I often write on Quora.com, where I am the most viewed writer on financial matters, with over 389.3 million views in recent years.
In the answers below I focused on the following topics and issues:
- What are some challenges of remote work?
- What are the biggest mistakes that investors make, and how can they be avoided?
- What are the best tax havens to hide your fortune, or is this now a myth?
- Does the Ukraine war mark the end of globalisation?
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Some of the links and videos referred to might only be available on the original answers.
Source for all answers – Adam Fayed’s Quora page.
What are some challenges of remote work?
I will focus on expats and some areas which haven’t been tackled by the other responders.
Many people want to get a remote job to use geographical arbitrage. If you can earn a great wage, or business income, and live in say Thailand or Bali, then your ability to live well increases manyfold.
However, there are challenges. If you are from a Western country, you can usually claim unemployment benefits if your job ends.
If you are living thousands of miles away, you usually can’t. What is more, if you lose the job, you will find it more difficult to find another job locally, because employment laws favor locals.
Finding another remote job can take ages in some industries, often a year or longer, especially for non-Americans (some of the remote jobs only hire US taxpayers).
This means that the normal advice to have three months’ savings in the bank, isn’t applicable here.
Realistically, you need:
- A bit more cash on hand for emergencies
- Health and some other insurances. This becomes a bigger burden as you age.
- Investments for your future, and sometimes to create cashflow
The last points are especially relevant because if you live overseas, you often aren’t paying into social security back home.
This means that you need to create your safety net and be conservative with your assumptions.
The expression hopes for the best, but plan for the worst is very applicable here.
Beyond that, some other challenges are:
- Become legally compliant. In some countries, freelancers are in the gray zone. What is more, if you want to set up an investment account, then you will need a tax identification number (TIN). It is better, these days, to have at least a home tax base somewhere (ideally in a low tax county), even if you are traveling from country to country.
- In addition to the last point, there have been many reforms in recent years, and as more people work and do business remotely, it is less likely governments will accept this “gray zone” activity forever. Already, some governments (Canada, Australia, etc) have said that if you don’t actually “actively” give up your ties to your home country, then you might be liable for future taxes. In other words, you need to show “intent” – which can mean canceling gym memberships and cutting ties to your home country, and gaining ties to another.
- As a result of the above, it is best to also have portable, expat-friendly, investments. Sending money to your home country can increase your “ties” and sometimes be tax-inefficient.
- Of course, the same issues others have alluded to below, such as learning how to communicate remotely and so on.
- Learning a new culture, and sometimes language, if you are working overseas
You also have to factor in risk. If you have onboarded clients remotely, then that is less risky than if you are reliant on existing clients accepting you working remotely, even if you have run it by them. If they leave you, and you don’t know how to get clients remotely, then that is a big challenge.
Same thing with a salaried remote worker. It is better to know how to find remote jobs, rather than rely on your existing boss to keep to their side of the bargain and allow you to work remotely
What are the biggest mistakes that investors make, and how can they be avoided?
One thing that people seldom speak about is being a good investor can be completely different from being a good businessperson.
Many successful business people get asked for advice on stocks, and the wider stock market, even though most aren’t experts in the area.
Being successful in a private business can often require opposite skills to being a good investor. Take diversification and focus.
In a private business, having just one core business can make sense over two or especially ten businesses, especially before you are super-rich.
That is because of focus.
If you are just focused on one core business, you have the following advantages:
- Time. 10 projects won’t take 10% of your time. They will each take 20% of your time. Being focused will ensure you can focus 100% of your time correctly.
- Risk. If you aren’t focused on just one private business, it is more difficult to become a master in that space. The old expression, “it is better to be a master in one area than a jack of all trades” is true. A core business can also reduce risks by focusing on different countries, markets, etc, so still, diversify the revenue stream under one umbrella. What is more, if you are just “very good” at ten businesses, it will be easier for somebody to eat your lunch who is excellent in one of those business areas.
In investing in the stock market or private businesses, which aren’t your own, the same thing can’t be said. You either need to be diversified or concentrated, but it wouldn’t make any sense to invest in just one stock (a public business) or a private business.
That is why you see so many ultra-wealthy people first build up their core business, and then diversify once they have sold off the business.
An example is Kevin O’Leary, from Shark Tank. When I spoke to him privately before the event I had with him, he mentioned how he only focused on diverting once you had sold out.
Apart from that, the biggest mistakes investors make are:
- Over-analyzing – is this the best time to get in and so on. This especially affects investors who watch the media too much.
- Trying to time the stock market. Nobody can know, for sure, when the market will fall or increase
- Being too greedy on the upside, and fearful on the downside
- Speculating. 10% of your money isn’t a problem. 50% is.
- Not being long-term enough. Nobody has lost money being in the S&P500, or any major index, for 30 years, assuming that dividends are reinvented. Many have been down for over a year, or five.
- Not being liquid enough. Even if investing in private businesses, or property, is going well, don’t put all your net worth in those kinds of things. It isn’t easy to sell a property in a few days, or get 10k out of a private business that isn’t listed on the stock market.
