Warren: Hi, everyone. Welcome to our offshore series on what we’ve been doing and I’m here with Stephen Petith. We’ve already done a series of four offshore interviews to do with offshore structuring, offshore banking and tax residency.
And what Stephen and I are doing just going to continue this on what we said last time and do a series of further ones just covering a range of topics. So today, we’re going to be covering the very exciting topic about actually offshore sovereignty what it means to really become sovereign. So, welcome, Stephen.
Stephen: Welcome, Warren, and, thanks for having me here and welcome, listeners. Yeah, sovereignty and how to basically take control of your life and leave the pesky politicians in their place.
Warren: Oh, that sounds good to me.
Stephen: So this would be a brand new topic today.
Warren: I couldn’t figure that gives you more joyful I had a client yesterday actually who just said to me, oh, we just set him up because he runs international business like he has virtually no clients in Australia at all.
He’s actually going to move offshore. But he goes, “Oh, the best thing I’ve ever done in my life,” he said, “you know, half my money was going to the [0:01:08] government,”and he said, “after what you guys had done, it’s going to be down about 5% or something.” I’m like, “Yeah, exactly.”
Stephen: Yeah. I’m becoming capital efficient. That’s the one of the main sort of foundation stones that are becoming sovereign is taking back control of your money and what all the different parts of your life. You know, your privacy, your independence, your freedom, your movement of travel, where you live, how you live, what you spend your money, what you want to believe in – all that becomes all yours under a sovereignty model.
And, it’s available to anyone. And a lot of people are doing it these days. Most digital nomads are [0:01:53] on the path to sovereignty. There is a lot of international businessmen they’re on the path to sovereignty. And this is not the domain of the super-rich or the ultra-wealthy. This is well and truly the domain of anyone.
One of the clients that I’d sat down with yesterday, we had to look at a four-hour and just – I naturally talk fast, you know. I have the coffee and we just went through. But by the end of it, we realized that what this guy, what my client was doing is exactly that. He is living a sovereign life. He now lives between four places around the world all during the year. He is from the Eastern Bloc. So he spends a fair bit of time in Southern Spain.
Down there sort of during the [0:02:41] months. But he comes out to Asia because he’s got business here in Asia. He’s an Amazon and Internet seller. Then he’s also over into the Americas for a couple of months out of every year because he’s got clients over there on a [0:02:55] and teaching level. And now he’s moving –
Warren: Oh, wow.
Stephen: Teaching field. So he wants to be able to teach this lifestyle that he’s created which, you know, he’s been able to put a term on as a sovereign lifestyle. The people that follow him and, especially in the Eastern Bloc, which is the people in the Eastern Bloc are looking for this
sort of stuff everywhere.
Warren: That’s excellent. I mean in fact, one question I was going to ask you on this, Stephen, is that what you’ve just said confirms a lot to me. I pretty much tell people for now that gone are the days like 20 years ago where you could basically set up some nifty [cue taxes 0:03:35] scheme over in offshore. You’ve really – to earn the right to be capital efficient, as you beautifully put it, and, actually, be making high-income minimal taxes, you actually do need toreally it’s like a war to becoming sovereign.
By becoming sovereign, having international business, investing in a – being willing to move around, relocate your borders and move around, the reward is that everything changes. You get more – you see more of the world, you make more money because you opened up to better markets. There’s investments out there but I’m always [0:04:08] get in Australia, U.S., over in Europe and in other private funds. And, also, you get access to much better tax rates by getting advantage lawfully and legally of capital efficient means. Whereas if you’re living in Australia, working as a doctor, you do some offshore scheme, you’re asking to basically get in trouble, would you agree?
Stephen: For sure. And the whole idea is, and especially for me anyway is I don’t want to live under the rules of just one nation. If you have a look back in history, we’re nomadic people. The humans are bound to wander. We want to move where the resources are in the world. And the best resources these days in a modern world are the best Internet, the best access to opportunities.
The biggest thing about moving offshore and becoming sovereign is your access opportunities, the opportunities that you can get living offshore, as you pointed out, investments, tax rates, lifestyles, living standards, education for your children, education for yourself. If you have a look at the stuff that’s coming out of the U.S. at the moment, with Trump, he’s this – got his nominee for the Department of Education up, so, hopefully they dismantle the American education system, which is just one of the most appalling systems in the world.
