes as well, since they started their own scheme.
Malaysia is underrated too. English speaking, quite developed, good value and they have a two-year nomad visa.
One thing I would add to your list is ‘ease of being tax compliant’.
In some countries being a nomad is in the gray zone.
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
