“FU Money”: How Much Do You Need?

the concept of so-called fu money or having a walkaway fund is generally spoken about it's a way that people who have a job can tell their boss to do the old take this job and shove it or to leave a toxic partnership or a toxic work environment by having enough resources behind them to where they can go and be unemployed for a while while they find their next gig but what's typically talked about for people who have jobs what about entrepreneurs in this video I'm gonna tell you the story of one seven-figure entrepreneur who leverage the power of the legal offshore tax strategies that we talk about to build his own fu fund in a more serious way than I've ever seen before [Music] [Music] hey guys I'm Andrew Henderson if you'd like to learn how the Nomad capitalist team can personally help you implement legal offshore tax strategies do cool stuff like get a second passport or invest in emerging markets learn how we can help you at Nomad capitalist dot-com let's talk about this client of mine who's a seven-figure entrepreneur who decided to take the fu fund the fu money to a whole new level now you typically think oh you know you're a business owner you know who are you walking out on and here's a guy who owns his own business he doesn't have any partners who could go crazy on him he just owns the whole thing but he said you know what Andrew we're going through the diagnostic process together he said I'm a big believer in the emergency fund which is the idea of having a certain amount of expenses set aside in case an emergency happens right because emergencies do happen and where I come from in the US I think in a lot of developed countries even though people make very high salaries in the scheme of things around the world most of them don't have money to pay for a simple car repair or if one paycheck were late they'd be screwed I mean look at what happened when the latest US government furlough where federal workers weren't given their paychecks and they were talking they were being foreclosed on their cars were being taken away they don't every problem that could befall them because they didn't have enough money to go for a week or two without a paycheck and so here's a guy saying I like the emergency fund he says when we're talking about setting up the banks that I'm gonna use overseas he says I like the quiddity he said in fact my goal is I want my emergency fund to be a lifetime emergency fund he says if I decide one day I'm sick of doing this or something happens and my business stops generating you know people coming to it or whatever happens I said I wanna be able to retire he was uh I think 32 early 30s probably live another 50 to 60 years and he said I want to go just to be done and walk away he said it's not my goal but I just want to be covered and so what was interesting about this is here's a guy seven-figure Entrepreneur making about a million to a year about a hundred thousand dollars a month living in New York not City but state and so I think was paying you know I mean it was getting up there in the high forties percent in terms of tax even with some deductions I don't know forty six percent or something like that so he's given about I was a half a million dollars a year away in tax you still make it a good income I no crime you know everyone's gonna say Crimea every maiden seven hundred grand but it's expensive to live where he lives in New York there was no city tax but he lived somewhere nearby so it's not a cheap place to live and you know he was certainly saving some money but what we did was we said okay let's look at this from two directions okay if you live overseas you're gonna pay some tax but let's say we let's say it's a you know 150 a year okay so you have an extra three hundred and fifty thousand dollars a year roughly to play with and on the lifestyle side you know let's say we can keep your lifestyle the same you know really nice level but we can probably save you a hundred grand there it's nice an extra four hundred and fifty thousand dollars a year that's basically you know needs to be put somewhere and so by stepping out of the the paradigm of having to live in the New York area but we're able to say alright well where do you want to live and we went through a whole bunch of places that's kind of irrelevant basically live some of the costs a lot less and so we said all right you know let's not look at living like a king in New York well let's also not look at being a popper okay how could you live in like a normal emerging place and so we figured that you know he could make about forty five you could live about forty five thousand dollars a year now that's not his current lifestyle you know he's not flying business class around the world and it's not you know eating red caviar every night and all that but you have a nice lifestyle and so what we decided was let's give it a two year horizon okay let's take four hundred fifty thousand dollars a year put that in a bank account not at 0.6% but also not at the 6% or 7% you can make in some emerging economies but they'll split it around different banks I think we're gonna figuring out you'd get about two-and-a-half or three percent yield all told just cuz he wanted to keep it in banks okay so with a series of banks that would do that he would put that money in the bank for two years this and next year at that point his screw-you fund would be you could draw the money down to where at the time of his death I think we figured 50 years from now so it might be a little short if he lives past 82 but we figured out he could basically draw down the forty five thousand dollars a year that he needs they would need to live this more Spartan but still halfway decent lifestyle in some of the places that we talked about you know