I often write on Quora.com, where I am the most viewed writer on financial matters, with over 251.9 million views in recent years.
In the answers below I focused on the following topics:
- How should one account for inflation when planning retirement savings and withdrawals?
- Where is the best place to live if you are wealthy? How might that change in the future given the increases in taxes, and changing societal attitudes, in many Western countries?
- Is running your own business really more difficult than a 9-5 job?
- I suggest why you can become successful without lying, and implying that most wealthy people lie is a dangerous idea.
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How should one account for inflation when planning retirement savings and withdrawals?
It is hard to fully take account of it, because we can’t know the future.
Imagine somebody was planning for this in the 1950s or 1960s. They wouldn’t have been able to see the sky high inflation of the 1970s coming.
Nor would they have seen the lower inflation of the 1990s, 2000s and 2010s coming in most advanced countries.
You can look at history, but that is only a guide.
What does seem to be the case, however, is that stocks and some other assets perform well during inflationary times.
People don’t want to keep loads of money in cash, unless interest rates are much higher than inflation, if inflation is getting higher.
What is more, over any long-term period (say 35–50 years as a typical career), stocks in the US have tended to do inflation +5%, +6% or +7%, with International giving slightly lower returns.
That doesn’t mean that every year stock markets will give that growth, but the long-term average has been around that ballpark.
Therefore, you can use a calculator which focuses on real, as opposed to gross, returns.
The only fail proof way of doing this is to have a conservative buffer.
In other words, assume that real stock returns will be lower than has historically been the case, regardless of whether there is any evidence for this or not.
That way you are likely to have more than you need in retirement, rather than less, as you will either need to invest more or start earlier than expected.
Where is the best place to live when you are wealthy?
This could change radically in the next few years. More on that later.
To answer your question directly, it depends on several factors.
In general, most wealthy people want:
- You are likely to stay wealthy, healthy and safe
- Nobody can have 100% security, or perfect health forever, but we can improve our odds
- If you are very wealthy but always worry about personal safety, then this is a problem.
- It isn’t just personal safety from violent crime either. When pollution levels skyrocketed in China and India, more wealthy people wanted to emigrate.
- The future is uncertain but in some places you can have a bit more of this.
- In others, you might always worry about military coups, radical politicians and many other things
- You don’t have to pay a fortune in taxes to live in the place to begin with.
4. Other wealthy people are around.
- If your business depends on networking, or find being wealthy lonely if most of your friends and family aren’t, it can make sense to be in areas where other people have a similar situation.
5. Somewhere they are familiar with
- This is especially important for some people as they age. This is one reason some people stay in their home country, or at least retire back home.
- People who want to be closer to family often prefer their home country.
- This speaks to a wider issue – your personal preferences.
Given these factors the following countries are ranked highly
- Hong Kong, even though this is getting less due to the political uncertainty
- Some territorial-tax, mid-income, places like Thailand and Malaysia. These places are attracting more people who can work from anywhere like online business owners, and retirees.
- Some EU countries. London as a city still attracts many wealthy people, as does Cyprus, Malta and several others.
- Some parts of the United States and Canada, as well as Australia and New Zealand
- Some islands like St Kitts and Nevis.
The following statistics are interesting
You can see that whilst the US and China might have more billionaires, places like Monaco, St Kitts and Nevis and Hong Kong attract more per capita.
In the future, I expect more wealthy people to leave high-tax developed Western countries.
It has already happened. The number of wealthy Americans who are renouncing their citizenship and residency at the same time is skyrocketing every year.
Each year, we see new records in that respect. Beyond that we face the new trends:
- The number of people who can work from everywhere has increased. Before it was only a select few who could work globally and remotely. Even many business owners preferred to be close to the office or factory. Therefore, it was only normal for retirees to emigrate on mass for lower cost of living and tax. These days, more people can make that choice. With one move you can legally reduce many of your taxes to zero, and live a similar quality of life in some cities and countries mentioned above. There are now more countries offering citizenship by residency and investment programs.
