I’ve made a number of really good long-term investment choices over the course of the last seven years, building my Full-Time Fund in the process.
It’s this Fund – my real-life portfolio – that generates most of the five-figure passive income I need to cover my basic needs (shelter, food, transportation, etc.) in life, rendering me financially free as a result.
I’ve often thought of how I might answer someone if they were to ever ask me what my best financial investment has been.
It’s not an easy question to answer.
First, one must decide what they’re looking at.
Aggregate dividend income?
Dividend growth reliability?
As a dividend growth investor who prefers investing in businesses that have both the wherewithal and commitment to paying and increasing an appealing dividend to its shareholders, total return isn’t really a priority for me. I rather believe that an impressive total return is a natural byproduct of investing in wonderful businesses. If you invest in the best companies in the world, you can’t help but do well over the long run, assuming you’re reasonable with valuation at the time of investment.
One would also have to consider the size of the investment. And the time horizon. And the lack/prevalence of headaches.
A large investment that’s done really well over a long period of time with no issues would, for me, trump a slightly better investment that’s much newer, smaller, and problematic.
But to each their own on this question.
However, it’s all moot for me.
That’s because there’s one financial “investment” that’s done far better for me than any others. I mean, it’s not even close. It’s absolutely slaughtered any other financial move I’ve ever made. And it required very little capital, which is perhaps one of the best features of this investment.
This investment cost me just over $600.
And it “returned” me about $700,000.
Can you guess what it is?
I’ll go ahead and tell you.
It was a plane ticket to Thailand.
You might be confused at this point.
So let me explain.
See, as I recently discussed when I shared my real-life expenses for life (a rather active and full life, at that) in Chiang Mai, Thailand, my purchasing power here (relative to the United States) is about three times higher. Said another way, my lifestyle as it exists here would cost at least three times more in the US.
My money goes three times further here. At least three times further.
Logic would then follow that my passive income has been magically and instantaneously tripled in local purchasing power terms. Thus, my portfolio essentially tripled, too.
My portfolio would have to triple from where it’s at now in order to produce triple the dividend income (assuming the same yield) – and that’s what would be necessary to live as I do, in the USA.
Doing the math on this, my plane ticket was $620. My portfolio value is currently roughly $350,000. Tripling the value of that portfolio (and the passive income it produces) would require another $700,000. Getting $700,000 out of $620 is a return of almost 113,000%.
As such, my move abroad made me a millionaire overnight.
That’s because I’d have to generate the passive dividend income a $1 million+ dividend growth stock portfolio would produce in order to replicate my Chiang Mai lifestyle in the US. And I’m not even factoring in the tax and health insurance savings, both of which would be monstrous if I were to return to the US as a millionaire businessman and investor.
That’s the advantage of geographical arbitrage.
The crazy thing about it is that I’m not even living that extravagantly here in Thailand.
But it would take all of the passive income a $1 million+ portfolio would generate in order to live in a furnished apartment in the middle of a great neighborhood in a premier US city, eat out for every meal, visit the best spots for entertainment, meet up with like-minded individuals regularly for food and/or coffee, and otherwise just not care one second about spending.
Of course, much of the reasoning for my permanent relocation overseas has nothing to do with money. And I wouldn’t want to come back to the United States no matter how much money I had. Nonetheless, it does feel good to know that I was able to substantially improve my freedom, flexibility, and financial capabilities in one fell swoop.
I’ve made some great investments in my time. Moreover, most of my best investments haven’t been financial at all. However, I must say that my best financial investment has most certainly been a $620 plane ticket out of America.
What’s the single greatest financial investment you’ve ever made?
Thanks for reading.
Image courtesy of: bplanet at FreeDigitalPhotos.net.
P.S. If you’re at all interested in becoming a dividend expat, or even just becoming financially independent, there are a number of resources that are invaluable toward that end. Definitely check them out!