Kuala Lumpur certainly get to blee si or Istanbul or even a lot of the places in Europe you know Lisbon for example you know you could factor in some inflation there but you know basically it's something he wasn't able to do is easily living in a place like New York at least to keep up a decent lifestyle and so through this combination of you know tax savings and cost of living savings and being open to living somewhere else overseas he was able to dramatically do this now you say hey he could stay in New York and he could he could scratch together the same amount of money in three or four years but he wouldn't be able to live in New York going forward and so I think the beauty of this show is that by keeping more of your own money you can accomplish goals much faster now if you are sitting in New York you might say oh that's a suboptimal use of money okay that's a word that has come up sometimes in this channel when we talk about you know buying homes that you live in a couple months a year for example well here's the other thing this guy can take the money that he would have been saving in in in the United States now he's just saving the cost of living the tax savings he can now take that money can buy a house or two houses or three houses and he can set up his trifecta bases around the world with the other money so he can do both at once he can accomplish two things at once whereas in the US you'd only accomplish one so now he has his multiple bases he's paying cash for so now he's reducing his cost of living not only now but in the screw-you fund example because he no longer has a rent payment so now he can control a standard of living by buying a property from which the rent would be going up in value over the next 50 years and and keeping that in check all while also saving this cash is that suboptimal well number one he's only taking two years out of his life he's 32 years old he's making a lot of money the other thing is now I think that for him you know psychologically he can be much more focused on growing the business because now he has what he wants he feels comfortable you can walk away forever and there's a money that's sitting there exactly for that purpose the money has that name on it and it'll collect a few percent of your interest and if he never uses it you know either every year the the drawdown amount goes up or it becomes a retirement fund or he gives it to his children or to the whales or whatever he wants to do but the point is you can do things by dialing in the conservative side of your store of your money strategy with the tax and cost of living savings you can then afford to go out and do more lifestyle investing or more aggressive investing and so by going offshore what we found with people is you know you cover the conservative side you put some cash in the bank you get your gold you get your crypto you get whatever it is that you want to do that makes you feel comfortable and then you go out with the extra money you have and you do some stuff that's more aggressive you invest in more emerging markets including some stuff that I always incent a pretty conservative quite frankly you know to me investing in city centers in frontier economies 20 years from now I think you'll generally be okay you know barring some massive coup so you're basically getting dependence of the benefits of both worlds you're living a conservative life but also having money to go out and be more aggressive that is the benefit of keeping more of your own money because most people even entrepreneurs even the seven-figure level isn't it interesting how in our own countries our expenses rise with our income we go and spend more money right the more income Rises the more taxes we pay not only the amount we pay with the rate gets higher and higher as you go you get to keep less of your money I think that actually also demotivates a lot of entrepreneurs because they say and I'm giving away half of this money why should I learn anymore so there's also that but really you get to do a lot more things you have to accomplish a lot more goals you get to do it a lot faster and because of that you get to accomplish I think some of these these psychological goals that may not be financially optimal but that actually help you be more productive that to me is a case study for why going where you're treated best is so thou how can nomads capless help you four ways number one subscribe to our Channel and click the notification bell to make sure you get our new video every day number two get a copy of nomads to capitalist the book you'll learn a lot of my personal experiences over a dozen years of studying this stuff as well as exactly some of the strategies that you can use to build your nomadic capitalist plan number three if you're not sure where to start but you want to come and learn from my team and I you want to come and mingle with like-minded people learn more about our live conference Nomad capitalist live it's coming up soon and number four if you want some help right now because you've got a burning issue you need something solved you want to lower your taxes get a second passport or build 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Channel: Nomad Capitalist

Views: 36,673

Keywords: emergency fund saving, dave ramsey sinking fund, how much money do you need to retire, retirement planning, entrepreneur funding, entrepreneur advice, millionaire mindset, high networth individuals, high net worth wealth management, wealth management, retiring wealthy, savings account, retire wealthy, retire early, retire young, retire rich, retire rich with rentals, retire rich at 27, how to retire fast, retiring early, retiring at 30, retiring early what to do

Id: OvY9XuAS0DY

Length: 10min 41sec (641 seconds)

Published: Sat May 02 2020