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04 July 2008
Thoughts on Investing in Panama Today I’m to writing to you from the beautiful city of Panama, Republic
of Panama. I’m looking out over my balcony at ocean, palm trees and skyscrapers,
listening to seabirds and honking horns which stand out the regular drone of
any big city. It’s one of those hot and humid days, cloudy but not quite
raining. Whenever I come here, especially at this time of year, I can’t
help but feel a little intrigue and mystery.
Panama is not short of intrigue and mystery (though switching on the AC kind
of changes things!) Things are not always quite what they seem here. That’s
why instead of quoting official statistics, I’m just going to tell you
what I think and feel.
Panama, of course, is not a tailored offshore haven. It doesn’t have
any specific IBC or offshore banking legislation. It’s simply a country
which was founded and reached where it is now all for business reasons (international
trade – the canal) and for its friendly treatment of foreign capital and
income. Panama rightly refuses to be grouped together by the OECD with what
its government describes as “manufactured tax havens.” Panamanians
and foreigners, residents and non-residents, are treated equally. Only locally
sourced income is taxable.
Over the last four or five years, what the outside world has really been watching
is the real estate boom here. For at least three of those, I’ve been predicting
that the bubble will burst, because much of it has been fuelled by speculators
trying to flip apartments off plan before they have to put down serious money.
Developers and banks are now sensibly discouraging this activity.
But there’s no reason to believe that Panama’s growth will end
any time soon. One major influence here is money from wealthy Latin Americans,
money that used to go to Florida. Now it comes here. Especially from Venezuela
and Colombia. Another influence is retirees from North America and, increasingly,
from Europe, attracted by an affordable, tax-free tropical retirement haven
with a likely upside in real estate investments.
Getting to Panama is easier than ever, with dozens of direct flights from all
of the Americas and now also from Europe. After all, Panama is truly the “hub
of the Americas.” I can tell you, the hotels are full. Hotel rates have
risen to ridiculous levels (doubled since last year)
As for investing in real estate, I think some speculators will get burned.
Those are the ones who come here and don’t know what they are doing. In
Panama there is a great deal of freedom, and with that comes the responsibility
to watch out for yourself.
In particular, you need to look beyond the market that Panamanian realtors
have created for investor-tourists who don’t know local prices. Here in
the city, for example, a smart single expat friend of mine bought an apartment
for $25,000 a year ago which he is just selling now for $40,000. That’s
for the whole apartment, 100% paid cash. Of course it’s just a studio,
and it’s not luxury, and it doesn’t have much of a view. But it’s
quite liveable, in a respectable building right off Via Espana (the main drag)
with a security guard at the front door.
Just down the road developers with glossy brochures are asking the same amount
of money as a 10% down payment on an apartment that’s not even built yet.
Yes, they are asking $40,000 down payment on a $400,000 apartment.
You won’t find deals like the above on the internet. You’ll find
them perhaps in Spanish language newspapers, or better just by finding someone
who knows the market to put out the word and help you scout around.
Another good investment in Panama has to be land outside the city. Panama City
has a huge traffic problem, and as the city grows it will expand outwards. Only
logical. But again, don’t buy it through those high priced realtors with
flashy websites. And don’t buy on your first trip down.
Of course I could write a lot more, but space is limited here. Today I’ll
be working on the schedule for our Recipes for Success event on the subjects
of Freedom, Wealth, Wellbeing and Privacy which will take place here in Panama
this November, the week after the US election. The humidity should be gone by
then! Although it’s a very internationally oriented event, we’ve
specifically included a “Panama day” where you will learn more about
this other real estate market in Panama City. Please join us.
Look forward to more blog entries about Freedom, Wealth and Privacy. I hope
you enjoy them and that you can use the information here to benefit your business
and your life. In turn I would much appreciate your feedback, comments and questions.
I can be contacted via info@petermacfarlane.net.
Peter Macfarlane is joint editor of The Q Wealth Report an established
newsletter dedicated to informing readers about creating, protecting and growing
wealth in a secure offshore environment. It also covers international living,
banking, retiring and investing. Visit www.QWealthReport.com
to see more.
You have been
reading an entry on the following blog:
The Q Wealth Report Peter Macfarlane of The Q Wealth Report blogs on Freedom, Wealth and Privacy
Other recent
entries in this blog:
19 November 2008 You Don’t Know Until You Go! It’s a few weeks since my last blog entry, and the reason for this is
that I have been travelling in Latin America with a small group of investors
– concerned privacy-minded and freedom loving individuals who are concerned
about how our financial and personal freedoms are being gradually eroded. We
had an interesting ten day trip starting in Panama City then taking in Paraguay
and Brazil.
When I talk about “concerned individuals” what I really mean is
that if and when things get worse in the western world – in terms of financial
and political restrictions - it’s important to be prepared. An established
business or residence presence in one of the more remote corners of the world
will be a great fallback or hedging position. Even a second passport or citizenship
might be your ultimate goal.
You might be surprised to learn that Paraguay scores highly on all this –
a free society, no personal income taxes and an economy that is completely self
sufficient with plenty of fresh water and clean, green power. In fact Paraguay
is the world’s largest exporter of hydro electricity, and one of the highlights
of the trip was a visit to the Itaipu Binacional hydro-electric power plant
– the largest in the world, and an incredible feat of engineering and
international co-operation. We also visited the spectacular Iguassu Falls, one
of the seven wonders of the natural world.
