How to prepare for the recession: Citizenship by investment and seven other useful instruments
What should you do with the financial resources that you possess when a global economic crisis is unfolding as you are reading this text? Obtain a second passport and citizenship for money and follow other recommendations below to minimize possible losses and prepare yourself for the bad times.
The panic around the COVID-19 virus and the severe economic problems that accompany it should be sufficient to convince anybody that a financial crisis can break out at any moment and for any reason. Both the markets and the investors are irrational. Even the people who believed that the ‘bull’ tendency was going to last, fasten the fall by urgently selling their securities when they see that such a fall is approaching.
Markets can collapse for multiple reasons from recessions and pandemics to wars and political crises and you have to be prepared for that. Putting all your eggs in one basket is certainly a bad idea. When chaos occurs, people and governments give in to the madness around and start acting on an impulse.
The key to protecting yourself and your loved ones from any misfortune that might happen is global asset diversification. Everything is interconnected in the global world and this fact requires that we look beyond the traditional diversification methods such as buying various stocks and bonds.
Even if you are optimistic about what the world is going to look like in the near future, you certainly understand that there will be times when economies become weak anyway. If not now, in some more distant future for sure. Below please find some advice on how you can prepare for an economic collapse.
The points that you will find in this article can be thought of as an anti-crisis checklist. We will be talking about the financial aspects, not about storing preserves and toilet paper in the cellar. At the same time, it is always a good idea to have the basics at hand just in case.
How to prepare to the recession: What is an economic collapse?
Before we start checking the items on the checklist, let us define what an economic collapse is. As a matter of fact, every person will give his or her own definition to the phenomenon and will have his/ her own ideas as to what should be done to live through the hard times.
An economic collapse can be defined as a crisis during which all types of assets depreciate. During the recession that occurred in 2008, the price of almost all securities fell in dollar terms. Even American mutual investment funds reported a decrease in income. As it was later found out, their assets were not very much diversified. The price of real property also decreased in dollar terms at that time.
But such things did not happen everywhere. While the stock and real estate markets of the developed countries experienced heavy blows, the markets of some developing countries such as Cambodia, for example, actually grew. Precious metals’ price went up and some national currencies strengthened in relation to euro and the US dollar.
Naturally, your plan of action in the hard times will depend upon your personal needs and circumstances, your daily and monthly expenditures, your debts, and so on. However, you may well find some useful points in the text below.
Here are a few recommendations that you can follow if you are a successful businessperson or an investor who wants to protect yourself from the negative consequences of the next financial crisis. Of course, every personal situation is unique and not all the actions that we recommend can be feasible in your own case. Also, please seek tax and other experts’ advice before you arrive at the ultimate conclusions.
How to prepare to the recession: Obtain a second passport
Your anti-crisis checklist must necessarily contain the ‘foreign citizenship’ item. The panic around the coronavirus has led to shutting the borders and limiting the mobility of all people especially those who have visited the ‘hot spots’.
Imagine a citizen of China, for example, who has spent a year or two on a paradise island far away from his motherland where he wants to return now. He is going to face many problems trying to do that under the current conditions.
Even Canada has closed its borders to non-citizens and non-residents in order to slow down the virus proliferation. A number of other western and eastern countries have taken the same measures.
Having dual (triple, etc.) citizenship means that you can gain legal access to more than one country. More than one national Government will be obliged to support you should a crisis occur. There are numerous advantages of holding several passports at a time indeed.
Currently, depending on where you come from, you may face tough or not so tough restrictions as far as moving around is concerned. Take the people of Venezuela, for example. They used to be quite free in moving all around the world and now things look quite gloomy to them in this respect: they have to stay where they are.
Remember that you have to act fast when the crisis is unfolding. The fastest way to acquire a second, third, etc. passport is to make an investment into the economy of one of the countries that run citizenship-by-investment government programs. There are over a dozen such countries in the modern world.
How to prepare to the recession: Purchase residential accommodations in a ‘safe haven’
The fact that you have a place abroad that you can call your home can change your way of thinking. In addition to that, it can help you avoid many pitfalls and keep your nervous cells intact. These do not regenerate, as you have probably heard.
There is a very convenient way to acquire foreign property and a second passport simultaneously. With some citizenship-by-investment national programs, you can obtain citizenship in exchange for purchasing real property in the country such as a villa or a luxury suite, for example. In this way, you can buy two valuable products at the price of one.
Ownership of some real estate abroad will let you evacuate from your home country or your current country of residence in case a crisis changes its economic and/ or social state of affairs especially drastically.
Over the years that we have been assisting clients in fulfilling their offshore plans, we have found out that psychological barriers are harder to overcome than barriers of all other kinds. If you do not know where exactly you are going, you will naturally hesitate to leave the place where you are at the moment. He who hesitates is lost, as the saying goes. Please do not allow it to happen.
