Scrivo spesso su Quora.com, dove sono lo scrittore più visto in materia finanziaria, con oltre 267,5 milioni di visualizzazioni negli ultimi anni.
Nelle risposte che seguono mi sono concentrato sui seguenti argomenti e problemi:
- Do I need separate wills for different countries?
- Is it impossible for a poor person to become rich simply by working hard and saving up money?
- Is it worth to be a client of private banking?
- How do I open an offshore bank account online?
- To which country should I move to pay the least amount of income tax?
- How can I begin a successful business?
- What do successful businesses actually do?
- Are business class flights worth it for the cost?
- If you were a billionaire, what would it take for you to give up your wealth?
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Do I need separate wills for different countries?
Having assets in multiple-jurisdictions gets complicated.
There are different legal systems and rules around the world.
All of the above is why people often:
- Set up wills in numerous countries
- Set up trusts to cover assets in many countries
- Use life insurance for short-term liquidity needs if inheritance tax is due and probate is likely to be long
In terms of the last point, people often forget how long probate can take, especially if you are a non-resident or an expat, or the assets are illiquid, as is the case with say land or property.
It is important to deal with investment solutions and providers who will pay out quickly.
I have known some take a matter of days, and others who can take years!
Even if the wills work, you have to consider what happens if prohbate takes more than six months and beneficiaries can’t pay the inheritance tax due.
Selling illiquid assets can even take years in some countries!
That is why getting advice about this kind of stuff is useful – not just legal advice but advice about which providers have a better track record of paying out without the need for probate, and how to have enough liquidity.
For example, some insurance/investment providers accept listed beneficiaries as a letter of wishes, and therefore just need the death certificate rather than going through probate and wills.
Why is it impossible for a poor person to become rich simply by working hard and saving up money?
Saving money in the bank has been a guaranteed loss to inflation for years now – since 2008.
Even if we go back to the pre-2008 real interest rates, you have never earned much with cash in the bank.
The long-term trend tells that story. The chart from Darrow Gestione patrimoniale shows T-bills, and compares them to stocks and bonds:
Therefore, you can’t get rich or even wealthy by just saving money unless you are earning so much that the lack of growth doesn’t stop you from having millions.
What is possible is getting wealthy, albeit slowly, on a normal job, from investing in productive assets long-term.
This is due to small amounts of money compounding over time.
There have been countless stories in the media showing some “everyday millionaires” who just bought stocks, property and other assets decades ago and held onto them.
You probably know somebody like that in your network. It isn’t that unusual.
What is unusual is getting rich only from investing small amounts of money.
If somebody retires tomorrow at 65 with $4m, they are wealthier than more than 99% of people, even in developed countries, but they aren’t rich.
If they tried to spend $250,000-$350,000 a year, they would run out of money. Realistically, they should spend $120,000-$160,000 a year at most.
So, to get rich, people tend to need to take bigger risks.
For example, starting a business and then investing on the side, but of course the failure rate is higher for business owners.
Getting wealthy, but not rich, slowly, is just a lower-risk route to a comfortable life.
How do I open an offshore bank account online?
You can either:
- Do your own research and approach the best banks online
- Use a consultant to help you with the process
I would first determine why you want the offshore bank accounts.
Offshore bank accounts just means banking outside of your country of residency.
Most people do that these days for diversification of risk, not to evade taxes, regardless of what the media says.
If you want the most convenient offshore bank accounts, I would try some of the Neo banks.
For example, most of those banks and financial institutions won’t need documents like certified proof of ID.
Proof of ID, with a video selfie, will be enough. Likewise, they won’t need physical documents.
In comparison, if you are trasloco all'estero as an expat, it makes sense to also have an offshore investing and bank account.
The reason is simple.
If you are living overseas and continue banking back home, you might get your accounts closed down, or one day your host country might doubt that you were really residing overseas.
As I have written about before, many expats get bank accounts closed, therefore making a portable offshore account essential.
When it comes to things like the safety and stability of different banks, a company or advisor will be able to help you, or you can spend time doing your own research.
Some of the banks listed below are only good for certain jurisdictions.
Ultimately, every decisions should be made based on your individual situation.
In some cases, “killing two birds with one stone”, and investing offshore as well, makes sense.
Is it worth to be a client of private banking?
