ERE in an economy like Argentina?
ERE in an economy like Argentina?
How would you retire on income in an economy with high inflation?
Re: ERE in an economy like Argentina?
Invest everything abroad (e.g. SP500), with an additional cushion (say, +50% ?) for decreasing currency risk.
Re: ERE in an economy like Argentina?
1. have your money invested in a stable global currency other than your home currency - possibly even part btc
2. prioritize sources of income that obtain from physical, tangible assets: farmland comes to mind.
3. Borrow heavily in devaluing currency to fund productive asset purchases and wait for inflation t erode your loan (requires fixed interest OR inflation accelerating at rates higher than anticipated)
4. DIY and subsistence etc. take an even greater importance in conditions of high inflation
5. Stockpile. Buy non-perishables in bulk and store. It would be more expensive later
6. dont' plan to rely on capturing the consumer trash stream. The consumer trash stream will be picked over and scavenged long before you get to it
7. if you own a business, make it supply income inelastic goods: groceries for instance. workers' incomes increase slower than inflation. alternatively, have it cater to the rich who don't care. If you can't sell groceries, have inventory that doesn't depreciate with time. currencies lose value; a washing machine is a washing machine
8. consumer staples w pricing power. think buffet.
2. prioritize sources of income that obtain from physical, tangible assets: farmland comes to mind.
3. Borrow heavily in devaluing currency to fund productive asset purchases and wait for inflation t erode your loan (requires fixed interest OR inflation accelerating at rates higher than anticipated)
4. DIY and subsistence etc. take an even greater importance in conditions of high inflation
5. Stockpile. Buy non-perishables in bulk and store. It would be more expensive later
6. dont' plan to rely on capturing the consumer trash stream. The consumer trash stream will be picked over and scavenged long before you get to it
7. if you own a business, make it supply income inelastic goods: groceries for instance. workers' incomes increase slower than inflation. alternatively, have it cater to the rich who don't care. If you can't sell groceries, have inventory that doesn't depreciate with time. currencies lose value; a washing machine is a washing machine
8. consumer staples w pricing power. think buffet.
Re: ERE in an economy like Argentina?
1/ invest in global equities/bonds so that you isolate from country specific risks.
2/ if you have to invest locally, buy assets that hedge against inflation: real estate, stable businesses, etc
3/ ALWAYS keep the bulk of your money outside of the country
Re: ERE in an economy like Argentina?
Maybe out of scope here, but Zeihan is forecasting Argentina to be one of the winners of the post-Order world ("Disunited nations").
Timeline TBD....
Timeline TBD....
Re: ERE in an economy like Argentina?
One of the seminal moments in my retirement philosophy happened exactly one year after we officially "retired" while walking around Buenos Aires in September 2001. Back then the city was full of once-wealthy retirees wearing their tattered haute couture European clothing from before the mid-70s. I was fascinated by their ability to don their costumes and stroll around town larping the Paris of South America distinction. They owned their crumbling once-elegant apartments but the wealth needed to maintain them had dried up.
The tourist area was full of incredible antique shops and open markets trading in their trappings of wealth for hard currencies. The happy, prosperous people who saw the writing on the wall had transitioned from owning the trappings to selling them.
At the time we read about but never really saw the elite few who had the ability to invest in other currencies but still lived in Argentina and were spending their valuable dollars or deutsche marks or francs as if they were kings.
Back in the 80s Mrs. Ego went to university with many of the children of Argentineans and Venezuelans. Rather than living in the past the parents used their declining wealth to send their kids to school in SoCal. The kids were tasked with figuring out how to set up lives here and bring their parents. We know some who succeeded.
Our approach is multi-pronged. A little bit of all three.
The tourist area was full of incredible antique shops and open markets trading in their trappings of wealth for hard currencies. The happy, prosperous people who saw the writing on the wall had transitioned from owning the trappings to selling them.
At the time we read about but never really saw the elite few who had the ability to invest in other currencies but still lived in Argentina and were spending their valuable dollars or deutsche marks or francs as if they were kings.
Back in the 80s Mrs. Ego went to university with many of the children of Argentineans and Venezuelans. Rather than living in the past the parents used their declining wealth to send their kids to school in SoCal. The kids were tasked with figuring out how to set up lives here and bring their parents. We know some who succeeded.
