Why You Can't Afford Not To Retire Overseas

May 20, 2008

Paris, France

PLUS:

n  The Celtic Tiger Is History...

n  Irish Adventurers In Argentina...

n  Why Is The Chinese Government Selling Off Its Antique Treasures At Bargain Prices?

n  The Best Current Buy In Provincial Ireland...

n  Kama Sutra In Rajasthan...

n  You've Almost Gotta Feel Sorry For Ortega...

AND:

n  The Benefits Of Being A QRP In Belize...

Behind closed doors over two days in sunny Cancun, Mexico, Lief Simon and 12 other global real estate investing pros will detail 13 current property opportunities in emerging and undervalued markets with big upsides. These could be the most important two days you spend this year.

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Dear Overseas Opportunity Letter Reader,

Over lunch Friday afternoon, friends in Dungarvan shared big news:

"We're preparing for a move," they told us, "from Ireland to Argentina.

"We work for a U.S. company," they pointed out, "and earn our income in dollars. It doesn't seem to make much sense to continue living in a place where we have to pay for everything in euro."

The U.S. dollar is down nearly 6% against the euro since the first of this year...and it's down better than 30% against the euro since it began its long slide in the first quarter of 2006.

In other words, our friends have a point...one that, believe me, hasn't been lost on Lief and me these past couple of years, as we've divided our time between Waterford, Ireland, and Paris, France, places that not only use the euro but that also charge premium rates for the privilege of residing within their borders.

In fact, our friends in Dungarvan and we both might seem like suckers not to have imagined and accomplished our respective moves, theirs to Argentina, ours to Panama, long before now.

Another friend, living in Uruguay for the past two years, wrote recently, after a weekend getaway across the river to Buenos Aires, to remark, "I was surprised to see that the Argentine peso has remained relatively stable with respect to the dollar, while the Uruguayan peso has gained more than 70%. It makes BA look pretty affordable right now to us 'Uruguayans.'"

Imagine how affordable it looks to our Irish friends! Currency appeal aside, the cost of both living and of real estate is so dirt-cheap in Argentina compared with Ireland that you wonder why the idea of emigration to places like the Land of Malbec and Tango hasn't occurred to more residents of the Emerald Isle.

It's an eminently appealing proposition. As our friends explained on Friday, "We bought our home here in Ireland 10 years ago. We could sell it today for maybe seven times what we paid for it.

"We spent a month in Argentina recently, traveling around to get an idea where we might like to settle. In places like Cordoba and Santa Fe, you can buy a big house, bigger than our home here in Ireland, with land for farming and outbuildings, for $150,000. That's less than 100,000 euro.

"Plus, in a city like Cordoba, we could live very well on much less than we earn, meaning we could save and invest.

"Our dream is to find a place to settle in Argentina and also to be able to afford a small apartment in Paris so that, thinking long term, we could spend part of each year in the City of Light. If we sell now in Ireland, we should see enough net both to establish ourselves in Argentina and to invest in an apartment in Paris that we could make available for rental on the short-term market when we're not using it."

For the retiree, expat, or adventurer with Greenbacks in his pockets, Panama can make even more sense. Here, you have no exchange risk whatsoever. Panama has used the U.S. dollar as its currency since 1903.

Meaning that, though the cost of living in Panama may be higher than in Argentina, you don't have to worry that it'll increase as a result of further dollar decline.

That's the big question, of course, on the mind of every American thinking about living and investing overseas right now. How much further will the dollar fall?

And, given its current demoralized position, the poor American can't help but ask himself, can I really afford to think about pursuing my global fantasies?

A recent article in The New York Times concluded that the answer to that question is no...that the dollar's fall to date means Americans need to think twice before making plans to retire or live abroad.

It suggested a new life overseas is now beyond your reach.

Falderal. That is, The New York Times couldn't be more wrong.

Right, right...if your primary concern is cost of living, you don't want to retire to Ireland or France right now. But neither do you want to stay put because you fear your U.S.-dollar nest egg has no buying power beyond U.S. shores!

I can't say where the dollar will be versus the euro or the Uruguayan peso 12 or 18 months from now. But I can tell you that the smart move today to me seems to be to hedge your bets. Move your home base to a place with a low cost of living and an affordable cost of real estate.

And move your investments outside the Greenback. If you haven't yet diversified by market and by currency, it's not too late. In fact, the coming 12 months could be the best time in some time to get yourself out of the dollar.

