I often write on Quora.com, where I am the most viewed writer on financial matters, with over 438.2 million views in recent years.
In the answers below I focused on the following topics and issues:
- How can I buy property as a digital nomad?
- Who is better, Sarwa in Dubai, Interactive brokers, or TD Ameritrade in the US to deal with?
- What are the things that bring prosperity?
- How can you retire at 40?
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Source for all answers – Adam Fayed’s Quora page.
How can I buy property as a digital nomad?
I am not a mortgage broker, but I have helped many clients with this.
It is similar to others, only more questions might get asked.
Let’s imagine you want to buy property in the UK, or Germany, as just two examples, as an expat.
It is possible to get international mortgages, also known as expat mortgages. Many providers offer them.
Interest rates are higher than local mortgages due to the real, or perceived, higher risks of you defaulting.
During that process, questions will be asked about where your income or wealth has came from.
The lender will want to know how trustworthy you are, and how likely you are to repay.
There are different kind of nomads, including:
- Those who have a UK, US or German employer, but live overseas, as they are able to work remotely. Some of these people are still tax-residents back home.
- The self-employed
- Business owners
Those who have a job, and are able to work remotely, are potentially an easier case. You aren’t especially high-risk because you took your 80k a year job and moved overseas.
You could easily move home, or to a third country, if you like. For business owners, the lenders will be keen to see how stable the enterprise is.
For the self-employed, it can get tricky, depending on how clear cut the money appears. Having income from twenty sources is fine, as long as it looks legit and can be evidenced.
A good mortgage broker can help with these kinds of things.
What is also important is considering your overall financial situation, because interest rates might increase, leverage/debt is a double edged sword and it can involve complications.
Those complications potentially include tax. Most British expats don’t need to file when they live overseas.
As soon as you have UK property, you do, even if there is no tax to pay.
Who is better, Sarwa in Dubai, Interactive brokers, or TD Ameritrade in the US to deal with?
It is best to give this answer some context.
Why are robo-advisors in the market? What problem is a firm like Sarwa trying to solve?
Well, not everybody can afford good advice, even though it is more accessible than people think – you don’t need to be rich to have an advisor.
What we do know is do-it-yourself (DIY) investors usually fail, at least long-term.
Many people assume they can save money and do it themselves.
The problem is emotions which explain results like this:
Often this is because investors go through a rollercoaster of emotions like this:
Everybody can DIY when the markets are doing well. Few can do it well when markets are crashing.
Fidelity announced that 35% of their over 65 clients completely sold out during the covid-19 related falls in 2020.
They missed out on the recovery, and that doesn’t mean that 65% of people did the right thing.
Some partially sold out, with others not adding extra money out of fear.
Imagine the 2020 crash would have taken years to recover from like the 2000 crash? I imagine the next time that happens, the figure will be higher than 35%.
This problem has been called ‘the behavioural gap’ in investing.
The question is, do robo-advisory firms like Sarwa help with this problem?
I would say the jury is out. They are too new. We know from a lot of peer reviewed papers that clients of human advisors perform better than DIY investors long-term, if the advisor is good at controlling the emotions of the client during the bad times.
The Vanguard Group, through their ‘advisors alpha’ research, for instance, found that DIY investors in the same Vanguard funds and ETFs did worse than advised clients.
The reason is simple. The DIY clients bought high and sold low, due to emotions.
They purchased when ‘everybody else’ seemed to be buying, and sold when ‘everybody else seem to be selling’.
On average, the most successful DIY investors are dead people for this reason. The dead can’t panic or get too excited , so their dormant accounts do well.
In conclusion, then, i would say:
- If you have enough cash to get a human advisor do it
- If not, try out the robo-advisory services, and see how useful they are during the extreme moments like market crashes. Are they sending out emails to clients warning them against panic selling? Are they creating content and webinars to that affect?
- For the small number of DIY investor’s who have balls of steel and the knowledge to go it alone, try the DIY platforms like TD Ameritrade and others.
What are the things that bring prosperity?
I presume you mean for individuals and not nation.
If so, here is a list:
- Embrace that we can’t control everything. We can only control certain things, and luck or chance plays a role in success. Just as we might die at 30 even if we try to be healthy, doing the right thing is no guarantee of prosperity. It just increases the odds.
- Spend less than you earn. How much you retain is more important than how much you earn.