Our approach is multi-pronged. A little bit of all three.
Re: ERE in an economy like Argentina?
Live near the border so you can do your banking and finance in a more stable country.
Re: ERE in an economy like Argentina?
Like all of South America, Argentina has vast wealth controlled by a tiny elite, serviced by a shrinking middle class, and politically lurches between unstable populism and brutal oppression. Argentina does have enormous geographic advantages, it could have been a great world power. It was briefly the worlds wealthiest country circa 1900, but that was because Britain was basically running the show. Until Argentina overcomes the quasi-feudal culture it inherited from Spain it will continue down the path of instability, inequity and failure. It should probably apply for EU membership, it worked wonders for Spain.
Re: ERE in an economy like Argentina?
I would also want to set some limits on what I was willing to tolerate and set some boundaries to keep safe (versus trying to change the system or anyone else). For example, having a home safe and guard dog/security system (and keeping a low profile) would seem prudent. If armed home invasions were taking place despite people being responsible, I’d leave rather than hire an armed guard. The personal accountability piece would be huge. As Harry Browne said, “There’s always a cost” and paying it sooner can be more skillful in the long run.
Re: ERE in an economy like Argentina?
come to Poland to train in better (at the moment) conditions 8)
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Re: ERE in an economy like Argentina?
No, that would be Pareto inefficient although growing some food is never a bad idea. Lets say you grow $100 worth of food and buy $50 worth. Then 10% inflation on market prices is $5. That is negligible. Worry about the $5000 bill/tax that went up to $5500 ... and that's what the TIPS are for.
Re: ERE in an economy like Argentina?
Leaving is going to be the best option for many, especially as most Argentina's are of Italian descent.
Re: ERE in an economy like Argentina?
Acquiring citizenship takes a long time. The waiting time for a consulate appointment here is now nearly three years. That is after all of the documents are collected, a process that took me more than a year and a half in the US. I would imagine it would take longer to get documents about long-dead relatives out of the Argentinean bureaucracy, if it were possible at all. Once approved there is another very long wait time to get a passport. This is something that would have to be pre-planned, not spur of the moment.
Although I imagine many have been planning to leave for years.Re: ERE in an economy like Argentina?
This is what Mrs. Ego's family did. Most of them have dual citizenship so no difficulties. Those without US citizenship got caught up in the anti-money laundering account closure wave in 2015. Caution with governmental whims.
True. Though many young Argentineans gave up and left. They are roaming around working illegally just about everywhere in the world. A few years ago I mentioned we were seeing them wherever we went. They were trying to find some toehold or marriageable person to give them a way to stay.
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Re: ERE in an economy like Argentina?
It was in Barcelona around the time you were there Ego. We went to a strip club (I was curious what they were like so some boys took me) and it was full of South American girls. Turned out it doubled as a brothel. I was concerned about sex trafficking although it seemed a reputable-ish establishment. I believe prostitution is legal and regulated in Spain.
Re: ERE in an economy like Argentina?
A few years ago I was friends with a Brazilian diplomat posted to the Baltics. What he revealed opened my eyes a bit about realities of life in high-inflation countries:
The Brazilian foreign service paid their diplomats in USD, to US bank accounts.
Now that's one way to retain your highly qualified staff -- and completely bypass the issue.
The Brazilian foreign service paid their diplomats in USD, to US bank accounts.
Now that's one way to retain your highly qualified staff -- and completely bypass the issue.
Re: ERE in an economy like Argentina?
I'd say a right answer is to make sure you maintain the possibility to leave Argentina/the hyper inflation area whenever you wish, and to leave on the first warning signs of that not being the case anymore.
Look at historical examples. Jewish history in particular has a few very sad, but instructive episodes in this regard.
Limit your local physical assets. Maintain a high net worth outside the country. Get and maintain a second passport. Bonus points for a passport from a geographically unrelated country with a large military.
Look at historical examples. Jewish history in particular has a few very sad, but instructive episodes in this regard.
Limit your local physical assets. Maintain a high net worth outside the country. Get and maintain a second passport. Bonus points for a passport from a geographically unrelated country with a large military.