Friend Bill Bonner got directly to this point in an issue of his Daily Reckoning e-letter last week:

"Sell America," he said. "Sell its money, sell its property...

"In the short run," Bill continued, "we could see a revival of the dollar....With no more obvious reasons for the dollar to fall...it has stabilized. Next," he says, "it will fall for reasons that are less obvious and more important."

Sell on the bounce. Sell your dollars and your dollar-based assets and buy...what?

A new life in a place like Cuenca, Ecuador, or Atlantida, Uruguay, the world's two most affordable retirement havens (see our Ecuador and Uruguay Retirement Living Budgets), where you could live comfortably on $660 and $1,038 per month, respectively.

Or maybe follow our Irish friends to Cordoba, Argentina...or Lief and me to Panama City, Panama. If I had to make a shortlist of the world's top retirement and lifestyle havens right now, these four places would be on it.

With your investment funds, buy land, coastal or productive. Best productive land buys in the world right now are to be found in Uruguay and Argentina. Best coastal buys are in Panama and Ecuador. Meaning you could combine your new, far more affordable life overseas with what could prove the wisest investment plays of your lifetime.

The real answer to the question, Can an American afford to live or retire overseas right now? could be that maybe you can't afford not to.

As American (from Vermont) Jay Snyder (three-year retiree to Granada, Nicaragua) puts it:

"The truth is, retirees in the States right now face a serious dilemma. It's impossible, really, for them to live on Social Security. And the cost of quality retirement living options has exploded. The current meltdown in U.S. housing costs doesn't change this fact. Most retirees can't afford a retirement home."

At least not one within U.S. borders.

Kathleen Peddicord

P.S. You can read more about Jay's adventures in Granada here.

----- Borrow To Buy In Central America -----

Georgetown Trust lends in Panama, Costa Rica, Nicaragua, Belize, Honduras, and beyond. Attractive terms.

Find out more.

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ALSO RIGHT NOW:

Property values in Ireland have fallen for the past four quarters. Prices remain inflated (for now), but it seems the Celtic Tiger has been tamed.

"People are worried, and so they're not spending. They're not buying. They're holding tight. The nervousness has been settling in gradually, over the last year or longer, but it's become more urgent in the past four weeks. Our business has slowed dramatically in the last month."

We heard this story again and again last week in Ireland. Friends in the restaurant business, friends in the construction business, friends in the building industry, and friends in the antiques trade, as well as every local paper we looked at, reported economic woes and market concerns.

The Celtic Tiger is history. Waterford Crystal is begging for a government rescue package. And property prices across the country have dropped for the past four quarters.

Finally, the long-awaited pop of the Irish property bubble? The Irish papers say the downturn will be short-lived and call for a turnaround starting in 2009...as long, they add, as the U.S. market rebounds.

Will the U.S. market bounce quick enough and strong enough to save the Irish one? I couldn't say. I've been calling for the collapse of the Irish property market for the past 10 years, ever since we took up residence in this country with its enigmatic economy. In truth, there never was a Celtic Tiger...but an imported American one.

Meantime, the current doom-and-gloom reports got my attention. No, this isn't a crisis investing event--at least not yet (keep watching). But the current circumstances are creating interesting opportunities.

For example...

Antique-lovers, take note: You might want to organize a quick trip to Ireland next week. This country, with its attic stores of old furniture, accumulated over centuries of colonial rule, hides the best antique buys in all Europe.

Best buy in Ireland? Antiques. This is the number-one place, in my experience, in all Europe to shop for old British, French, and Irish breakfronts and linen presses, inlaid tables and sideboards, historic engravings and centuries-old tapestries. Not in Dublin and not in Cork, but at the provincial auctions.

This has been true throughout the entire past decade, Celtic Tiger economy notwithstanding. Right now, the tiger tamed, it's more true than ever.

When our auctioneer friend Rody mentioned that his business has fallen off recently, I couldn't help but think that maybe I should take a look around his auction room.

I hesitate to share this news, for fear you might organize a quick trip to Waterford and compete with me for Rody's best bargains. It'd be worth the trip. Next Monday, Rody Keighery (cityauctionrooms.com) will auction nearly 1,000 lots, from garden urns to 19th-century roll-top desks, all at a fraction what you'd spend for comparable treasures in the UK, France, or the United States.

After three visits and a series of phone calls to solicit quotes from four international logistics firms for packing and shipping to Panama City, I've put in bids on 47 of the 1,000 lots, enough to fill a 20-foot container.