But the most important thing I think we all learned from this trip was the
importance, even in this internet age, of actually getting on a plane and seeing
things for yourself. We all know the comfort of familiar places and people,
but that often also comes with a feeling of frustration, a feeling that we are
not in full control of our lives as we should be. On the other side, we all
have a natural fear of the unknown. This internal fear is perpetuated by the
mainstream media. But by confronting and overcoming it we can open up a whole
new world of opportunities.
For example, one of our delegates, a successful UK businessman, said TV and
press coverage had led him to believe he would find machete-wielding individuals
a mile or two from the financial district of Panama City. But by going there
and getting a feel for the place by visiting local and expat-owned internet
businesses, he found instead that it’s a great place to do business. Now
he is making plans to move his operating base down there instead.
Here at The Q Wealth
Report our business for over a decade has been writing about not just how
to preserve your assets offshore, but how to create wealth and develop opportunity
by actually living offshore. As a famous offshore author once said, “You
don’t know until you go.” The instability in the world right now
means that you truly need to know about safe places and new opportunities. Right
now would be the time to start, and here on lowtax.net you will find a lot of
information to begin your quest.
Peter Macfarlane is joint editor of The Q Wealth Report an established newsletter
dedicated to informing readers about creating, protecting and growing wealth
in a secure offshore environment. It also covers international living, banking,
retiring and investing. Visit www.QWealthReport.com
to see more.
28 October 2008 Why the Financial Crisis Doesn't Really Matter Well I needed an attention grabbing headline! Maybe I’m exaggerating
a little if I say it doesn’t matter. No disrespect to the many financial
services professionals who read this blog. What I really wanted to say, is that
it’s time to take a step back and look at the bigger picture. Does it
have to matter to you? Do you want it to matter?
For weeks now we’ve been glued to our screens, watching the latest news,
share prices, currency rates and so on. In this article I want to suggest a
different approach. It took me a long, introspective walk on the beach last
week to figure this one out, and now I will run it by you.
It’s easy to get drawn in by mass media hysteria. That’s what happened
to me as the bailout plans unfolded. But at the end of the day, why get stressed
by things we can do nothing about? Let me restate two facts we all know already:
The market is no longer free, nor is there even any pretence of a free market
economy. A huge part of the global financial system is now in hands of governments.
Apart from the obvious intervention (bailouts) you don’t have to be
a conspiracy theorist to see there are lots more political factors playing
out behind the scenes. Lots of special interest groups. Lots of infighting.
The media is in business to make news. There was a time when reporters
reported. Now, they don’t. They take stories from the internet and rewrite
them, changing them a little so as not to stand accused of plagiarism.
It would be hard for anyone to dispute these two facts in isolation. The conclusion
I draw from these two facts combined is that it is simply not worth participating
in the financial markets anymore – not unless you happen to be a central
bank, maybe.
What we need to do is concentrate on living. During that walk on the beach,
I thought back to some decisions I made years ago. They have stuck with me and
served me well ever since. I decided I wanted quality of life – a healthy
life with friends and family. Time to do things I believed in, that pleased
me. In other words – I wanted to be in control of my life.
That is why, back when I was a business student in London in the early nineties,
I didn’t jump on the bandwagon and apply for a job with a big American
investment bank. I knew a lot of people who did, and sure they made a lot more
money than I did. But their lives didn’t seem to me to be complete. Or
maybe it just seemed too much like hard work for me.
That’s why now, I don’t want to be a slave to the TV and the endless
market watching sites. If I can’t do anything about it, I might as well
look for better things to do with my time.
When times look tough, the Americans talk about ‘heading for the hills.’
I headed for the beach in Latin America, with a few stopovers in European cities
on the way. And I’ve never regretted it for a moment.
Now, just in the last few weeks, I’ve talked to a lot of people who have
been dreaming for years about a “new life offshore” but now they
are really taking concrete steps towards that goal. It is really possible to
live better, live healthier, at lower cost, make money using the internet, and
– best of all – you can hedge against the effects of the financial
markets in a way that you would never achieve with even the most sophisticated
derivative!
Maybe now is really the time to do something about it, if you are one of those
people. If the financial situation is pressuring you, it could be time for that
radical change you have been putting off. Don’t doubt your abilities.
Grab your spirit of adventure, stop gambling on rigged markets, and move yourself
offshore!
If you are interested in this topic, I’ll be addressing more specifics
of how to achieve this in my blog entries here over the coming weeks. I’ll
also talk about more recession-proof investments and businesses you can start
from scratch – all in a low tax environment of course! No promises as
to specific dates, but I will certainly cover this topic more! And if you would
like to investigate this through a more in-depth approach (i.e. peek ahead),
you can read articles in this vein by myself and others at www.QWealthReport.com
Peter Macfarlane is joint editor of The Q Wealth Report an established newsletter
dedicated to informing readers about creating, protecting and growing wealth
in a secure offshore environment. It also covers international living, banking,
retiring and investing. Visit www.QWealthReport.com
to see more.
Penelope Wise
Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
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