Being International and The Future

When this forum started someone commented that we were getting ‘a nutter a day’, but those days are gone and this has become a great source of advice. Thanks guys!

Now, to business! (A toast.)

Here’s the thing. ‘My friend’ is something of a wanderer. He hasn’t set foot in the country of his birth (the UK) for ten years, and has no ties there - no property, to investments, not even a bank account. He has operated an account in New Zealand for some five years and has credit cards etc., but is not a legal resident of that country.

He has been in TW a couple of years, and will probably be here for a couple more. But in a couple of years he’ll be, and this is a terrible thing to say… 40 years old!

No wife, no kids, no pension, no permanent home, no long-term plan. He has enough money in the bank to pay living costs for a few months if everything goes pear-shaped, but that’s all. And his work situation is somewhat erratic. He tends to have numerous p/t jobs going at once, and takes on occasional other projects from time to time - mostly teaching. While this may seem a bit scary for those who rely on the next paycheque my friend is cool with the day-to-day reality. He’s confident of his ability to support himself as he goes along.

The problem is the long term. Assuming he disciplines himself to work more than he absolutely has to, and has surplus money to invest for his future, he’s a bit lost when it comes to the best investment.

It’s all very well to recommend, for instance, the S&P500 - but what will the $ be worth in twenty years? Or the Euro? Or the RMB? What will be the relative cost of living in different areas of the world by then?

It’s very easy to have a long term plan when you are expecting to be retired in one particular place - ie Taiwan or your homeland. But when the world is your home the picture gets very messy.

I have another friend who plans to buy a beach in Indonesia and be semi-retired at 40. Is this the way to go? Or should he put his money into, for instance, the US property market and hope that a) those price rises are sustainable, and b) the $ is still worth something when he is old.

Another issue is the relatively straightforward one of banking and regulation. Banks like stable characters with ‘standard’ lives. You need to fit a profile to use many of their services, not least because they are often linkes to tax laws. Many investment products take advantage of tax breaks to improve their profitability, but if your tax ‘residency’ is in a succession of foriegn countries and you have no ‘domicile’ then you may not be eligible to use them.

Recommendations for banks that are set up to cater for non-millionaire itinerant expat’s, anyone? HSBC?

Thanks

Diversification is the key to being able to survive anywhere. If he has a particular country in mind for retirement, primarily investing there would probably be advisable – even if that country goes down the toilet, the investments would still be worth something locally, while if it rises, it would prevent him from being priced out.

But investing in other economies AS WELL will give better returns over time, overall. I like Japan right now, and while Russia is scary, their banks were paying 17% interest last I heard – inflation is eating most of that, but the returns are still better than the 1.x% that American banks are paying on savings.

Indonesia isn’t the most stable place, and I’m not so sure about the U.S. real-estate market (although Sarasota, Florida seems a LOT more sustainable, price-wise, than Seattle, Washington). There are no guarantees. Indonesia could become a very inhospitable place, if Islamist wackos turn it into a religious dictatorship; Sarasota could be pretty iffy if Islamist wackos dust it with anthrax spores. Ya pays yer money and ya takes yer chances.

Tax issues, you’d have to take them on a case-by-case basis. One of the attractions of a residence in the U.S. is that you can write off the interest portion of your mortgage on your primary residence – but that would mean that you (a) have to be paying U.S. taxes on the money to begin with, and (b) are living in that house. U.S. real estate becomes less attractive if one is a foreign absentee landlord. . . .

Salting as much as possible away is a good idea. HSBC demands that you have NT$300k in an account at all times, so I would try Standard Chartered instead.

You get both European and US index funds - then you are saving in both US$ and Euro, they can’t both go to hell at the same time.

A brokerage account with etrade is a good start, as that can be done for non residents/non citizens of the us.

I would wait buying a beach in Indonesia until I could write off the loss without it viping out a substantial parf of my savings in case of severe political upheavals there.

There are many tropical beaches in many parts of the world, and cash will get you a beach, but a beach will not always give you cash.

Cash money earning 1%, or invested into something through them? In NT$? Or converted to other currencies?

I’d hate to have that kind of money just lying around, but wouldn’t object to it being properly invested.

Cash money earning 1%, or invested into something through them? In NT$? Or converted to other currencies?

I’d hate to have that kind of money just lying around, but wouldn’t object to it being properly invested.[/quote]

First optionl, but I think you can invest them in some of their schemes.