But, living under that system is you’re not being educated. You’re basically being turned into a slave. So, free yourself and move to where you’re going to get the best education. And I learnevery day. And I love to learn. So I’ve got people who are in town at the moment from all over the world, and, you know, after this, I’ve got lunch with the group, Russian guys.
They’re going, “Oh, Russia’s good. It’s moving. It’s this now.” Yeah, but it’s got some problems. But we’re moving. They live in Egypt for a bit of time. They live in all sorts of wonderful places around the world. But this is what’s happening. People are now waking up, getting educated, and moving along. And if we go back, we mentioned this book earlier, and I’ll bring it up. I’ll tell everyone. [0:06:19]. It’s The Sovereign Individual.
Warren: I love that book. I love that.
Stephen: It’s a really, really good book. It’s still available in a lot of bookshops and that now, I think it’s third or fourth reprint. They can’t bring it out. So it’s by James Dale Davidson and Lord Rees-Mogg. It basically really explains what individual sovereignty is about. How to use the 21st Century to your advantage. How to use the information age or the digital age or the data age to your advantage. Gone are the days where you’re stuck behind the desk. A plumber can set up a website and teach people in Africa how to be the best plumbers. How to set up storm water collection systems or whatever. An electrician can teach people how to self-install solar.
So, we now live in such a transportable means of whatever our job is all because of the Internet. It doesn’t matter whether you’re a truck driver, whether you’re a checkout chick as we, you know, so, you know, you’re packing shelves, you can actually use that knowledge that you have to help other people gain better knowledge. Because there is someone out there that wants this information.
The and then reading books like this sort of help you sort of underline the theories that are out there.
Warren: That’s excellent. Yeah, that’s really good, I mean. No, I couldn’t agree with you more. That was my first book which I read, Stephen, back in about 2000. It opened my eyes, that book. And the fact it was saying how we would become more sovereign and more global and how we’d move more to the Internet and then led me to Robert Kiyosaki and how he talks about the fact that our school system and education system is more designed to make us slaves and soldiers.
And, you know, I homeschool my own kids now to give an idea on that just to make sure that they’re getting access to the information and training I want them to get. And, yeah, in fact, that leads me onto a question. So, would you – so, obviously it’s correct to say there’s more opportunities, give me an example of investments like what’s been your experience, I know you’re an international investor, like now, myself, that you find that, say, by just becoming sovereign and going global in your thinking rather than just being in Australia or U.S. or UK, you can actually improve investment and increase [residual 0:08:47] income, I mean, could you give some like practical examples of where it’s different?
Stephen: Yeah. So, if you have a look at what’s happening, there’s a lot of investment and this is just one, a lot of the investment is the property in Spain. So, back in the early 2000s, the British and Spanish builders built a lot of property in Spain and there’s a lot of it around. So, now you could actually go and pick up some property in Spain and Portugal. Portugal’s probably better than some of the places in Spain. But you can actually buy that property now at replacement value or below replacement value because are not going to get rid of it. There is still property on the market over there.
Warren: In Portugal?
Stephen: [0:09:29] in Spain. Most of it’s gone. But there is still little pockets in that around. So one of the investments we set up for a group of guys was to go and buy about 10 properties over in that part of the world. And what they do is they rent them all out on Airbnb. So they picked up choice properties in very good tourist locations that weren’t exactly central, just a little bit on the outskirts of the location. They got them for replacement value basically. And, so, their rental yields are very good.
Warren: Like what kind of yields? Obviously you can’t guarantee anything, but I’m curious, like what kind of capital costs for a good property in Portugal, what kind of yield would someone get? Like this is an example?
Stephen: Depending on where they were buying. They were buying these properties in these sort of the second-tier villages around the €100,000-€150,000, which is what it cost them. They all had their own pools and all that sort of stuff. And then, because they’re renting them on a short-term basis, and during the winter months, they normally do them on a month-to-month basis.
During summer, it’s a week-to-week basis. So, they get and they probably are yielding on and off around that 10% to 12%, which is a nice
return. Because you’ve got some costs you’ve got to clean it and maintenance costs and all that sort of stuff.
