I have three brothers living in Norway, all with their own lifestyles, political views and general outlook on life. Considering our common background, it's interesting how our personalities have cut out different paths for each of us, not least in our approach to wealth management. We have each received one quarter of our father's fortune to manage, and the degree to which we've succeeded is starting to show.
My chosen path is the most radical, with two features that distinguish it from the paths of my three brothers. I moved to Portugal where the cost of living is one third of what it is in Norway, and I've cut my tax burden to zero by ridding myself of taxable assets. I sold my house in Norway, and I've distributed my registered wealth among my three children in Norway against a promise from them that they will give me a relatively secure fixed income for the rest of my life.
The proceeds from the sale of my house was moved to Portugal where it served to pay off my wife's debt on her apartment. Additionally, we had enough cash to last us three years, and enough gold to last us twelve years if consumed to support a modest lifestyle. However, we have not consumed any of our gold. Our cash holding has helped us through a tight spot last year, and my children in Norway have sent me the money they promised.
My strategy has in short been to cut down on all types of expenses, and to keep my wealth as unregistered as possible. Hence my preference for gold as a savings vehicle. My reward has been a great deal of freedom. I can spend my days as I please, with no concern for a boss, debt payments or taxes. To me, that's as good as it gets.
My only sacrifice has been to give up on a few luxuries. But what is the value of an expensive vacation if the rest of the year is spent in an office? Not much, I would say, especially since I live in one of the world's most iconic tourist destinations. What others pay a lot of money to see, I see every day with no expense at all.
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| View of the river Douro |
My brothers in Norway have chosen more conventional approaches. My older brother has focused on capital income as a counterweight to taxation. Having cut down on consumption as much as possible, his capital income is keeping him with a lifestyle similar to mine. He doesn't work at an office. But he's not as free as I am, because his savings have been put into real-estate that he rents out to students. He has to keep an eye on what he owns, take care of repairs, pay bills, report income to the state and pay his taxes.
My twin brother has put most of his savings into a small farm in Sweden, which serves as a second home for him and his family. There's virtually no income associated with this investment, so he has to service the bills with other income.
My younger brother has taken a similar path. He owns two small summer houses. One of these, he uses for himself and his family. The other one is a passive investment with no income. He too has to service his bills with income, and spends much time at the office for this purpose.
All of my brothers live in what can be considered upper end houses, making up the bulk of their other savings.
The problem with the approach taken by my brothers is that their savings come with responsibilities, fixed costs and taxes, and recent developments in Norway are likely to make this problem all the more pressing. The state has seen its incomes fall over the last couple of years. It's expenses has also gone up, and this has prompted bureaucrats to look for ways to make up for the shortfall. As I've predicted, their eyes have turned to real-estate, because that's something that cannot be easily hidden.
Real-estate is such a visible display of wealth that it's easy for politicians to make people accept the idea that anyone with more than a modest apartment is rich and therefore perfectly capable of taking on more taxes. However, this is not the reality of it. My brothers have invested in real-estate for much the same reason that I've put my money in gold. They know that fiat money is eaten away by inflation, so they've put their savings in everybody's favorite alternative to cash; namely real-estate.
But real-estate is a trap when it comes to taxation and fixed expenses. My younger brother is spending all of his time at the office merely to pay the bills, and we know for sure that this is the case because I don't spend any time at any office, yet my savings are still equal to his, even after a decade of hard work on his part.
Had my younger brother done what I've done, he too could have spent his days doing whatever he pleases, as long as it doesn't cost a lot of money. But he didn't, and is therefore confined to his office. He's trapped, spending 100% of his office hours servicing bills.
My other brothers are in a similar pickle. They too spend most of their time servicing bills, and this is about to get a lot worse. Meanwhile, gold is doing well. It's up 50% over the last five years. Only yesterday, my local bank had to adjust the price of gold sovereigns up by 3%. I've also noticed a drain on their supply. What used to be a display of two pages with various gold products is now a relatively short list on a single page. It appears that people are waking up to the fact that gold is the best place to hide from socialists hell-bent on taxing the upper middle class to oblivion.
Gold sovereigns are called sovereigns for a reason. Anyone owning a bag of such coins can do whatever they please for as long as they manage to hold on to it, and no-one can tax it because no-one can find it. It's the only safe haven in a world gone mad with socialist envy and hate.
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| Sovereign |
By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link
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