BTW, here’s an interesting article which touches on some of the housing trends that I considered when selling my house:
story.news.yahoo.com/news?tmpl=s … california

[quote]
AUSTIN, Texas

We are all at different stages of our lives and living on different incomes. So there is no such thing as one advice fits all.

By there is a rough benchmark or ball park figure: (USD$500,000) to live an affluent life or retire comfortably.

Someone who can afford to buy a beach in Indonesia before they are 40 - I am assuming the beach is at least half a million US dollars - then I think he can be classed as suitably affluent to benefit from Private Banking.

The couple example from above quote can also benefit from Private Banking. [quote]Gallagher, a 36-year-old software engineer, plans to move to Denver this summer with his wife, Lora, and their three young children. They expect to sell their “very, very average” 1,400-square-foot home in Chino Hills for at least half a million dollars. Considering they bought it six years ago for $175,000, they’ll reap quite a profit.
[/quote]

We are at an age when people live “too” long and can still function at 80 if you exercise correctly,and eat modestly, and live with at least a partner (husband/wife) to share your emotional troubles.

With proper planning and $500,000 USD to “start”, you don’t have to scrimp and save for the rest of your life because you know how much you can spend without going “out of budget”, how much you must put away each month to invest to ensure a worry free life.

Part of the planning is that you expect your life to be different after 40, At the very least a second income.

So the hardest thing in “financial freedom” is saving or reaching the first or initial “critical mass of money” which will be re-invested for a self-sustaining, indefinite supply.

The nice thing about having money, or at least half a million USD, is that even if you don’t know anything about money, someone else, a professional, would be willing to help you for a fee.

The flip side, the English teacher with NO savings, nothing much in terms of “assets” to show for himself after some 40 years of roaming on earth, no wife and no kids, etc… the story is not that simple. :noway:

We need to pool our “heads” together to find a “future” for this English teacher. :help: The number of able-bodied young men/women joining the “low tech”, “low skill” labour force is increasing at least in Asia. So this teacher’s income is not an upward curve. As long as your job can be automated, computerised or replaced by someone younger and cheaper from the third world or sometimes even more “qualified” then you are equally doomed.

Aside from money if you already have a beer belly, hypertension, high blood pressure, balding, impotent etc… chances are not good even “physically” that he will be able to perform beyond 50 or continue like he was doing before 40. :blush:

Half a mil is nothing. The current estimate for “fuck you money”(*) is about US$10,000,000. Then again, it was US$5,000,000 only a few years ago.

(*) old Microsoft button – “FYIFV” – “Fuck you, I’m fully vested”.

firstly,

I am not sure what this has to do with Microsoft. Are they into financial planning.

Anyway I disagree with the maPoSuid; there are some truely honest and law abiding investment bankers or private bankers able to help someone who is moderately rich along the path of financial freedom. I just haven’t found one person who use the same one for 10 years. They are definitely not all sharks and hoping to pocket your money on the sly. I think posters here should be encouraging instead of putting everyone off with unreasonable amounts most people couldn’t possibly have earned themselves before they are 40. What the point of that?
I think half a million is still reasonable and a true achievement for most people. Twice that would be even better.

[quote=“drambuie”]firstly,

I am not sure what this has to do with Microsoft. Are they into financial planning.[/quote]
Er, no, we were discussing retiring early, I thought. The standard in the techie community is often called “fuck you money”, after the button made famous at Microsoft. Pointless aside, other than that half a mil is just a start, and one needs to save if one is going to retire well.

I have no idea where that came from. Sure, save money and do retirement planning. Where did I ever say anything about sharks and dishonest planners?

The real reason I dug up this thread was to add this commentary on the U.S. housing market:

story.news.yahoo.com/news?tmpl=s … use_prices

[quote=“AP Business”]WASHINGTON - U.S. house prices are likely to grow at the slowest pace in more than three decades as interest rates climb and land prices take a tumble over the next three years, researchers at the Federal Reserve have estimated in a new study.

The study, published on the central bank’s Web site recently, asserts that if U.S. disposable income and short-term interest rates climb as much as Wall Street expects them to, nominal existing-house prices would increase a cumulative 2.6 percent over the next three years. That would mark the lowest rate since the government began keeping records in 1970. The number implies high odds that house prices will decline in inflation-adjusted terms.

The conclusions validate the unease of many private economists who fear the U.S. housing market, having benefited recently from rapid price gains that helped maintain strong consumer spending through a recession, may become a source of economic instability as interest rates climb.