Some of the other investments that are out there that I’m finding are in agriculture. Backing current farmers, especially in avocados or macadamia nuts or that sort of stuff to expand their crops. Once again, it’s sort of the 12% to 15% yields. One of my clients one of the guys that I know that does this all the time, he takes the off-take from the farm, so, invest into the farm plus he then takes the off-take or a percentage of the off-take, and then he uses that through his international trading business.
Because he’s in the gourmet food area. So he’s doing avocados out of Panama, pineapples and stuff out of Thailand. You can find these things but you normally need to be on the ground talking to people finding the right lawyers or accountants and of course, then you got to do your due diligence on these investments. But they’re out there.
American property is another one. International businesses, investing into other people’s businesses. There’s also a lot of people out there that you can invest in Internet companies through their startups and that sort of stuff through places like Singapore, Hong Kong. You can even get access to just Chile into the startup hubs and stuff over there.
Warren: All right, okay. That’s excellent. I know one thing, too. Years ago, I don’t produce this thing anymore, but I don’t know if you remember, Stephen, back in about 2001, you could buy this book called The Standard & Poor’s Top 500 Offshore Funds in the World. And you can’t really buy it now but that bend I remember Lance Spicer who used to run the sovereign individual and the invisible world. And I remember reading and he put me onto the [0:12:52] and I was astonished at that time. It was actually showing that Australia made hardly any of –hardly even appeared on the top 500. U.S. did have some presence, but most of the best was in Europe.
There were funds that were consistently returning 400%, 300%, 200% per annum over a five/ten-year period on the top ones. And I remember going, “This is crazy,” and that got me researching more. And discovering that, yeah, there’s a lot of private funds that won’t come near Australia or U.S. because they just don’t want to get into trouble with the Nazi SEC ASIC.
But you can actually make like, you know, regularly 30%, 40%, 50% yield per annum with some of them or even more in a particularly good year. Have you come across those kind of ones?
Stephen: Yeah. There’s these funds are around all the time, especially in Europe. Europe’s a hub for [certainly 0:13:39] risky investments. They like their risks – Sweden and Germany – love take risk. And anything that’s a bit riskier that’s going to return a bit of a yield. Stuff that’s also coming out there are some of the stuff in Asia, where we’re seeing Vietnam becoming a bit of a hotspot for tech and for startups in the Fintech industry.
So, there’s projects and funds there that you can get access that are yielding quite well. Just on the other side of that coin is a lot of the big international transactions that happen won’t go anywhere near the major sort of countries – Australia, America that sort of stuff because they just don’t want the hassle and the red tape around their fund or around their investment. So they’ve always – everyone’s putting them in places where it’s a bit more friendly. Dubai, for instance, is becoming a little bit of a hub for this as well.
Warren: Right. Okay. Now, fantastic. So there’s so much opportunities. So really, if someone was starting off, this is a bit of an idea, what kind of things do they – what would you recommend if someone’s really looking to open their mind and educate themselves more in offshore and how you can become sovereign offshore and start to invest or even the kind of businesses you could do like any businesses from your experience that are a great way to get started and start to go global.
Like just an e-commerce business online.
Stephen: And e-commerce online is probably the hot topic at the moment. But I’m liking service-based, education-based-type businesses. And don’t think just English. When you have a look at the world, English is probably only 30% of the spoken language. We’ve got – there’s a big – there’s big chunks language around the world that people want to be able to access this stuff. Spanish, the Spanish-speaking nations all three – Central and South America. Some of the Portuguese places in Brazil.
Brazil, which is a Portuguese-speaking nation. So, taking your knowledge in transferring it into another language is also another way of doing it. Finding a current business that is doing really well in one market, and then exporting it to another market. So, at the moment, I’m working with a group of guys on some gourmet food. So we’re looking at taking gourmet food and their business is doing well in Europe. So, we’re now looking at taking them from Europe and bring them here into Asia.
So, transplanting businesses from one part of the world to the other is another good. But if you’re just starting out, let’s have a look at what you’ve got, what knowledge you’ve got. And look around the world or travel around the world even better and try and match your knowledge with a gap in the market.