In general, the answer is no, but it depends on what you are looking for and sometimes where you are based.
As per the online definition from Wikipedia:
“Private banking is a general description for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals – those with very high income and/or substantial assets”
Yet, there are some basic issues with the private banking model.
Firstly, when it comes to performance, the banks usually underperform, and charge high fees in the process.
I have run out of the number of high-net-worth individuals, including my clients, who have used numerous private banks and have been disappointed.
At best they sell the same funds, ETFs and financial instruments you can get more cheaply elsewhere.
A lot of these banks are just legacy brands trading on brand names.
Those brand names got tainted after the 2008 Global Financial Crisis:
They have partly regained some of their reputations since then, but it hasn’t completely recovered.
Many people have discovered that boutique and specialized providers can do more, and charge less.
Where banks can bring value is:
- Lending solutions. In some countries, private banks do have some superior lending solutions
- There can be specific private banks that could be offering more value than the traditional wealth management proposition. I have worked with one or two of my clients who are more progressive.
- Convenience and customer service. If you really care about somebody coming to your house to give you a statement in person, a private bank is more likely to accommodate you. Likewise, if you are a business which has massive payments coming in and out, private banks can be OK for business bank accounts.
- In some countries, there isn’t that much competition, so they can be the defacto choice for some. This is changing over time though.
Basically, for lending and just normal bank accounts, they can be OK or even good in some cases. A necessarily evil.
They tend to disappoint when it comes to wealth management and investing.
The average retail bank can be even worse.
How can I begin a successful business?
Starting a successful business is the easy point.
You can raise money or get experience in a domain and then start your own business. The later is the better way for most people, even though it takes longer.
If you have experience in any industry you can see inefficiencies, build relationships and start your own thing.
What is difficult is longevity. In other words, maintaining a successful business.
Many of the answers below deal with the question well.
One thing most people forget is that most of the successful businesses in the world don’t try to be all things to all people.
They actually reject clients and often stick to a small niche
Pensateci.
When you went out to bars and nightclubs as a youngster, most places struggled to fill up.
The most successful places would have bouncers outside and rules about attire. They would regularly reject those who aren’t dressed right or don’t have the right attitude.
Some would even only accept people who pre-booked.
You might go in and discover that the place is packed:
The same is true for most successful businesses.
Rolex isn’t that much better than some of the fakes out there, but people will wait on waiting lists for years to get some makes.
Ferrari and many luxury car brands aren’t affordable for 99% of the population. Out of the remaining 1%, probably only 1%-5% will buy. They aren’t losing sleep about that.
That doesn’t mean they don’t advertise or try to get new clients. Many will try to get their name out there aggressively.
Rolex, I am told, does forty-five minutes a day of sales training for their staff, and spends millions on advertising every year.
Yet they still aren’t looking to sell to everybody. They aren’t even looking to sell to 100% of wealthy people.
For instance, they aren’t looking to sell to frugal wealthy people for obvious reasons.
It isn’t just big brands either that are selective.
There are some “elite yoga coaches” who only take on a handful of wealthy clients every year. They interview all the applicants and only accept the ones that are a right fit.
For example, if twenty people apply a year, and there are only ten places, ten get rejected, or moved onto a waiting list.
Likewise, for my business, I struggled in the early years, despite having the needed technical knowledge.
Things changed when I progressively became stricter about who I take as a client, which has now culminated in needing to bring out eligibility quizzes like this one (Take Adam Fayed’s client eligibility quiz), to weed out unserious people from the serious, due to very high demand.
To which country should I move to pay the least amount of income tax?
It depends on several factors.
Firstly, your nationality.
If you are American, you will need to renounce your citizenship if you literally want to pay zero taxes.
Like this man did:
And so do over 5,000 Americans a year.
If you don’t want to renounce but still pay lower taxes, Puerto Rico can be a good option.
If you are earning just over $100,000 a year as an American (the current US overseas income tax exemption is about $120,000 a year per qualified person), you can still go to a place like Monaco or the UAE, and take advantage of the lower taxes.
I would also make sure you get proper tax advice though as these things get complicated.
The last point, however, brings about another point which is true for Americans and non-Americans alike.
That is, it doesn’t make sense to live in say Monaco when you are making 120k a year, because the cost of living will negate the tax benefit.