“Of primary concern to some analysts is whether the recent run-up in aggregate home prices will be somewhat reversed, much like the 1985-90 and 1990-1995 experience,” when inflation-adjusted house prices declined in several major metropolitan areas, write the authors of the Fed study, Morris Davis and Jonathan Heathcote. Davis is a Fed economist; Heathcote is an assistant professor of economics at Georgetown University.

They conclude a reversal of those magnitudes

Here is what it is to be international and “our” future.

ps-pardons to our non-US/North American Forumosans.

[quote=“lsieh”]Here is what it is to be international and “our” future.

ps-pardons to our non-US/North American Forumosans.[/quote]
It’s kinda a hijack, Isieh. But: yeah, why do you think I’m here? They offshored all the software jobs, so I offshored me.

Indeed MaPoSquid… I saw the handwriting on the walls and decided to make the hop across the ocean. Different and more promising opportunities were to be had here than back in the States. Could be a one way ticket for all I know. Life is an adventure.

:s A sign up form for the New York Times? I can’t be bothered registering at yet another site just to find out what you’re talking about. Please clarify.

Thanks.

Stragbasher,

The article, “A Young American Outsources Himself to India”, was talking about how this American “outsourced” himself to India. He went to India, bringing his skills, experience and intelligence to help Infosys and himself. Given the transformation in white-collar jobs and services outsourcing, he only thought it made sense to go where the jobs were. Cosmopolitan “villages” are popping all over India as multinational companies redefine their business models, seeking greater integration of world talent with home-grown talent.

The gist of the article was the continuing globalization and integration of the world’s economies, means that you may be better off having a job in a different country than the one you lived in, graduated school from etc.

I’m a member, so I did a quick search and copy/paste for you Strag…

nytimes.com/2004/07/17/inter … 7fpro.html

A Young American Outsources Himself to India
By AMY WALDMAN

Published: July 17, 2004

ANGALORE, India

THE rooftop terrace at Cosmo Village was crowded with young partygoers savoring the temperate night air, oversize Kingfisher beers, and their place in this moment of global economic convergence.

At one table, five friends from Singapore sat with a 6-foot-3, 23-year-old anomaly: Joshua Bornstein, perhaps the only native-born American among the Bangalore-based employees of Infosys Technologies, one of India’s software and services giants, and one of the few Americans of his generation in Bangalore.

For all the complaints about American jobs migrating here through outsourcing, few Americans have thought to follow them. Eight months ago, Josh Bornstein did.

He quit his job at an investment banking firm in Los Angeles and came to this southern city on the Deccan plateau. He pays $110 a month to share a two-bedroom apartment with a Japanese roommate. He takes the company bus to work at the Infosys campus, as lush and large as Microsoft’s in Seattle. He has Indian, European, Israeli and Asian friends, and he has become a familiar figure on this city’s thriving pub scene. “Everyone talks about globalization left and right,” he said. “This is the way the world is moving.”

Perhaps so, but he is the only one of his friends in the United States who even considered going to India for work after college.

He has become a member of a cosmopolitan village that has formed as multinational companies flock here, and Indian companies try to become multinationals. The city is full of foreigners - 10,000 to 12,000 are registered here with the government’s office of foreign registration. At some bars, the crowds are so mixed they look as if they could be in London.

The foreigners are staffing multinational companies and filling five-star hotels to overflowing. Those here for longer stints are living in exclusive housing complexes, and international schools are springing up for their children.

Few Americans are among them, even though previous generations of young American graduates have pursued literary careers in Paris or tried to take capitalism and democracy to Russia and Eastern Europe. India would seem a logical next choice, given an economy that grew by 8.2 percent last year, a software and services sector that grew by 28 percent last year and the way outsourcing is rewriting the rules of the American and the global economy.

But most Americans still feel India can teach them more about spiritual practices than business models. Not Mr. Bornstein. On his first weekend, he met a Westerner who said he came to India because his guru told him to. “I can’t really relate to that,” said Mr. Bornstein, who was raised in Chicago.

HE first learned about Infosys, which has 25,000 employees, through its summer global internship program, which this year received 8,500 applications for 75 spots. Mr. Bornstein ended up being one of them in 2001 when a summer job in San Francisco fell through after the high-tech economy tanked. A friend told him about Infosys, and he figured it could be his only chance both to go to India and to get a summer job.

The experience helped him collar four job offers after graduation from Claremont McKenna College in Claremont, Calif. He chose an investment bank in Los Angeles, which he found too hierarchical. Miserable there, he got in touch with his old boss at Infosys, and soon had a job in Bangalore.

