While it may sound simpler to continue using the same bank accounts you had before your transition into the nomadic lifestyle, you will always come out ahead with a better planned, global banking strategy. Here I explain how to build it.
The need for a strategy
One of the greatest advantages of living a location independent lifestyle is the ability to bank with the best banks in the world, regardless of where they / you are located. Why? There are many reasons but the main ones are stability, low fees, access and quality customer service.
Stability is something most nomads tend to undervalue, at their own perils. Many bank with startups such as N26 and Revolut even though these companies lack any history of good governance and decision making. Not to mention that banking in the EU in and of itself is a major risk given the very poor fundamentals. The same is true of many other jurisdictions globally. Banking with the best banks, in the best jurisdictions allows you to stop worrying about a banking collapse, currency devaluations, regulatory changes etc. Your money is safe and in my opinion, that is a big deal.
The low fees charged by many of the best banks is also a major draw. If you know what you are doing, it is possible to entirely eliminate banking fees from your life. Imagine never having to pay a monthly fee, wire transfer fee, ATM withdrawal fee, currency conversion fee etc.
Access is something nomads rarely think about when opening bank accounts but in my experience, it can be a game changer. For example, opening an account in Hong Kong will allow you to hold and transact in offshore RMB. It will also allow you to trade on the Chinese stock exchanges, buy into local funds and more.
When things go wrong, quality customer service makes all the difference. A few years ago, I lost my wallet while exploring Angkor Wat in Cambodia. I called the bank where I have my main account and asked for a replacement card. My account manager had one delivered to my hotel within 48 hours via DHL. He also arranged for cash to be available for me at a local bank within the hour.
What about the legal implications? The tax implications? This will depend on your nationality and tax residence but in nearly every cases, it is entirely legal to bank overseas.
How do you get started? Simple: you build a strategy and you have an expert validate it. This expert should be someone familiar with your tax situation. Insiders Club members can also ask me to validate their strategy for legal / tax compliance.
Before getting started building your strategy, I strongly recommend that you read the following articles:
CRS, the end of banking secrecy
Currency strategies for the future
The global credit initiative
How to transfer money internationally
Remote account opening
I often get asked whether it is possible to open a bank account remotely in another country. The short answer is yes, it is possible. The long answer is that you probably should not. The reason for that is simple: the good banks do not open accounts remotely. Why would they? It would increase their exposure to risk while offering no upsides as those who cannot afford a plane ticket rarely make good clients anyway. The exception to that are private banks, many of whom open accounts remotely. That said, these banks usually have large minimum deposit requirements and are not suitable for day-to-day banking anyway.
If you insist on opening an account remotely, your best bet is to choose a bank in your home country. Provided that you have a valid ID (or credit history, in many cases), this should not only be possible but also fairly easy. There are also a few decent offshore banks who accept remote applications, my favorite is Standard Bank (Isle of Man). They have USD, EUR, GBP and AUD accounts with dedicated UK IBAN numbers, a free Visa debit card and no maintenance fees.
There is no one-size-fits-all strategy when it comes to banking. You should tailor your strategy to fit your own specific needs. You also need to take into account your circumstances and long-term goals. I have create two demo strategy to show you what yours should look like.
Freelancers, consultants and the self employed
This strategy revolves around three accounts: one for your day to day transactions, one for your savings and one for your investments. The main goals with this strategy are as follow:
1. Facilitate the acceptance of payments (getting paid)
2. Offer protection against currency fluctuations
3. Reduce overall cost
4. Improve investment opportunities
5. Better alignment with long term goals
6. Improve access to credit
Why use three separate accounts? Because I have always found it best to isolate each part of a system. It helps with risk management, efficiency and in this case it also gives you access to more options.
The day to day account: This account should either be in the currency of the country you spend most of your time in or in a currency that has a stable exchange rate with that country’s currency. For example, if you spend most of your time in South East Asia your day to day account should be in USD, HKD, SGD or CNY. If you spend most of your time in Europe it should be in EUR. Your day to day account should also be accessible via a debit card that has no transaction fee, no ATM fee and no currency exchange fee. A good mobile banking app is also a must and so is the ability to initiate international transfers online. If you get paid directly (your clients pay you in your personal name), your account should be in a country where you can easily receive money (PayPal, TransferWise, direct deposit etc). It is also a good idea to open this account in a country that has a mature credit market. This will allow you to obtain a very good credit card, one that will earn miles and offer benefits such as free lounge access and travel insurance.
The savings account: Stability and a long term alignment with your personal goals is what matters here. You may be thinking right now that you will travel forever but you probably will not. At some point you will want to establish a base somewhere and it will be a lot easier to do that if your savings are well structured and compatible with your goals in that country. Personally I have settled down in Hong Kong and that is why I keep most of my savings in CNY, SGD, HKD and USD. Here is a list of the best currencies per region:
North and South America: USD
Europe: EUR, GBP, CHF
Africa: USD, CNY
Middle east: USD, AED, CNY
Asia: CNY, HKD, SGD, USD, JPY
Pacific: USD, CNY, AUD, NZD
Apart from choosing the most appropriate currencies, you should also consider:
1. The stability of your chosen jurisdiction
2. The stability of your chosen bank
3. Interest rates and yields
4. How capital gains are tax in your chosen jurisdiction
5. Currency controls in your chosen jurisdiction
Because of the considerations mentioned above, most jurisdictions are no-go and that is especially true when it comes to most OECD countries. I have compiled a list of jurisdictions that ARE suitable for your savings account. Remember that accessibility does not matter here, you will almost never have to deal with your bank (your day to day account will be the only one that you access on a regular basis).
North and South America: Panama, Bermuda, Cayman, Bahamas
Europe: Isle of Man, Gibraltar, Jersey, Guernsey
Middle east: U.A.E.
Asia: Hong Kong, Singapore
Pacific: none (Hong Kong or Singapore are suitable)
The investment account: Parking all your money into a savings account would not make much sense and that is why you also need a brokerage account. To maximize returns, you should open this account in a country that does not have a withholding tax and with a brokerage whose fees are reasonable. It is up to you to determine what percentage of your net worth you are comfortable investing and which products you want to invest in. Personally I have invested around 30% of my net worth, 60% is in my savings accounts and around 10% is in my day to day accounts. I like to have a decent chunk of available cash so that I can get in on investment opportunities when they present themselves.
As an entrepreneur, you should use a strategy like the one above for yourself + a separate one for your business. Your business strategy should take into consideration similar factors to your personal strategy (ease of getting paid, low fees, currencies, stability etc) although to simplify your accounting I strongly recommend doing everything in the registration country. This will also save you some headaches when it comes to payment processing.
What to avoid, pitfalls
Firstly, let me make it clear that you DO NOT NEED to use an introduction service to open a bank account overseas. These services are a scam, plain and simple. Secondly, because of their instability, high fees and dodgy business practices I strongly recommend avoiding these banks / jurisdictions:
1. All the Latvian banks
2. All the Cyprus banks
3. All the Caribbean banks except for those in Bermuda, Cayman and the Bahamas
4. All African banks except for those in Mauritius and South Africa
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Country specific guides
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