Being a tax accountant and tax adviser and

Being a tax accountant and tax adviser and having a range of different types of clients who are expats, what I would say about wealth protection, asset protection, asset growth, and portfolio management is that there are challenges for Americans when they have a lot of assets abroad.

 

There's a fair amount of filing requirements that are needed in the reporting of financial accounts. In addition to that, there are potential penalties involved when you invest in foreign mutual funds. We generally do not advise US expats to plant a significant amount of their portfolio assets (not including real estate) in foreign countries. 

 

There are three main reasons for this. Number one, the reporting requirement gets very complicated.

 

The second reason, depending on the country you're in, is that there could be potential country risks. Certain countries are not as stable. For example, if you look at the country ratings on the Internet, the US government has a triple-A rating. Other countries in Western Europe also have very high ratings. 

 

When you get down to Third World nations, you don't know the political and country risks that are involved. If, for example, you have a lot of assets in Venezuela, things could get very ugly. You can lose access to those assets or there could be massive devaluation of those assets. There's a fair amount of country risk that you should be cautious about before you put a big chunk of your estate outside of the US. 

 

Third, we always say, "Don't put all your eggs in one basket." There's a very good reason for that. When we talk about a portfolio for expats, most expats have money in the local country because a large part of their expenses are local. 

 

When you manage a portfolio, you want to have a good mix of asset types. This goes for international exposure as well. There's a combination of, "How much country exposure do I want to have?" along with the additional dimension to a general portfolio mix in a purely US-based portfolio, where you may have a portion in large caps, small caps, long-term bonds, short-term bonds and money market-like assets that are much more accessible and more liquid.

 

(Antigua, Guatemala, pictured.)