How the Wealthy Bank Their Money… A Different Approach

How the Wealthy Bank Their Money… A Different Approach

The past month has not been kind to mainstream investors.

Spurred by COVID-19 panic, many investors saw their portfolios fall by more than 33%. The 33% drop in the markets isn’t far from the 50% drop in the last Financial Crisis.

While mainstream investors have been stressing over their retirement funds, sophisticated investors diversified with offshore assets have been sitting back and riding out the storm. Many have an ace in the hole in the form of land banking.

While many people think putting their money in the stock market or a bank is the safest option for growing and protecting their assets, sophisticated investors, however, know that Wall Street and banks are really one of the worst places for keeping and growing your wealth.

Wall Street is volatile, and banks won’t protect you from potential creditors.

COVID-19 is wreaking havoc on the markets, and our intent is not to take advantage of a crisis, but we’ve been sounding the alarms about Wall Street for more than a year.

We never anticipated the drop would be caused by a virus, but a market downturn was inevitable given Wall Street was riding the longest expansion in history.

Sophisticated investors were prepared for the downturn. They’re always prepared.

By allocating more than 80% of their investable assets to alternative investments shielded from Wall Street volatility, the ultra-wealthy are unfazed by the massive selloff seen in recent weeks.

By turning to cash-flowing assets that grow over time like commercial real estate, productive businesses, agriculture, and commodities like energy, the ultra-wealthy ensure continuing cash flow through recessions while having the comfort of knowing their investments are backed by tangible assets.

Recently, sophisticated investors have been seen, adding more and more of one particular asset to their investment arsenal – land banking.

Land banking is acquiring a piece of land with subdivision potential and then holding the land to eventually break it up into smaller titles and selling them off for a profit. Profit is generated from a combination of an increase in demand for the land, changes in the zoning, and the value-added from subdividing.

Land banking is used by the sophisticated investor to not only profit from an appreciating asset but also for asset protection. The land also acts as money in the bank with liquidity created by selling individual subdivided parcels for cash flow as needed. And for this combination of benefits, sophisticated investors are looking more and more overseas as part of their land banking strategy.

Offshore land banking is ideal in a stable and quickly developing foreign jurisdiction with laws favorable to foreign investors. And it’s for these very factors, that Belize is perfect for land banking.

Here are the reasons why you should consider land banking in Belize.

Stable Diversification

Sophisticated investors understand the benefits of global diversification.
To them, not all world markets are correlated. A downturn in the U.S. stock market will unlikely affect land values in another part of the world.

However, diversification is meaningless if the country in which you’re investing is prone to economic and political upheaval. Belize is not one of these countries.

Belize’s legal system is based on British common law with a reputation in the Caribbean for a stable, democratic government and a stable and balanced economy. The offshore financial services industry in Belize is also highly regarded and well regulated.

With stable political and financial systems, foreign investors can have confidence in the stability of their offshore investments in Belize.

Appreciation

In addition to stability, ideally, you want your land to appreciate at high levels. For room to grow, sophisticated investors look to economies that haven’t already plateaued. Growth in emerging markets like Belize will, over time, outpace growth in developed economies like the U.S., Japan, and Europe.

Developing economies typically have younger, faster-growing populations that will contribute to economic growth that will outpace their more developed counterparts.

Belize is poised to boom. Beginning in the early 1990s, the Belize government has made a concerted effort to stimulate foreign investment, including major improvements to infrastructure.

With several infrastructure projects implemented in the past 20 years, including The Belize Road Safety Demonstration Corridor Project, Belize has made vast improvements to its roads and also its telecommunications network.

Improvements to infrastructure, along with a new international airport on the island of Ambergris Caye, will make Belize more accessible than ever.

All of these government efforts have worked. Tourism is booming – consistently growing by over 20% annually.

Its tourism industry is the fastest-growing market in the entire Caribbean and Central America region, growing faster than the markets of The Bahamas, Cayman Islands, and Mexico.

Asset Protection

Offshore land banking is an ideal asset protection strategy. There are only two assets exempt from reporting to the IRS on Form 8938, requiring U.S. taxpayers to report foreign assets – real estate and precious metals.

This provides protection from seizure from not only government entities but from potential plaintiffs and creditors as well.

While the financial markets reel, sophisticated investors involved in offshore land banking sit back and ride out the storm.

As for land banking, Belize is an ideal jurisdiction to consider right now.

With a growing economy with significant land still available to develop and subdivide, Belize presents sophisticated investors a recession-resistant asset that is poised to grow at rates outpacing more developed countries – all backed by a stable, investor-friendly government.

John

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John Turley

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