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.
Total return?
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?
No?
Okay.
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!
That’s a very neat way of looking at buying a plane ticket. All joking aside, brilliant move (literally)!
Enjoy the time in Thailand.
Team CF,
The ROI on that plane ticket has been incredible. 🙂
Thanks for dropping by!
Cheers.
How do taxes work? Do you pay taxes as an American or in the new country?
Eric,
I discussed this a bit here:
https://www.mrfreeat33.com/three-reasons-why-you-may-want-to-become-a-dividend-expat/
But I don’t/can’t delve into taxes too deeply, nor do I care to. It’s a highly individualized topic. And it’s frankly boring to write about. Two people are unlikely to have exactly the same tax situation, which means I’m not able to provide a lot of value/insight via an article anyway. Coaching is a far better platform for the discussion of taxes.
I highly recommend to do your own research on the subject of taxes, regardless of your living situation.
Best regards.
That is an easy one for me. I got my accounting degree and CPA in 1986. Net of some scholarships and earnings from a summer internship it cost me well less than $10,000 for the entire 4 years. I can’t even begin to compute the ROI on it, but I’m sure no other investment I have made comes close. Tom
Tom,
That’s great. Nice work!
College was the complete opposite for me. It was waste of money and time. It goes down as one of the biggest financial mistakes I ever made. Learned some lessons, though, so it wasn’t a complete loss.
But if you want a long career and need a degree for it, there you go.
Best regards.
Understand Jason. You are not alone in your thinking on higher ed. It’s so much more expensive now and to put that decision in the hands of 17 year olds is not always good. It’s easy to make a mistake and waste a lot of money. Tom
The fees for the 4 CPA exams plus the “good” (Becker) study materials alone will cost about $4k these days. Tuition cost is a mixed bag obviously, but with two years at a community college + two years of in-state undergrad tuition + one year of graduate school to get those required 150 credit hours, you’d be getting by on the cheap if it costs you less than $50k to get your CPA.
That’s if you don’t realize halfway through that it accounting is not for you. Not really the best vocational process to put 18-23 year-olds through, IMHO.
What’s the single greatest financial investment you’ve ever made? Started to read your blog. Best thing I have ever done.
FV,
Wow, man. That’s almost overwhelming for me. Thanks so much for saying that.
You made my day! 🙂
Best wishes.
🙂 I am happy to hear. It is the truth!!
Hi Jason,
Thanks for an excellent article, Very interesting way to analyze the benefit of geographical arbitrage.
I was listening to a podcast describe the same topic today (ChooseFI), However it is describing the benefit
of location arbitrage domestically in the US which similarly to your experience when you moved from Michigan to Florida.
No doubt in my mind that re-location will enrich you by lowering your cost and improve your quality of living, but also enhance your culture experience and allow you to explore new cities, countries and continent eventually.
Enjoy ..
atm,
Absolutely. Geographical arbitrage is not limited to international opportunities. One can certainly commit it within one’s own country, which is something I took advantage of while I was still in the States.
So I guess this was just a natural evolution for me, where I took things to the “next level”. 🙂
Thanks for dropping by!
Best regards.
Great post! I hope to follow your footsteps into geoarbitrage in Asia. Not really an investment but probably the most influential event that will help me achieve FI was joining the ERE forums and reading the blog and journal entries. I will FIRE in 2018, 12 years ahead of schedule and not sure if that can be quantified in dollars.
taemoo,
Well, if you ever make it over to CM, make sure to drop a note! 🙂
I remember the ERE forums fondly. Haven’t been by there in some time now, unfortunately. But I agree that starting down the path to financial independence was a great call for both of us. One of the best choices I’ve ever made, definitely. While many of my best “investments” haven’t really involved dollars and cents, the plane ticket out of America can be quickly and dramatically quantified in financial terms, making it easily my biggest home run.
Great job on getting there 12 years ahead of schedule. You just can’t put a price on 12 years of your life!
Cheers.
Mine was about $1.00 for a “raincoat”. It prevented me from making a kid that evening. I can’t fathom how much that kid would’ve cost me. I also include following you at DM as a virtually no cost investment that has returned much.
Freddy,
Children can be wonderful, but there’s no doubt they’re expensive. I can count my vasectomy as another great financial “investment” that has excellent ROI, but that’s only because I never had the desire to have kids. 🙂
Best regards!
Really inspiring post!! Your blog is one of the inspirations for the journey I am currently setting out on; 7 years to Financial Independence and to add some challenge to it I am living in one of the most heavily taxed countries in the world: Sweden. I started my blog after having read yours and gotten very intrigued by it, now setting a similar goal for myself.
Thank you!
FV,
That’s great. Best of luck with both the new project and your ongoing journey. The sacrifices are relatively small, yet the benefits are incredible. 🙂
Cheers!
Jason,
When I scanned the title of the post, I thought that you had bought bitcoins when they were really cheap. It is over $8000 each now. If someone has 125 bitcoins including hard forked coins like bitcoin cash, he or she is definitely a millionaire. So that is what I imagined first…
ER2019,
It’s surprising to me that anyone who’s read more than one article by me would even come up with a thought like that.
I’m sure a few people out there also spent very little money on Powerball tickets, yet they’re massive millionaires.
The good thing is that one doesn’t need to bet on stuff like that to become wealthy (and STAY wealthy) in a relatively short period of time. I have no idea what’s going to happen to bitcoin in 10 years. But I’m fairly positive people are still going to be buying Doritos in 10 years. To each their own. 🙂
Best wishes.
Glad you are happy in Chaing Mai.
FV,
Thanks so much! 🙂
Cheers.
