The Road to Wealth

Once you earn your money, you've got it made, right? Well, not quite. In fact, it's not really wealth unless you can keep it. And it has been said that it is ten-times harder to hold onto wealth than it is to create it. Maybe that's why there are so many folks who earn six-figure salaries but there are relatively few millionaires. 

In order to be truly free, one must achieve financial independence. And financial independence really means wealth that maintains itself and you. 

Don't Lose It

There are a lot of ways that you can lose your hard-earned money. You can make bad investments. You can experience a casualty loss without adequate insurance (e.g., your home burns down). Or you can have it taken from you by force. This last category is the one that we will focus on primarily.

There are many ways to have your wealth stolen from you. You might carry all of your wealth on your hip, as a pouch of diamonds, and a fortunate mugger strikes it big one dark and lonely night. More likely, you will be hit with a lawsuit. Through lawsuits, people can leverage the power of government to take your wealth from you. Sometimes you may have committed some obvious wrong against another. The law allows them to seek monetary damages against you to be "made whole" again. Certainly money cannot mend all wrongs, but our legal system says that it can.

In more recent years, and particularly in the past quarter century, political movements have blended with the legal system to created new laws the primary purpose of which is to effect socialist income redistribution via the courts. Other laws have been adopted to redress ancient wrongs said to have been committed by your "class" of persons, making you liable for some amount to another class of persons, who are more than happy to benefit from the windfall. Essentially, the law has been corrupted by politics, making justice difficult to achieve.

Financial Predators

In today's world it is dangerous to hold wealth because it makes you a target for financial predators. These nasty folks consist of anyone who wants to take your money and make it theirs without your permission. This definition probably includes the government (taxes), criminals (theft), people who use politics and the courts to transfer wealth from you to them in response to some vague political grievance (private/public shakedown). The fact is that there are many people who believe that you shouldn't have wealth, probably because they don't. And there are opportunists who take advantage of this jealousy-driven environment to prey on those who have managed to accumulate wealth. 

As a result of this dangerous financial situation, you cannot afford to hold much wealth on your own. To do so is to attract the sharks. Rather, you must blend in with the ordinary. Make sure that no one takes special notice of you. And if they do, make sure that they believe that you are not a financial success. Like so many young people today, you must live off of the kindness of others, and be a "kept person." Don't think that this is a practical solution for you? Well then, you haven't met your new best friend, Mr. Trustee.

The Offshore Trust

What is a Trust? 

A trust is a legal vehicle available under the laws of countries who have adopted English common law. This includes most former English colonies (including the United States). Most countries in mainland Europe and many others do not recognize the trust as a valid legal entity. Trusts are normally created by attorneys who concentrate in this area of law (if you are considering forming a trust, please consult a competent attorney - this website is meant as an introduction to the subject only). Trusts amount to giving your property to someone else, who promises to take care of it for you and give some or all of it back (or to a third party) at some time in the future. Trustees (the person or entity that takes legal ownership of your property) tend to be large banks, insurance companies, and offshore entities that can afford to set up elaborate protection mechanisms to ensure that the money that they hold in trust is protected.  

Why a Trust?

By giving your property away to a trustee, you protect it from attack without necessarily giving up the benefits of having wealth. You may ask what the point is of building wealth if you have to give it all away. The truth is that modern political reality has made this course of action a necessity for many. And with creative planning, a well funded trust can help you to achieve most (if not all) of the goals that you would otherwise hope to achieve by keeping wealth in your own name. So a trust can act as a sort of "insurance policy" against loss to predatory attack on your hard-earned wealth. Like any insurance policy, it's not perfect, but it's better than no protection at all, and a well planned trust can be a life saver.

Why Offshore?

You have probably heard a lot about "going offshore," but assumed that it was not for you. Then again, maybe you are interested in the offshore world but are confused by the hype. Going offshore is an important step in achieving personal sovereignty, even if only symbolically. It places you, as a sovereign, among the sovereign nations of the world, choosing the best that each has to offer. Only a fool intentionally limits the choices they can make. By only considering domestic options, whether they be for investments or advice or residency, you acknowledge by default that you are not sovereign. If you are an American, the idea of looking outside of your country may seem strange, even unpatriotic. You may be used to hearing about criminals and "money launderers" hiding their ill-gotten gains in Swiss numbered accounts or in the Cayman Islands. Hollywood is to blame for much of these inaccuracies. And western governments have encouraged these perceptions.

Europeans and others tend to be more comfortable with the idea of going offshore. As these countries tend to be smaller, it is only natural to cross national boundaries to obtain things not available at home, or just to get a better deal.