It's all intended for personal use and will be put into storage in Panama until our home there is ready to receive the load. However, there's a bigger opportunity here for anyone who's interested to pursue it.

Buy a pair of cast-iron urns on pedestals for 150 euro and resell them in the U.S. for $700 or more. I know you can do this, because my sister, last year, purchased a pair of urns in an antiques shop in Baltimore that are identical to a pair I bought from Rody for our garden in Ireland. She paid $700. I paid 150 euro.

Buy a 200-year-old inlaid lady's writing desk, in perfect condition, from Rody for 100 euro and resell it in Paris for 500 euro, at least. Glass-fronted oversized armoires, cheval mirrors, English china, Waterford crystal, pine dressers...they're all selling at auction in Waterford for one-third to one-sixth what you'd pay elsewhere.

Including Panama, where I've also shopped for antiques. The supply is limited, and the demand is growing. My 20-foot container of Irish antiques will cost less than half what I'd have to spend to buy furniture of comparable quantity and quality in Panama City (if I could find it), even allowing for the cost of shipping from Waterford.

Logistics are the monkey wrench. You've got to get your finds from Waterford to Baltimore or London or Panama, etc. And, if you'd like to try to make a business of this, as some I know do, you've got to have an outlet for resale.

Still, I can't help but run the numbers in my head every time I wander around Rody's shop...

If it's Chinese antiques you're after, Hong Kong, not Waterford, is the place to shop, as correspondent Paul Lewis reports:

"When China was difficult to enter, Hong Kong--then a British colony--was the principal marketplace where foreign collectors hunted for Chinese antiques.

"It's still a major market for all kinds of Chinese art that has seeped out from mainland China. But the situation is becoming more complicated as China itself opens up to the world and government-owned antique shops and even museums start hunting for foreign customers.

"Today, as always, Hong Kong's quaintly named Hollywood Road is the center of its antiques trade. It is on Hong Kong Island and quite easy to find, near Sheung Wan station at the end of the dark blue Metro Line. Just follow Morrison Street up the hill, and it's on the left. Street signs in English and Chinese also point the way.

"Most shops on Hollywood Road are up-market and clearly for serious, well-heeled collectors. But there is plenty of cheaper bric-a-brac available in countless small shops along the parallel streets. My wife, who collects antique share certificates, picked up an interesting old Chinese railroad bond issued in Belgium in 1913 for HK$350 (about US$60). It was complete with the coupons due after 1939. Around midday is when the market really comes to life.

"Meanwhile, in mainland China, the antiques business appears to be changing with increasing competition and unusual new sources of supply.

"At an officially government-owned antiques store near the Badaling section of the Great Wall of China, about 50 kilometers from Beijing, my wife secured a substantial price cut on a carved ivory figure of a dancing Chinese lady just by threatening to walk out of the store.

"The asking price was $350; she paid $160.

"The figure is probably about 200 years old, but, as Chinese law officially prohibits the export of objects over 120 years old, even government antique dealers automatically give purchasers a customs certificate stating that anything they buy is much newer than it probably is.

"Other official shops, like the ones in the Beijing Summer Palace, also have side showrooms where quality antiques are for sale.

"Most curious of all was my experience in the Yangtze river city of Wanxian, where, after a tour of the local museum's ho-hum official display, the English-speaking director led us into a special, large, well-lit room where attractive antique pieces in jade, metal, and wood were on display--and for sale. Moreover, prices were flexible.

"A retired music teacher from Oregon paid $1,800 for an elegantly carved red jade wine flagon about 12 inches high, originally priced at $2,000. The Director claimed it was more than 200 years old, although the customs certificate made it much younger. I paid $350 for a pair of red jade crouching dragon chimeras, each about seven inches long, originally priced at $550.

"The Museum Director claimed to have lots of such surplus antiques in store and stated that the Culture Ministry now wants them sold off for dollars. It seems possible that, during the Cultural Revolution, when Red Guards ransacked the well-to-do homes, a lot of privately owned antiques ended up in the store rooms of state museums.

"Perhaps the Culture Ministry now wants them turned into cash? Perhaps museum managements have discovered free enterprise? Who knows.

"Oh, by the way, when we left the country, Chinese customs never asked to see the birth certificates for the antiques we were taking with us.

"Jim Rogers expects that the RMB will be revalued from 7 to US$1 to 2. So the Chinese antiques you buy today are at bargain prices. Particularly if you don't pay the asking price."