He works in corporate planning, helping seven units hone their business plans, and regularly sits in on meetings with the Infosys chief executive, Nandan Nilekani, and other senior executives.

Infosys is one of many companies whose gain has been American software programmers’ loss in this era of outsourcing. Mr. Bornstein extends his sympathy but wonders why Americans so readily accepted the “made in China” label when that cost “thousands or even millions of jobs lost.”

He does not see himself as taking sides, but as gaining experience. “It is impossible I would have a similar experience in my life at this stage in the United States,” he said.

(Page 2 of 2)

He knows Indian culture places a high value on experience, and he is lucky that his height masks his youth. “I’ve lied more about my age here than I ever have,” Mr. Bornstein said. “Honestly, I don’t know if Nandan knows how old I am.”

As it turns out, Mr. Nilekani did not.

“How old is he?” he asked.

“My God,” he said when he heard.

MR. BORNSTEIN does not dwell on whether his American identity has allowed him to leapfrog to a higher position than would be available to a 23-year-old Indian, and neither does Mr. Nilekani. As he sees it, Mr. Bornstein’s attributes of intelligence and a positive attitude are supplemented by his cultural perspective.

Advertisement

The company wants to become truly multinational and multicultural, able to win business in any country. That requires interaction with other nationalities, but most of Infosys’s 650 or so foreign employees work in the company’s offices abroad. “When the bulk of the working population is here, we also need to create some diversity here so people are comfortable in working with people with different cultures,” Mr. Nilekani said.

He said he would clone Mr. Bornstein if he could. He has a boy-next-door appeal, a studied pace of speech that suggests a brain at work.

He brings an unusual adaptability: a curiosity toward, but no critique of, other cultures. Sixty percent of his Indian friends’ marriages were arranged. He wonders if the pressures to please a large family outweigh the option of pleasing oneself, but resists the temptation to pass judgment. “If someone is happy doing that, it’s not my role to criticize.”

More than cultural differences, more than power outages and rough roads, he finds the extremes of wealth and poverty hard to take, feeling guilt at having mastered the skill of ignoring the beggar in front of him.

His parents, a lawyer and an academic, fostered independence and a sense of responsibility in Mr. Bornstein, their eldest son. They, like their son, favor what he calls the “calculated risk.” At one point, his father, tired of Chicago, moved the family to Colorado with no new job. It worked out fine.

Mr. Bornstein describes himself as “marginally kosher.” For Passover, his parents sent food; Infosys provided a cook so he could keep kosher.

He works 10- to 12-hour days, but lives well. His salary is less than a third of what he earned in Los Angeles but he is still able to save a few hundred dollars a month and afford the Champagne Brunch at the Leela Palace hotel, where the French chef is a friend. “I’m enjoying myself,” he said.

There is only one problem. Mr. Bornstein’s girlfriend of five and a half years is in the United States. His plan was to stay two or three years; she does not want to wait. These are days of decision.

Whenever he leaves, though, his legacy is already secure: he is devising a recruiting plan so Mr. Nilekani can lure more Americans to Bangalore.

Thanks guys. Interesting article.

The question is, what will Mr B (or my friend) do in future decades? Is saving the surplus from an Indian salary going to secure you a decent future? If so, where?

The answer to the first depends hugely on that happens in the global economy over the long term. Will the US (or Europe) be wise places to put your money compared to the new boom economies? In thirty years will your money be worthless if you buy $s? Will you wish you had invested into India, and picked up some cheap property in LA after the earthquake? Or will you be glad that you kept away from the bubble, didn’t get caught when it burst, the western world maintained dominance, and start shopping for a nice cheap island of your own in Asia?

Make the right decisions now, and you can retire anywhere you like. Screw it up and you may be condemned to live in an impoverished nation, still scrabbling for a living until you die.

Yes, all really good questions.

See this article to some thoughts about them. Again, pardons to the Non-US Forumosans.

Reprinted below.

July 18, 2004 ECONOMIC VIEW A Growing Force of Nonworkers By EDMUND L. ANDREWS

WASHINGTON

IF President Bush was correct when he asserted recently that the economy was strong and getting stronger, why are so many people not only out of work but also not looking for jobs?

Mr. Bush noted with evident relief that the nation had added 1.5 million jobs since last August. Senator John Kerry and his supporters complain that the country still has about a million fewer jobs than when Mr. Bush took office.

But neither statement captures properly the shortfall of jobs that has built up over the last three years. An accurate estimate is not one million but four million, and possibly higher.