You'd Better Shop Around

Laws in countries vary. Many countries have one set of rules for their own people, and a different set for foreigners. When it comes to money and investing, all nations want investment from foreigners. Money from foreign investors helps to finance a great deal of the American government's debt, in the trillions of dollars. Without their investment, the U.S. economy may very well collapse. Like the U.S., other nations need foreign investment dollars to keep their economy strong. Since nations compete for these international investment funds, they create incentives to investment. Moreover, these same nations compete to attract the best and brightest people to their countries to live. They know that bright, energetic people who have proven their productivity will add positively to their nation. When one stays at home, one tends to be taken for granted. However, when you start to shop around, you suddenly become important. A sovereign individual always shops around for the best deal.

Your Offshore Security System

By going offshore, one can take advantage of foreign legal systems. Remember, one of the primary threats to your wealth is from attack by financial predators who utilize the courts and laws motivated by income redistribution goals to seize your wealth. One way to escape these predators is to move your wealth so that it is governed by the laws of countries who do not have such laws. This often has the effect of forcing predators to travel half a world away to an isolated locale where the laws and judges see them for who they really are. Such an attack can be extremely costly with an uncertain outcome. Since financial predators are motivated by return on effort, they will often just go on to the next poor sop who failed to take such precautions, much like your neighborhood prowler would do when faced with strong deadbolt locks and a good security system.

Other Wealth Protection Mechanisms

The Corporate Shield

Corporations, Limited Liability Companies (LLCs), and other limited liability legal entities can be of great assistance in protecting wealth from loss. Simply isolating assets inside various corporate entities can protect those assets from loss if you are attacked personally. And if one of your entities is attacked, the others should be safe because they exist separate from each other, as if they were separate persons. Real estate is particularly well suited to being held in an LLC. Offshore corporate entities add yet another level of protection to this strategy. Once again, you should consult a competent attorney to determine the best method for structuring this aspect of your asset sheltering plan.

Taxes

The Evil of Taxation

Taxes are by far the greatest drain on wealth creation in western society. Most persons of higher income pay nearly fifty percent of their income to taxes, once all state, federal and local taxes are counted. When one considers the effect of compounding on the growth of wealth, the loss of this income to taxes amounts to a compound rate of taxation of 94% over a normal lifetime of earnings. That is, 94% of the wealth you might have had if there were no such taxes simply never comes into being because the seed money that might have formed the foundation of that compounded gain is taken from you.

This is obviously a terrible effect. It becomes even more terrible when one realizes that without such a serious drain on our ability to grow wealth, all of us could retire much earlier. If you are reading this at all, you probably already earn a good living. So I suspect that you would not need to worry about much of the material on this website if these taxes did not exist. You would already be quite wealthy. The reason that you are not financially independent is taxes.

Taxation in western society is the result of a failed twentieth century experiment in socialism. It is a remnant of the dead industrial revolution. It is the cruelest mechanism yet devised to steal the value created by people, outside of pure slavery. And it works in a way that is not obvious, its supporters protected by layers of political insulation and purporting to espouse "justice and equality." Those who refuse to pay are branded "unpatriotic," "selfish," "evil," and are exposed to imprisonment alongside the most despicable of criminals, subjected to unspeakable violations of human dignity in the dark halls of prison.

Tax laws and their brethren, the laws utilized to enforce taxation, drug and environmental laws, have become so severe as to exceed any basis in reason. One can only conclude that their severity exists for the purpose of terrorizing the populace into compliance with the will of those with political power. A founding father of the U.S. once said that you can judge whether a particular government is despotic or not by a simple test - if that government fears you more that you fear that government, then it is free. However, if you fear it more than it fears you, then you live in despotism, regardless of the double-speak of freedom and democracy it may use. You be the judge of the current circumstance.

Tax Minimization

Due to the draconian nature of U.S. tax laws, absent rejection of one's citizenship and departure from the country, it is nigh impossible for U.S. citizens to avoid federal taxation. Citizens of other nations, such as the U.K. and Canada, can depart their homeland with their assets and avoid taxation by national authorities. For these folks there is a growing list of nations who will welcome them (and their money) with open arms. Some of these are located in warm, tropical climates with modern conveniences and telecommunications.

Anyone should utilize every legitimate, legal tax loophole and tax-avoidance mechanism possible. The U.S. Supreme Court said that it was a U.S. citizens duty to do so. A single tax dollar saved is a dollar earned (as long as the effort to avoid is not too costly). However, tax evasion is illegal in the U.S., and will send you to prison. You won't experience much freedom there. To understand the difference between avoidance (legal) and evasion (illegal), consult a competent tax attorney or CPA. It irks some to realize that many of these loopholes were intentionally created by legislatures to "encourage" certain types of behavior in citizenry. These social engineering efforts may be annoying, but the savings is real. If you can, take it.