Panama's pensionado program gets the limelight...but pretty little Belize, with its long coast and sand-fringed cayes, offers a program of special tax benefits for retirees, as well...one that you can avail of starting at age 45.

Belize's Qualified Retired Persons (QRP) program is perhaps more straightforward than retiree residency programs of other jurisdictions in the region. You can be as young as 45 to qualify, and the associated red tape is remarkably controlled. You must provide an authenticated police record from your most recent place of residency; certified copies of your birth certificate and passport; a medical clearance certificate; and proof that you have a minimum income of $2,000 monthly ($24,000 annually) from outside Belize. This can be from any source (unlike Panama's pensionado program, which requires your income be from a recognized pension).

You can include your spouse and children up to the age of 18 in your application.

Once you've qualified for QRP status, you can import your car, boat, and household goods tax-free...and you pay no tax in Belize on any income generated outside the country.

In other words, through the QRP program, you could establish yourself as a resident of Belize and avail of the no-tax-in-Belize-on-foreign-earned-income benefit...while taking advantage of the foreign-earned-income exclusion in the United States to offset tax due Uncle Sam. Talk about tax-efficient. 

Plus, of course, you'd have the right to live in Belize--and that's an appealing idea in itself. This is a beautiful, sunny, friendly country whose currency (the Belize dollar) is pegged to the U.S. dollar (meaning Americans have no currency-exchange risk). Plus, Belize is a stable, peaceful nation where they speak English.

This is the best time in years to visit the Ranthanbhore National Park in Rajasthan, which is right now enjoying an exceptional birth rate among its returned tiger population.

Feline news this week from friend Vivian Lewis:

"When we were in the Ranthanbhore National Park in Rajasthan four years ago, we duly jeeped around the jungle looking for tigers. But there were none to be seen.

"At that time, there were a mere 32 of the big cats in the park, which is a popular tourist destination, converted from a rajah's hunting reserve when India won its independence. The rajah had protected the tigers from being killed by local peasants, because he wanted to shoot game. But the democratic New Delhi government was pressured to kill tigers that were threatening local voters. Tiger lairs were often simply destroyed by raiding farmers, lest the big cats go outside the park looking for somebody to eat.

"Finally, under pressure from tourism and wildlife groups, India and Rajasthan decided to do a better job protecting the tiger population, as well as the humans around the park. Good fences make good neighbors. Greater privacy also encouraged the tigers to get amorous at night, when the tourists were not looking for them.

"Thanks to India's efforts, the result has been an exceptional rate of birth for tiger cubs. Fourteen tiger kittens were enumerated by the last Ranthanbhore tiger census.

"We will have to go back to India to re-visit Ranthanbhore. We went there from New Delhi on the Palace on Wheels, a private rail service circling Rajasthan, stopping at the Taj Mahal, a non-feline memorial to India's Kama Sutra, and then winding up back in New Delhi. Riding a train rather than taking dodgy flights (often cancelled in the winter because of fog) is an easier way to travel in this part of the world. And you don't have to pack and unpack your baggage between stops on the train."

"Uncle!" cried El Presidente Daniel Ortega...but is his $1.30 diesel subsidy enough to keep his country rolling ahead?

In other news as we go to press:

The transportation strikes in Nicaragua have ended--at least for now. 

Truck, bus, and taxi cooperatives in this country had been demanding that President Daniel Ortega reduce then freeze fuel prices in that country. They wanted diesel fuel at Nicaraguan pumps to cost about $2.50 per gallon, rather than the $4.70 it was selling for. Until that happens, they told Ortega, our wheels won't roll.

Ortega pointed out that such a move could bankrupt the country. Maybe we could take prices down about 30 cents a gallon? he proposed.

No good.

Finally, Friday evening, Ortega, in his second national address in three days, cried Uncle. OK, he said, taxi and bus drivers will pay only $3.15 per gallon of diesel fuel.

The rest of you Nicaraguans, he continued, however, will pay more. He increased the cost of diesel for all non-taxi and non-bus drivers to $5.10 a gallon.

Meaning Nica bus and taxi drivers are now paying less for diesel fuel than anyone else in the region...and average Nicas are paying more than anyone else in the region.

Further, though Ortega agreed to subsidize the cost of diesel to the tune of $1.30 a gallon, he didn't freeze prices.

And he forgot about the truck drivers, who aren't covered under the new subsidy program.

Stay tuned...