- Invest the surplus from spending less than you earn wisely
- Use leverage sensibly. Examples include:
- Leverage time to compound investment gains. Example. Person 1 invests $500 a month + 50k as a lump sum, and then retires. They have $2.4m based on an 8% yearly average return. Person two does it for 45 years and has $20m. Ever wondered why you hear stories like secretaries who amass $8m+ fortunes, like the lady below. All people like her did was buy assets, such as stocks, “forever”.
- Look after your health and do something you like. I don’t believe in the idealism that you need to love what you do. Andre Agassi is one of the greatest tennis players ever, but he admitted that he hated tennis in his book. However, if you love or at least like what you do, it is likely you will never want to retire unless your health goes,m. That, in turn, is more likely to result in more prosperity and happiness than being ready to retire at 55 or 60.
- Leverage other people and technology if you have a business. If you only focus on income for hours worked, that is linear progression. With social media and technology, you can achieve exponential growth.
- Use debt/leverage sensibly in business – but be very careful here and know how to manage it.
5. Take advantage of luck, and get up from bad luck. Many people are willing to throw luck away. Most lottery winners, or those who get big inheritances, don’t really take advantage of it.
In business, many get complacent after a bit of success. Imagine when we were young, if our parents gave us a paper with six holes in it, and said that these holes represent your six huge peaces of luck that you will be afforded in your life.
If we knew that going in, we wouldn’t take good economic or personal times for granted.
6. Out-work, out-educate , out-learn and/or out-smart others. Find out, what is going to be your edge.
7. Take as many calculated risks as possible, especially when young. Often the biggest risk is to take no risks
8. Control your emotions, or allow your emotions to control you. Many people out there panic sell whenever asset prices fall, or act as those they are 90 and not 20, 30 or 45, and act overly cautiously.
9. It is better to look poor and be rich, than look rich and be poor. Don’t fall into the below trap of trying to impress people you don’t even like:
10. Delay gratification. Buying that first class ticket for 20k might be OK if it is once you have created enough passive income to justify it. It isn’t sensible if you barely have any assets to your name, and you just have a big salary which is all going on buying random stuff.
11. Expect and embrace failure. You learn better this way.
12. Avoid negative people and influences.
Also Bill Gates says people overestimate how much they can do in a year, but underestimate how much they can do in ten.
I have found the same thing. As things compound over time, it is easier to change your life in half a decade or a decade, compared to in say a year.
How can you retire at 40?
There are only two ways of doing this for most people, assuming you don’t get luck from inheritances, winning the lottery etc.
- Earn so much money, and have reasonable spending habits adjusted to that, without being frugal
- Earn averagely, and be very frugal, using arbitrage when possible.
In terms of the first option, you can’t retire at 40 even if you are lucky enough to earn $100m a year after tax, if you spend $100m.
Countless business people, sports and entertainment celebrities and others, have gone broke from bad spending habits, including these famous people.
What is possible is earning a lot, but living below those means considerably, even if you aren’t exactly frugal.
For most people, the more realistic route is to have a decent income, live well below your means, and invest the surplus wisely.
For instance, a person has a slightly above average salary from age 22 until 40, and makes sensible financial decisions such as:
- Stays at home for longer than the average young person
- Invests wisely from a young age
- Invests in themselves so they are earning more over time
- Takes advantage of things like geographical arbitrage. It is much easier to retire at 40 if you are open-minded enough to emirate to the kind of country where $2,000 a month gives you a decent living, compared to if you are living in one of the most expensive places in the world.
Of course, there are other ways. One way is from a business. It is possible to work really hard at a business, and retire at 40, with passive income.
The most tried and tested way I have seen is:
- Age (early 20s-late 20s/early 30s). Get a job. Get good at it over 5-10 years. See the issues in the industry you want to tackle.
- Age (28-35). Start a business. build it up. Get good at it
- Age (late 30s/early 40s). Sell your business, or hire somebody to run it day to day. You are now a sleeping partner, such as a shareholder, earning passive income
The final way doesn’t work for most people though, as most businesses go bust in the early years, or are barely breaking even.
Almost everybody I have met who has retired at 40 has either sold a business, built up a business and then outsourced it and continues to get passive income, inherited it or was very frugal and then retired overseas.
The ironic thing is though, many people who are financial capable of retiring at 40 or 50 end up carrying on anyway. I have lost count of the number of people who have aimed to retire early, have achieved it, and then went back to work/business.
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Adam is an internationally recognised author on financial matters, with over 735.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.