Finding Your Financial Freedom in Latin America

When checking out investments in Latin America, don't miss intangible benefits that might not contribute directly to the bottom line, but that could make you freer, wealthier and happier as a person. Peter Macfarlane investigates the hidden benefits of Latin Investing such as tax benefits, asset protection and even a new passport...

For most investments, the bottom line is of course the most important. But one of the very attractive advantages of alternative investments is that they are not just digits on a screen. Frequently, they also carry significant fringe benefits that, while not contributing directly to the bottom line, play an important role in the investment itself and in the investor's longer term strategic planning.

These fringe benefits may be pure fun, or perhaps social status - like inviting friends over to sample the latest vintage from your own winery. But as the traditional financial system remains far from predictable, and the outlook for 2010 remains gloomy, you might be surprised to learn that savvy investors are turning in droves to alternative Latin-American investments as a conservative 'safe haven' for serious asset protection purposes.

Longtime international speculator Doug Casey, who authored The International Man back in 1976, recently wrote that “a wise man ... doesn’t allow himself to be limited by an accident of birth.” Casey predicts that we are “heading into a currency crisis for the record books, and I think you can plan your life around some type of foreign exchange controls. If you don’t get significant assets out of your home country now, you may soon find it costly and very difficult to do so.”

Whether you agree with that prediction or not, there are several very good reasons to diversify into hard international assets - things like real estate or physical gold bullion.

For a start, there are the tax benefits. If you are managing an investment portfolio today, chances are your geographic location is not really that important. Day-to-day management of your portfolio can be carried out from anywhere there is a laptop and broadband. So more and more investors and managers have realized that they just don't need to be located in a high tax, high cost country.

The majority of Latin American countries have territorial tax systems – meaning that if you are officially resident there, you are only taxable on your local source income. Anything you do outside the country of residence is tax free as far as they are concerned, so you don't even need to bother declaring it. This contrasts starkly with North America and Europe where the rule of thumb is that your home country taxes you on your worldwide income.

By living - even part time - in one country while overseeing investments in another, you can therefore legally slash your tax bill at a stroke. Some countries, like Urugu.....




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