Therefore, your choice should depend on additional factors such as:
- How much you are earning
- Where you are earning money from. Purely income or also capital gains and dividends?
- If you have a job or a business
- If you have a business, you usually need to offshore the business as well. Would your customer be happy paying into a Bahamas bank account?
- Your personal preferences in terms of lifestyle.
I will come off the fence though and say this.
If you are earning millions, or even a million a year, Monaco might be one of the best choices.
In comparison, if you are earning say 100k a year, living in a place like Bulgaria will easily beat it, because 10% tax plus low cost of living makes more sense. You will save more despite the taxes.
The UAE is probably the best choice if you include ease of getting in, cost of living despite not being cheap (some parts of the UAE are cheap and it is certainly cheaper than Monaco or New York) and conveniences of life like customer services.
In comparison, if you want a slower pace of life, then Cayman or Bahamas is probably better.
For those who have passive income and not employment income, golden visa’s in Europe like Portugal’s NHR program attract a lot of wealthy people.
It makes sense to have a holistic plan for yourself, your wealth and business.
Are business class flights worth it for the cost?
Firstly, you say ‘for the cost’, but it has to be remembered that many business class traveller’s aren’t paying for it.
Either their company is paying for it, or they are using points and miles to upgrade as a business owner.
If a business owner is paying for ads or something else on an American Express card, or a firm that has an agreement with the airlines, they can use those points to upgrade.
However, it is true that some people pay the full price to fly business or first.
In that case, flying short-haul business class doesn’t usually make sense from a pure benefits:price basis.
The seats are often the same as economy, and you are better off using a train than a plane.
These days, in Europe as an example, Eurostar Business Class will beat almost any short-haul airline.
For long distances, flying business saves you time, hassles and reduces the risk of posture and other health problems after a flight.
You will arrive refreshed and ready for work.
Whether or not it is worth it is subjective.
It isn’t easy to go back to economy after trying business, so it is best to only do it once you have consistently generated enough income from your business or salary to justify it.
In other words, it is a very low percentage of your total income, or you are using points to upgrade.
What do successful businesses actually do?
Many valid points below, so I won’t go over them again.
One point I would make is that successful businesses…….are profitable.
Sounds so basic and even patronising to say it, but so many people focus on:
- Social media followers
- Quality of products and services
- Positives online reviews from customers
- Sound business strategy.
I am not saying those things listed above aren’t important.
They can help businesses become more profitable.
Yet there are many businesses few people have heard about that are super profitable, and others that get ‘big’ and it is all hype like during the 1999–2000 Nasdaq bubble.
I made this point recently on a recent Forbes articles – Perché le società di consulenza finanziaria dovrebbero evitare le metriche di vanità
Remember, revenue is vanity and profits are sanity….unless you plan to optimise for a buy out.
What is more, as a private investor into stocks, real estate, stock ups or other projects, you can only make decisions based on the information you have available at the time of making them.
Investing into unprofitable ventures due to a story or speculation about the future is risky.
Just look at which firms are still able to operate within a few years according to Crowdfunding Platform
Those essential services like health, finance and education are more likely to stay in business.
So, best to invest into firms that can be sustainably profitable.
If you were a billionaire, what would it take for you to give up your wealth?
I don’t think it would take much.
Having billions, especially multi-billions, isn’t the same as having multiple millions.
For one thing, your privacy and safety are on the line.
You often can’t just go to the park with your kids or dog.
Then there is the legacy issue. If you give away when you are alive and dead, you are more likely to be remembered.
Look at Chuck Feeney. The FT did a feature on him called “the reluctant billionaire”.
He has achieved his ambition of dying broke, and will be remembered in the US and Ireland, in particular, for his generosity.
He inspired Bill Gates and Warren Buffett to give away as well.
He still lived a great life, materially speaking, but just decided to give.
Therefore, billionaires who give away a lot are making a rational decision, which is in their own self-interest.
What is wrong, however, is thinking people are obligated to give away all their money, which is often just based on envy.
It is a personal choice.
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Adam è un autore riconosciuto a livello internazionale in materia finanziaria con oltre 830 milioni di visualizzazioni di risposte su Quora, un libro molto venduto su Amazon e un contributo su Forbes.