So, if you want to travel to Asia, don’t travel to Hong Kong and Singapore because most of the gaps are filled. Or there’s a lot of competition. Travel to Vietnam, Laos, Cambodia, the Philippines, Thailand, Myanmar, these sort of places have huge gaps in the market. And you might be able to find that you can plug a gap there.
Travel to Costa Rica. Central and South America. Find the gaps in the market. There’s a couple of guys that run around. What they do is they find the best tech that’s happening in, say, America or Europe, and then they bring it to South America. Or they bring it to Africa or they bring it to Asia. And these guys are doing very, very well. And they’ve had a couple of unicorns that have come out of it.
So, if you’re looking at doing that, that’s what I’d suggest. But the biggest thing is from Day 1, say, today you want to start doing this, go and find yourself that book, The Sovereign Individual. Another guy that I follow closely is Dr. Ron Paul, the ex-U.S. Congressman. He’s theories and everything around the sovereignty of the individual – his books are fantastic.
Another guy is called Harry Brown, he was an American Congressman. His theories on political, so, this is basing yourself in the political dos and donts and how politics now has got so over-controlling and over-bearing. So those two guys doing that. But, just reading a different newspaper, start reading [0:18:16] news, start reading Al Jazeera.
Start reading Le Monde in France. Start reading newspapers and stuff to familiarize yourself with what’s actually happening beyond Australia. I don’t read Australian newspapers anymore. I do read the South China Morning Post here in Hong Kong. I’m a big reader of Al Jazeera.
I like looking at some of the other things that are a bit out of the ordinary. So, the Gulf Times in the Middle East is one. There’s a couple of Panama papers that I read. I use a service called Press Display which basically gives you access about 200 newspapers all around the world.
And you can just read them. And you can find out what’s happening. And you could quite easily start to find there’s gaps in the market and there’s gaps in the market there.
That’s if you’re really wanting to start today, that’s I’d sort of do it and how he’s made a way into it. Then, we can talk about all the fun stuff, you know. Getting yourself a second residency, giving yourself second passports, structuring yourself overseas, taking control of your pension, self insuring, creating your own medical funds. The list is really, really endless.
And creating a legacy is a big thing around most sovereign people. Most sovereign people want to create a legacy, whether that is if they’re – they want to give to a charity. I’ve got some clients that have basically spend half their year doing charitable work. The rest of the year they focus on their business, they really narrow down what’s happening, and then they give back and put back in the side if for the other half of the year.
So, there’s all sorts of ways and mixtures and constructs of how to become sovereign and how you want to be sovereign. There is no one standard you have to fit inside this box. If you’re fitting inside a box, you’re not sovereign.
Stephen: It’s as simple as that.
Warren: You’ve got me thinking, yeah. I mean, there’s so much we could cover we could go five hours on this, but –
Stephen: Keeping days.
Warren: Days, yes. So we’re going to think of plenty more topics for our next set of ones coming up. But the last thing I want to quickly just cover was what came out what you just said just all then, you know, a couple of things that came to mind I wanted to quickly ask you on. Number one was I wasn’t aware about Ron Paul [0:20:49] some books. The guy’s a legend.
And I’d love maybe give me two or three books of his for our listeners and for myself that we could go away and read.
The second one, from what you mentioned as well was that you got me really thinking, so, I always believe and that the easiest thing is to make a good business more successful. So, as an example case study, would I be right to say that something a business could do very easy to become sovereign is, say, let’s just make up a really close-to-home one, like you and I, we could almost, for example, take what we’re doing into Europe or into France or into Germany or into, say, like, Vietnam or into, you know, some other places just transfer into their language and basically teach them on offshore international and just like, our knowledge goes into another market, that’s really what you’re saying, isn’t it?
Stephen: Oh, exactly. Exactly. And I have done it to a degree. I started to do a little bit in Spanish, in Central America working with my Panama lawyer there. So I was transferring some of my knowledge over to him and working with clients there. But, yeah, that is exactly what to do. Move stuff into other markets. The world’s a bigger place.
The English-speaking market is that big. The rest of the world is that big. So, it’s on which pie do you want to play in and what pie do you want to work in? It’s the same as if you’re stuck in one country, the pie is that big, but the rest of the world is this big and once again, which pie do you want to work in? So, transferring knowledge is probably one of the biggest things.