What are the best tax havens to hide your fortune?
Many people have a Wolf Of Wall Street view of offshore investing.
There is a funny scene in the movie where an actress straps money to herself to take it through passport control.
This was in Switzerland in the 1980s.
Times have changed and there is financial transparency with CRS and other rules. You can’t “hide” money now and hope to get away with it for too long.
People in the know these days invest “offshore”, which in reality means in a country that isn’t your home, for diversification, legal tax reduction, portability, and so on.
A better strategy is to hire professional lawyers, accountants, and advisors to legally reduce your taxes. The devil is in the detail.
I will just give you one example of millions I could use. If you are a British expat, if you invest on an offshore life assurance platform, you get the chance to get tax breaks when you return home.
Up to 5% can be withdrawn in a tax-efficient manner, even if the investments you are making are identical to on a pure investment platform.
It is a rule which doesn’t make sense rationally speaking, but since when is the law rational? Similar rules can exist for Australian expats – “the ten-year rule” – and others.
Another example is the UK’s non-domiciled rule. I am not sure if you are watching the news these days, but there is currently a “scandal” involving the UK’s second most senior politician, who is the daughter of an Indian billionaire.
It isn’t much of a scandal, because his wife is non-British, and most wealthy expats living in the UK consider becoming non-doms, just as wealthy British people do overseas, in countries that allow that rule.
The point is, there are plenty of rules out there that are legal, and allow you to minimize your taxes – especially if you own your own company, which means you can take advantage of tax-deductible costs.
The ironic thing is, there are more legal onshore ways of reducing taxes these days, rather than offshore.
If you are determined to reduce taxes to zero, one of the only legal ways is to offshore yourself and your company. In other words, move both yourself and the company overseas to a 0% tax location.
This usually works unless you are American because the US Government taxes people based on citizenship, which is one reason thousands rescind it every year.
Again though, get proper advice if doing it.
Does the Ukraine war mark the end of globalisation?
Below is a quote from Bill Clinton’s speech from over twenty years ago, when he was advocating for China to join the World Trade Organization:
“China’s accession to the World Trade Organization (WTO) will help promote reform, accountability, and openness in China. Voting to enact permanent Normal Trade Relations (NTR) with China is the most significant immediate action we can take to move China in the right direction.
China’s accession agreement will deepen and help to lock in market reforms — and empower those in China’s leadership who want their country to move further and faster toward economic freedom.
In opening China’s telecommunications market, including Internet and satellite services, the agreement will expose the Chinese people to information, ideas, and debate from around the world. And China’s accession to the WTO will help strengthen the rule of law in China and increase the likelihood that it will play by global rules. Many human rights activists and members of the foreign policy community agree that bringing China into the WTO will help move China in the right direction”t
That was the great hope. Making the world economy more open would make everywhere more liberal.
The opposite has happened. As these countries have become richer, they have become more authoritarian.
When I first went to China in 2007 to visit, most Chinese people I met were keen to speak about “win-win co-operation”.
There was a sense that China was on the rise, but it was only happening because the world opened up to China (which was true).
Even the official media propaganda said similar things, but then things changed gradually, starting in 2008.
Many authoritarian regimes started to think “our system is not so bad after all”, and a lot of political reform was stopped.
This situation in Ukraine is only making people more cynical about the situation, and has resulted in economists like Adam Posen (below) suggesting that the world could turn into regional blocks:
However, there are some counterarguments
- As he mentions in the video, this argument about regional blocks has been made for decades.
- It is one thing for Iran to become more inward-looking after sanctions, and even Russia, but China and the US are so integrated into the global system that it is difficult to completely go in the other direction. For smaller trading nations, this is, even more, the case.
- The US can only grow by 2%-3% these days, unlike the 4%-5% it saw in the past, and China’s growth is fast converging. It is expected to be 4.5%-5% this year, 3% by 2030, and 2% by 2040. Therefore, finding new markets in Africa and beyond, will become more important, just as Japanese firms looked more globally after the economy stagnated.
- When it comes to travel, we as a human race, always want to do more.
- The internet, and global services businesses online, are only getting bigger.
- The poorest countries will suffer if there is a more inward-looking lurch in bigger economies, and eventually, people everywhere won’t like that.
- In terms of personal, and corporate, decision-making, what have we seen in 2022? The number of people who want to become even more diversified with their investing strategies has grown. As the world becomes more uncertain, people intrinsically realize they shouldn’t rely on just one currency, stock, or economy. They want global exposure into many sectors.
- Predicting the future is almost impossible. Quite often the opposite happens to the assumed outcome. What did “everybody” want to speak about in 2010–2011? The BRICS. Since then, Brazil, South Africa, and Russia have struggled. India and China have continued to grow, but growth is slowing in China. 10 years prior to that, many thought that globalisation would result in liberalism.
What is more likely is “de-globalization” in some specific areas. High-tech will become more and more sensitive. We already saw that in 2018 with ZTE, and then Huawei.
We could also see some manufacturers come home, especially now consumers care more about the environment.
I don’t see us going to a very closed economy though, at least in most parts of the world.
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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.