My greatest “financial investment” was a plane ticket also. I moved from Nova Scotia (NS) to Alberta (AB). Canada has a federal consumption tax called the GST which is 5% tax on almost everything you buy. All provinces beside AB, have a sales tax. Some provinces combined their sales tax and GST into one tax called HST. Alberta does not have a sales tax, so I only pay 5%. In Nova Scotia I would pay 15%. So right there I save $0.10 on every dollar I spend. For example, if I paid $20000 for a new car, then my tax savings would be $2000. Also Alberta has higher basic exemption (income that is not taxable ) when it comes to personal income tax. The jobs also in AB pay a lot more then NS on average.
My portfolio would be a lot smaller if I did not move here.
IP,
Nice move! 🙂
I did something similar when I moved from Michigan to Florida. Geographical arbitrage isn’t limited to international moves. One can commit it domestically, too.
I guess I saw the benefits from the first move and decided to really ramp things up for the second big move. But there’s probably no room for improvement from here. This is about as good as it gets.
Best wishes!
Hey Jason,
Incredibly high ROI, and I am so glad that you made a right decision to move there and having a great time in an amazing environment. (Snow season already started in Canada 🙂 ).
Cheers,
FJ,
Man, snow season already?! Stay warm and safe over there. 🙂
Thanks for dropping by!
Best regards.
J, great article. Just curious, how does this time around in Thailand compare to last time? It seems like your attitude/mindset is a lot different this time around, amd you’re getting a lot more out of it. I bet other long time readers are curious also! Glad it’s going so well.
Jason,
It’s been wonderful. I feel incredibly blessed. I’ve been doing my best to share all of that via the last few articles, as well as all of my social media updates. If it doesn’t paint a picture, I’m not sure what will. 🙂
Cheers!
It’s definitely clear that you’re having a great time, haha. I was thinking more from the perspective of, it seems like a much more enjoyable experience than your first round, I’m sure there are some key factors that are contributing to that. I bet a lot of people are inspired to consider the international option because of you, but maybe some personal insights into factors to evaluate when deciding if one is in the right place in life to make the move and be successful at it would help. You have unique experience on that topic given that you’ve found a way to make the intl lifestyle work.
Greetings from Buenos Aires!
Jason,
Yeah, I guess only one can answer that for themselves. But as I noted during both my initial visit and my later move, you should be doing it for the right reasons. I was honest that the reason I was initially mixed on the place was because I wasn’t there for the right reasons. The article I wrote before I came here addressed that and also addressed the reasoning/factors behind my move:
https://www.mrfreeat33.com/two-big-reasons-behind-my-decision-to-move-overseas-and-become-a-dividend-expat/
Now that I came here purely for myself and purely out of my own feeling that this was the best idea for me and my needs, I couldn’t be happier.
In the end, moving abroad is a big decision. It’s not for everyone. It’s probably not even for 10% of people. This content isn’t meant to convince anyone of moving abroad. I’m only providing an ongoing narrative on the benefits of financial independence for me, which now obviously includes living as an expat indefinitely.
Cheers!
Absolutely, I agree with you there J, and I know you aren’t trying to convince. Life is a long time, so I hope people interested in dipping a toe into a foreign experience are inspired by you and give it a try. We are vacationing in Argentina currently, and there is so much beauty outside of the US that many people never get to experience, I realize. The rewards are great for those in the right place and with the desire.
Cheers.
Sounds like you are enjoying your journey. How exciting. I am looking at geo arbitrage as well. I am enjoying your blog. Thank You David
David,
Geographical arbitrage is pretty incredible. If I was able to provide you some meaningful information and inspiration, my job is done. 🙂
Best wishes.
Pretty awesome way to look at things. Makes me realize that the most important decisions can sometimes be a change in your lifestyle, not what you save and invest.
My best return would then be to seek out and accept the job I have now. The impact it’s had on all facets of my life is pretty incredible.
LD,
Absolutely. One’s financial picture is far more complicated and nuanced than just saving $X and investing in stock Y. A number of key lifestyle decisions I’ve made (such as the one discussed in this article) have allowed for profound financial change in my life, going well beyond just doing well with a particular stock.
Sounds like the job you have is treating you well. I hope it continues to do so, and I hope it provides you with some of the resources you need to get to where you want to be. 🙂
Best wishes!
Sounds like that plane ticket was a fantastic call!
My first time coming across the term ‘geographic arbitrage’ and it’s quite an eye-opener.
Don’t stop enjoying Thailand!
Richest,
Thanks so much. Enjoying it very much over here. 🙂
I’ve made a number of great financial calls (and a few poor financial calls), but that plane ticket is easily the best financial investment I’ve ever made.
Cheers!
I was wondering, aside from the living expenses and all the other personal and financial impacts that moving to Thailand has, are there any (possibly) health-related impacts that moving to Thailand has? I’m not familiar with Thailand as much, but some countries require westerners to get an annual shot to prevent certain bacteria that we’re naturally less resistant to, or some have deadly critters that would freak out the average (spoiled in a sense like us from Holland) westerner. Or perhaps earthquakes, hurricanes or floods for example.
Has moving to Thailand affected you in a way like above, that staying in America wouldn’t? And does that have an impact on your future plans, both health-wise, financially or otherwise?
Joram,
In terms of health, moving here is one of the best things I’ve ever done:
https://www.mrfreeat33.com/how-i-accidentally-lost-five-pounds-in-one-month-by-moving-to-thailand/
I’ve never looked or felt better.
In terms of natural disasters, I left Florida just after Hurricane Irma ripped through. As I type this, fires are raging across a large swath of California. While you’ll never totally escape some chance of experiencing natural disasters, I feel more comfortable living here in that regard (compared to where I was living before).
Cheers!