And that’s what used to happen when we’re a nomadic people centuries ago, you know, millennia ago, the transfer of knowledge for most people moving around the world was how knowledge was spread. And so that’s the Internet. So we can use the Internet to do that.
But, so, we can be sitting on a lovely beach in Thailand, writing blog posts, writing courses, writing books, and then, sending that knowledge around the world. So, that is a perfect way of getting started. And as I said, most people has some sort of knowledge. They have some sort of hobby, they have some sort of everything.
If not, buy and sell something. Most of the really good traders that I know don’t even have a web presence. They’re not Internet-based traders. They are physically trading a commodity from point A to point B, whether it’s one guy is doing rock salt, you know, which is very great in cooking at the moment.
But he flies to the – and buys it himself, takes his wife along on the trip, on the buying trips. Then gets it shipped to wherever, gets it repackaged and then, sells it then goes somewhere else and sells it to distributors. So that’s one of the things is – so you don’t have to do.
The other one that and this is where one that I’ve always wanted to expand it myself but I’ll give it to the listeners is traveling around the world and trading and buying local art. So, if you’re in Africa, and you can meet local artists over there, do a deal with them, where you’d buy their art directly from them at a reasonable price and don’t go in and [0:24:03] because you’re going to make great margins anyway.
Go in, buy the local art, buy 10 or 12 pieces, get it shipped back, put it in a gallery in, say, Sydney in Australia and then sell it from there. And so, become the intermediary for the movement of artwork. Moving to music. Go into, say, the Pacific Islands, and record, you know, 20 different artists in the Pacific Islands create a CD and leverage the interaction and your ability to move and see gaps in the market.
Warren: That’s excellent. Before I forget, the last question before you go, Ron Paul, name me two or three books that are good reads.
Stephen: Okay. The ones that I like and I was just having a look at my reading list, the one that – the real one that got me started was Liberty Defined. It’s basically 50 points on his view of liberty, that is really a good book and you can get it on Amazon. There’s also book bundles on Amazon.
The other one is The Revolution by Ron Paul which talks about that basically it’s all based on America but it applies everywhere in the world – everywhere else around the world. There needs to be a revolution. There needs to be a rethinking in how governments are structured. I come from the world of small governments, the better. So, and I also believe that if you’re government, you shouldn’t be paid. It should be a service to your country, if you’re going to do it.
Or service to your tribe if you’re going to do that. So you shouldn’t be rewarded for monetarily, this is where we become – where we’re going to our problem where our politicians today it becomes a career, it’s not a service. And politics should be a service.
Bureaucracy is so large because politicians are trying to create silos underneath themselves that they can create their own [little five terms 0:26:15]. So we need to stop that. We need to totally rethink. Another one is The School Revolution so if you’re looking at homeschooling your kid, The School Revolution is all about homeschooling and redoing our education system. There’s also a homeschool program that Ron Paul does.
The other one is the Ron Paul Institute, which is an online magazine and research center. A lot of their stuff is really, really good. I’m a very big fan of Ron Paul, as you probably can tell. But they’re probably the three main books that I would look at at the start.
Stephen: And then just go onto the Ron Paul Institute and start researching and having a look at what he says. His son Rand Paul is in the U.S. Congress at the moment as the Senator Rand Paul. And he’s continuing some of the work that his father started which is good.
So, yeah, that – and then the other guys, Harry Brown. Just Google Harry Brown and his some of his works. These are guys that are thinking outside the square. If you’re looking on economics, Martin Armstrong from Princeton Economics, the guy is a genius in his thinking. So, for investment cycles and that sort of stuff, he’s very well worth looking at and following.
Warren: Excellent. Well, thank you so much, Stephen, for your time.
Stephen: Not a problem.
Warren: And I put up a few things I’m going to do today after out of all that. And, yeah, next time, we’ll speak here next week and I was thinking we might do the 5 [Flags 0:28:00] of Sovereignty, which I know is always a very good topic.
Stephen: Definitely. We can follow on from the five flags and there’s actually probably six, seven, eight, nine flags that we can do in the modern world. But it all starts with the base 3 and then we can build up from there.
Warren: Excellent. Thank you, Stephen. And, thanks for being here.
Stephen: Thanks, Warren. Thanks, listeners.
-End of Podcast-