Consider just one figure. Since June 2000, according to the Bureau of Labor Statistics, the number of adults considered “not in the labor force” - those who don’t have jobs and are not looking for them - has grown by about 4.4 million, to 66.6 million.

The political significance is obvious: if the shortage has been formed by millions of additional discouraged job seekers, Mr. Bush will have a much harder time persuading voters that the economy is heading in the right direction.

The economic issue is important in its own right. If the United States has a huge reserve pool of workers, Alan Greenspan and the Federal Reserve may be correct in asserting that the economy has room to expand without big wage increases. That would reduce inflationary pressure and allow the Fed to raise interest rates slowly.

But if workers are being displaced by more fundamental forces, like a growing mismatch between their skills and the needs of the marketplace, the pool of untapped labor could become a cauldron of frustration and resentment.

First, the numbers. According to the Bureau of Labor Statistics, the nation added 112,000 payroll jobs in June, for a total of 131.3 million. For those watching Mr. Bush’s scorecard on jobs, that total is 1.5 million higher than it was last August, and down 1.2 million from a peak in March 2001. But the recent increases greatly overstate the job growth.

The United States adult population has been growing about 1.4 million a year. Even if a third of those extra people don’t want jobs - choosing, say, to be stay-at-home parents - the potential work force would still have expanded by more than three million since the start of 2001.

The unemployment rate would be much higher than the current 5.6 percent, except that millions of people have dropped out of the work force. In a downturn, it is normal for many people to become so pessimistic that they stop looking for work. It is also normal for them to jump back into the market when prospects improve.

But in this recovery, optimism remains muted. The “labor participation rate,” the percentage of people who either have jobs or are looking for them, has barely begun to revive after dropping sharply since 2000.

Among adults in their prime earning years, ages 25 to 54, the work force participation rate has dropped to 82.8 percent from 83.9 percent in 2000. That may seem a minuscule decline, but it is the lowest rate since 1987, and it translates into millions of people. In June 2000, the Labor Department estimated that 62.2 million people over the age of 20 were “not in the labor force.” By this June, the number had jumped to 66.6 million. The extra 4.4 million amounted to more than half of the 8.2 million people officially labeled unemployed.

Economists say the trend is beginning to reverse, as people become more optimistic about job prospects.

“It’s pretty clear that employers are starting to hire again,” said Jared Bernstein, senior economist at the Economic Policy Institute, a liberal research organization. “Even the most cautious employers are being forced to pull the trigger.”

Even so, job creation has not come close to the pace reached in previous recoveries, including the “jobless recovery” of the early 1990’s.

There is a curious countertrend to the muted picture, but it may not be encouraging: the one group that is working more than ever is people older than 60.

Because people remain healthy far later in life, it is not surprising that more are working past the traditional retirement age. According to a recent survey by AARP, 80 percent of baby boomers said they expected to work at least some after they retired.

But many older people are also working because they need the money - because their pensions are too slim, their debt loads too high or their savings too meager. Whatever the reason, older people snapped up about a third of the 1.5 million jobs created since August. About 250,000 went to people 60 to 64 years old, and about the same number to people 65 and up.

The evidence, meanwhile, suggests that the jobs being created pay less than the old jobs that were lost. Stephen S. Roach, chief economist at Morgan Stanley, estimated that 44 percent of the hiring from February to June was in lower-paying jobs and that 81 percent of total job growth over the last year had been in lower-paying occupations like retail sales and transportation.

“A likely persistence of low-quality job creation could jeopardize sustained economic recovery,” Mr. Roach wrote recently. “To the extent that it legitimizes perceptions of worker angst, it could also turn into one of the biggest issues in the upcoming U.S. presidential campaign.”

WHITE HOUSE officials say that there is no reliable data on whether people are getting good jobs or bad jobs. And though average wages in expanding areas like hospital care and retail sales are lower than in shrinking areas like manufacturing, real income has historically increased even as the industrial mix has changed.

The deeper question is whether American workers have the skills they need for higher-paying work.

Mr. Greenspan has repeatedly warned that the United States faces a growing mismatch between the oversupply of low-skilled workers and the unmet demand for people with specialty training. He has pleaded for big increases in spending on community colleges and vocational training schools. The Bush administration has provided some extra money, but the effort has been long on fanfare and short on cash.

If Mr. Greenspan is right, and if nothing changes, the implications could be grave. The real level of unemployment would remain elevated. Income disparities between the low skilled and the highly skilled would widen. And that reserve of workers deemed not in the labor force would remain on the outside.

Copyright 2004 The New York Times Company