When you own a house or an apartment in a foreign country, you can use it any time. The purchase will not only contribute to diversification of your assets but it will also allow you to acquire a feeling of ‘home’ while you are, in fact, away from your home country hiding from the troubles in a safe haven.
How to prepare to the recession: Acquire sources of income that are protected from economic crises
Today, business owners and investors realize very well how important it is to have sources of income that do not depend on the location. If you do not have a flexible business yet, you will be well advised to change this situation promptly if you can.
The best way to prepare yourself to future crises is to have an income that you can use regardless of what happens in the world. For instance, you can invest into real property in several foreign countries and then let it on a lease. If only part of the world suffers from some calamity, your property in the other part will keep generating some steady income.
If you are into rent business but you own property in a single location only, a local crisis can damage your business badly. An earthquake or a severe flood can destroy the infrastructure in the region and you may go bust in the worst scenario.
If you invest into real estate and other income generating assets in various countries, you will be prepared to crises. There are multiple ways to diversify your assets geographically and we will be happy to discuss the possibilities with you. Please seek our advice by writing to [email protected].
You also have to make sure that your workplace as well as your income are mobile. If you work in an office, you can be simply forced to close it when a pandemic comes. Thus, you have to take some protective measures.
If you are dependent on the location of your business, it is high time to decrease the level of such dependence. You may want to consider launching an online business, for example, in addition to your stationary enterprise. You can also think about providing some consultation services, which will make you independent from the location if you provide the services via the Internet.
In the current situation, you should not disregard any possibility starting from working with partner websites and ending with selling products via Internet platforms such as Amazon, for example. If the situation becomes critical, you can take this source of income with you wherever you go physically. Otherwise, you might have to choose between losing your revenue source and saving your life.
How to prepare to the recession: Keep some foreign currency in store
You can make a good profit during the times of a crisis if you have some foreign currency in a bank account. The British pound may grow in value when the Brexit procedure is over. The New Zealand dollar, which is quite an exotic currency to be frank, is doing pretty well at the current moment.
Currencies fluctuate constantly. There are times when the American dollar is strong in relation to euro and pound sterling. At other times, the US currency becomes weaker…
At this particular moment, you can buy more of an undervalued currency for one dollar than you could before. But who knows how things are going to progress?
The Singaporean dollar, for instance, is considered a shelter currency and its profitability range is more attractive than that of the American dollar. It can be used as an instrument of risk hedging in case the US dollar suddenly drops against other national currencies.
The British pound fell drastically after the Brexit procedure was initiated and now it costs much less than it used to, so buying some pounds sterling today could be a good idea. Another exotic currency you might think of buying is the Georgian lari. It may well grow against the America dollar in the future and in addition to that, it will provide for geographical asset diversification.
Having a foreign currency account in an offshore bank is a wonderful opportunity to have better returns on your investments. This is certainly a way to combat the negative interest rates that the Central Banks of several western states have introduced in the times of the economic crisis and the approaching economic collapse.
How to prepare to the recession: Hold alternative financial assets
In addition to fiat currencies, you should consider putting some of your money into such alternatives to the fiduciary currencies as gold, silver, and cryptocurrencies.
Over the recent years, the Central Banks of the developing countries such as Russia, Turkey, and Columbia, for instance, have been accumulating gold. They call it a safe asset that will help them restore national economies should a financial crisis break out.
You can actually do the same. Invest into gold and silver and keep the bullions in bank vaults in different countries. This will be your insurance against panic in the world financial markets. If your home country’s Government goes bankrupt, it is going to be difficult for it to confiscate your metals that are kept abroad.
Experts recommend keeping this kind of assets in such secure offshore jurisdictions as Singapore, for example. The country that you choose should be free from large state debts in any case. You can also consider the possibility to keep a few golden coins or silver bullions at home.
It is important to realize that gold and silver kept with a foreign bank cannot be confiscated by your Government. This move will provide secure protection against a possible future crisis.
How to prepare to the recession: Open an offshore bank account
Banks in Panama, for example, are not panic-stricken unlike the banks in some European countries. Panic in financial institutions can have some very undesirable consequences such as numerous bankruptcies and severe job cuts.
If you have some spare cash, please consider putting it in an offshore bank where it will be safe. We have seen the way banks in Cyprus, Greece, and Argentina combat financial crises: they limit their clients’ access to their funds and make them wait in long lines in order to withdraw a sum of money that the bankers will deem appropriate.
