What Portfolio Is Right For You

Let’s start with learning about you. Answer a few important question, and we can start building your recommended investment strategy based on your financial objectives.

How You Could Benefit From A Foreign Affair
November 10, 2014

How You Could Benefit From A Foreign Affair

Written By: Andrew Hallam

The grass really is greener on the other side of the fence.  At least, that’s what more than 7 million Americans must think.  Many packed their bags with kids in tow. They jumped on planes, trains or automobiles and left the United States.

You might even know some of them.  A middle class family in your neighborhood disappears one day.  Ten years later, they come back.  A jealous neighbor pulls you aside.  “God knows where John and Lucy just came from.  They paid cash for their new home. They don't owe a penny on their two new Audis.  Does it remind you of Breaking Bad?”

If your gut says they weren't in the drug trade, you’re probably right. HSBC’s 2013 Expat Explorer Survey says most expats make more money while working in a foreign country.  And they have more disposable income.

But you need two things for a foreign affair to work.  First, you need to pick the right location. Sure you can earn danger pay.  You could get a job in country where terrorist attacks are part of the daily commute.  Or you could take up dancing on an offshore oilrig. But money isn’t everything. HSBC lists countries with the total package.  They include those with high salaries, a great quality of life and those that are great for kids. Switzerland tops the list, followed by Singapore, China and Germany.

But the right location is just part of the puzzle.  You'll need to become a smart investor. Those working abroad for non-U.S. companies can’t contribute to Social Security.  As a result, such benefits may not be there for them when they retire. Nor can many of them invest in a 401K or an IRA.  Without such programs, their future is up to them. They can’t fiddle with their investments while their retirement burns.

Most Americans still invest in expensive actively managed funds.  That’s too bad. They would most likely do much better with low-cost index funds. But which index funds should they buy?  And in what combinations? The answers--- so many of them, and never in agreement--- can make your head spin. There are cap-weighted indexes, fundamental indexes, and strategies like The Permanent Portfolio.  There are some great books that describe each method. But none, that I’m aware of, explain all three. So I decided to write one that did.  It’s also the only investment book showing expats how to invest with index funds. 

By default, that makes my new book, The Global Expatriate’s Guide To Investing, both the best and worst book of its kind.  And it’s not just for expats. Some people expect Social Security to shrivel. Such doomsayers could benefit from the book's early chapters.  Like expats spending a career abroad, they'll learn how much money they should be saving to make up for a Social Security shortfall.  

I’ve profiled many expats throughout the book. Readers might be surprised to learn that even school teaching couples, in some locations, can save $100,000 a year.  I learned plenty from reader responses to my first book, Millionaire Teacher.  Amazon reviewers said it was clear.  They said that the language was simple. So I used the same, clear writing in The Global Expatriate’s Guide To Investing.  I show how to open a brokerage account.  I also explain how to purchase investments. 

Studies show that fundamental indexes beat cap-weighted indexes, such as those sold by Vanguard.  Will that be true in the future?  Nobody knows. So I showed investors how to use both. A third strategy shows how to build something called a Permanent Portfolio.  It’s historically stable. It averaged more than 9 percent from 1971 to 2014. In 2008, when global markets were nearly cut in half, it lost less than 1 percent.  It dropped only four times in 43 years.  Its worst year was 1981 when it fell 4.1 percent.

If I could see the future, I would tell you which of these three strategies would earn the best future returns.  But I can’t.  Nor can anyone else.  But all three strategies promise to do one thing: they'll beat the pants off the vast majority of actively managed portfolios. 

You can bet a dream house and two new Audis on that one---without having to break the law.

Related Articles

This article contains the opinions of the author but not necessarily the opinions of AssetBuilder Inc. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.

Performance data shown represents past performance. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown.

AssetBuilder Inc. is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and expenses carefully before investing.