- In the post-pandemic world we are seeing some trends like hardening attitudes to “the rich”, like talk of a global minimum tax. There is also speculation about more digital and wealth taxes. Even if that doesn’t happen, some people will get spooked by it. The general attitude from 2008 and occupy Wall Street, through to today, is clear. To put it mildly, attitudes to success are different to during the 1980s or 1990s. In comparison, most countries mentioned above have different attitudes. I have lived in several countries which lived under hardline communist rule in the past, and it is hard to find a believer in authoritarian high-tax policies in such places.
- Following on from the last point we are seeing an increase in irresponsible talk trying to set one group against another. This is mainly done in the form of identity politics, but is also happening in terms of money – “it is the rich against the poor” in this way of thinking.
- More countries could bring in a US-style citizenship-based taxation system, which is the main reasons American expats often need to pay tax back home. If so, more people from several countries will need to renounce to get the tax benefits they enjoy now in places like the UAE.
It will be an interesting few years.
What is so hard about about being an entrepreneur? How is entrepreneurship any harder than a 9 to 5 job?
How many people do you know who can’t hold down any job? Sure, I guess you know many people who have been fired many times.
Few people are fired from every job though. In comparison, most people fail when it comes to starting a personal business:
The main reasons are (in no particular order)
- You are always acting with imperfect information. There are so many unknown variables
- Few people know how to manage cashflow
- Even fewer know how to prepare for black swan events like 9/11 and Covid-19. Witness how many previously successful businesses needed to get bailed out
- If you have success for a few years, others could adapt and copy
- Sometimes government policy, like making licenses more expensive, can make things impossible too, and it results in smaller firms being sold to larger ones.
- The business is wholly reliant on the owner and if something happens to his/her health, the whole operation fails
- Disagreements between business partners.
- A lack of recurrent/residual income, which means the business always needs new sales. This is linked to the previously mentioned cashflow point
- Over-performance is seldom maintained and there is a reversion to the mean. Successful people become complacent and that results in problems. Even people who aren’t complacent by nature can become like that after ten years of success
- Too many people think it is all about “the great idea”, and not execution.
- Too many people want to create the new Facebook, rather than a more down-to-earth business.
- The owners, or the people in the team, don’t know how to do basic functions like marketing, so assume the operation has failed due to “lack of market demand”, because they haven’t created that demand themselves.
- Not being diversified enough in terms of the countries targeted, products offered, and so on. This is also related to the previously mentioned point about managing risk.
- Too few people get a job in the industry first, get good at it and then start their own company. Experience increases the chances of business success.
- People focus on fads.
- Too few focus on the long-term
- Others think it is too easy.
I could have mentioned many others as well.
Can I get successful and rich without lying?
Not only can you, this is the norm. Think about something for a moment.
Would you go back to a summer who has lied to you? Go back to that hotel who gave you the worst room even though you paid for the best one?
Go back to that law firm who overpromised (not even lying), or financial firm?
In comparison, I am pretty sure you would go back to a firm or individual who underpromised and overdelivered?
In fact, you might be wiling to refer several friends, family members and associated to that firm.
The point is, you can become successful in business, long-term, without deliberately lying.
Not only that, it is safer and more likely compared to somebody who gets a short-term advantage for a few months and then gets found out.
Moreover, you don’t even need to go into business to get rich.
In many societies, most of the wealthy people are the “get rich slow” kind of people.
Middle-aged, middle-class and middle-income. They have saved and invested for decades.
It has compounded. There are many people in the $1m-$8m bracket who have came from such backgrounds.
It is a pity though that some people assume that rich people are more likely to lie.
It is one reason why there is so much blame going around.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 251.9 million answers views on Quora.com and a widely sold book on Amazon
In the answer below , taken from my online Quora.com answers, I spoke about the following issues and topics:
- I was asked “if you could travel back 25 years with $10000 what would you do with it?”. I answer this question by asking if hindsight is easy in a world of uncertainty.
- How many years does it take to become a millionaire by investing? More specifically, I look at different scenarios to illustrate a wider point about investing returns.
- Do professional athletes deserve their salaries? Or is it the wrong question to begin with considering life isn’t fair?
- Why do so many people get intimidated by the topic of investing? Is it because investing seems technical or another reason such as the complicated way most financial experts speak?
To read more click on the link below.