Opening an offshore bank account is a legal way to diversify your financial assets via converting them into another national currency. Besides, such an account will give you access to new investment opportunities and new asset protection instruments. In any case, a foreign bank account will protect you from your home country bureaucrats who may have forgotten that you have already paid the taxes. It will also protect you from the bank managers who may think that it is up to them to decide how much money you can withdraw from your account.
When you have an account with a bank, it is easy to acquire a plastic pay card from it. If you have several accounts in several banks, you will be safe with a few plastic cards in your wallet. If the account with one of the banks becomes temporarily unusable, you can fall back on other accounts that you have in other banks and withdraw cash from ATM’s when you need it.
How to prepare to the recession: Put some money aside for a rainy day
Understandably, putting money aside during the good times means ‘freezing’ some funds that could be used to finance the growth of your business otherwise. But a certain sum of money kept intact can serve as your life buoy if an economic collapse suddenly occurs.
The availability of some paper money and a secure bank account is the best way to go through the crisis times. This backup money will help you survive while your business is on the downturn and your clients make fewer orders. You will have bills to pay in any case and thus you will need money.
Liquid financial assets that can keep you solvent can be in the form of money in the bank, or of paper money in a strongbox, or of gold coins in the coffee jar. Even if you like to keep most of your financial assets in offshore bank vaults and fixed-term deposits that pay an interest, you should have some funds that can be accessed immediately and without any trouble.
How to prepare to the recession: Avoid state pension funds
The Governments of some countries such as Ireland and Poland, for instance, have given in to the temptation to draw on their citizens’ pension accounts in the times of need. In light of this fact, experts recommend keeping away from pension funds and looking for alternatives.
It is true that the use of your home country’s standard pension system is the simplest option. However, in the situation of a financial collapse, your bankrupt Government may want to use your pension money in order to cover its expenses. Recent history shows that when crises occur, national governments may be prepared to raid pension funds.
In Ireland, company employees were automatically enrolled into a pension scheme while the Government literally stole their pensions. Poland followed the example too and stole money from its citizens’ pension accounts trying to cover the costs of an ambitious social security program.
Government of too many countries, including the Russian Federation and the Unites States of America, went back on their word when it was convenient for them. This concerns the pension systems as well whose security these same governments are supposed to guarantee. Thus, it is quite reasonable to expect that such things can happen again when the next financial crisis comes over.
Governments are laden with trillion-dollar debts while private pension funds are ‘honeypots’ that have some ‘idle’ money. Naturally, the authorities will be ready to put their hands on those in the crisis times. Many people in the world live paycheck-to-paycheck struggling to lay a penny aside and if you have some surplus in your pension account, it is easy for a politician to criticize you and justify ‘plucking the greedy bastard’.
If a national government becomes insolvent, it means that the ministers have made it insolvent. The risk that these same stupid or corrupt ministers will want to take your money away if they need it is too high. Therefore, it is a good idea to keep your money outside the reach of greedy politicians.
The rules of access to your pension funds can change any time. Please do not think that laws always remain intact. Sometimes laws can even be applied retrospectively. It is better to be safe than sorry.
How to prepare to the recession: Start doing it right now
Whether it is raining outside or it is sunshine, the best investment advice will always remain the same: do not put all the eggs in one basket.
The coronavirus pandemic may lead to a global economic disaster or we may get away only with a slight shock. Regardless of what the results of the current satiation will be, you should start preparing for the worst today. You have to protect your family and your assets from whatever may happen. Of course, we all will hope for the best but we need to prepare anyway.
The asset protection strategies described above are quite simple instruments that many cleverer people have been using for a long time now. In this way, they increase the levels of their freedom and their self-assuredness as well as the amount of their wealth.
These strategies can also protect your assets in the bad times, help you save on taxes, diversify your investments, and improve your mobility when the good times come back.
Nobody can be sure what the outcomes of the current pandemic and the oil price wars will be. Hopefully, we are going to get through this turmoil without too many losses. But there is no guarantee. Having a ‘plan B’ is always a good idea and it is especially advisable to make such a plan in the current situation. Do not wait to act. The only serious source of risk now is procrastination.
Diversify your investments, gain independence from the location of your business, and protect your assets against possible financial crises. Alternatives to fiduciary currencies such as gold, silver, and cryptocurrencies will serve as your insurance against the panic that is likely to burst out if a serious economic crisis occurs.
A second passport, in its turn, and a piece of real estate in a foreign country where you could live with your family is another powerful means of protection against local crises. You do have to have a safe shelter in a foreign country whose authorities will be obliged to support and protect you during the hard times if you are a full citizen of this country.
If you are ready to act now, our team will be happy to assist you in drawing up an individual plan of your asset protection and growth. Please do not be too shy to ask for advice. We will gladly discuss the opportunities to combat the coming world crisis with you if you write to us to [email protected]. We are ready to come to the rescue.