Hi,
I am new here and I would like to start a discussion on how to handle 6-7 figures (either USD or EUR) where all has been earned in a legit way and all the income taxes have been paid.
The amount has to be used for daily life expenses, housing, maybe a new car, travels etc. Thus, the amount is not to be stashed away for 20 years without touching it. The amount has to be used in line with FIRE (Financial independence, retire early). On top of that, part of the amount can be invested into stocks/bonds/ETFs - but thats a different topic I might address later on - for now its just about handling a rather large sum (large for some, small for others
) in 2021.
This applies for Europe, particularly northern Europe (=the Scandinavian welfare states).
The reason for the discussion is the increased unrest in the banking sector where they:
a) Apply negative interest rates. 1 year ago the negative interest rate of -0,6% was applied to amounts larger than approx 100000 Euros. Now (after just 1 year) 90% of all banks have dropped the bar to as low as 15000 Euros. There is a serious chance that they will drop the bar to 0 Euros. And there is nothing who can stop them from doing it! This means that low income people are getting pissed at the moment - not so 1 year ago where it only affected the wealthier part of the population. People are mad but cannot really do anything - also because they are lazy. So where will the negative interest rate end? At -3%? Will it ever end? Banks keep saying you need to invest or buy real estate since the loan interest rate is lower than the inflation why this is a good business - problem is, if you dont want to invest/buy and just keep a calm life.
b) Increase fees for just having a savings account and not use any service at all. Regardless of negative interest rates, the new weapons are adding fees to low income people. So besides negative interest rates you also have to pay fees for just owning an account and not doing anything with it at all. There is no upper limit for fees and the government will not stop them from adding fees - they can do whatever they want.
c) Threaten that you cannot withdraw or deposit large amounts without giving valid reasons. Due to the above 2 points, some people are withdrawing their funds and stash it somewhere else. But here the bank threatens the customers and explain there is a risk that they never will be able to deposit it again in the future due to money laundering regulations (even if they can prove they withdrew the money 10 years ago). This is a threat and I do not know how they will handle it in real life.
As a result, I personally dont feel safe or comfortable with the setup at the moment.
So what solutions exist?
1. I read somewhere here on the forum that once you deposit money to a bank, its not yours anymore - even if it is legit! I accept that belief since its all based on trust. But the problem is I dont really trust the northern european banking sector at the moment.
2. An alternative to savings accounts are brokerage accounts. But they also have negative interest rates, so basically you need to be invested with the majority all the time.
3. Some people are looking for more relaxed banking options in foreign countries without any KYC or very limited KYC. I know for a fact, that here in Europe, if the bank somehow misses some information from you (KYC wise) because regulations have changed over time, they will try to contact you to get the additional information. If you do not comply, they will seize your account until you do. Look at point 1. I feel that if you find a safe haven, that might chance with a short notice.
I sense that some countries have interesting offers in term of low KYC, but how stable is that bank? How stable is that country? Can you trust this bank who is located 10000 mi away more than your local bank? Will they still have zero fees and no negative interest rates?
4. Cryptocurrency. Then there is the option of exchanging all the fiat into a cryptocurrency and stay away from regular banks. Here I focus on exchanging into crypto not with the purpose of investment, higher yields etc but more into some sort of stablecoin so you dont have to deal with constant trades when markets go up and down.
I read here on the forum that many try to escape to countries to cash out their crypto - but again I feel these safe havens can change rapidly. But there will (always) be a fee when you exchange from fiat into crypto, a fee when you exchange back again, all the documentation to tax authorities and all the hazzle for just owning some legit money. And if you cash out with localbitcoin or maybe an ATM the fees will probably be higher than the -0,6% interest rate at the moment.
Basically, I only see the full potential of crypto once regular shops start accepting it so you never have to go into fiat again - and thereby deal with tax authorities.
5. Gold. Then there is the option of buying physical gold (coins etc) and stash them away in your home or find a vault. I know you can both find vaults in banks which in serious cases have to report to the authorities and then you have private vaults in for instance Switzerland or Liechtenstein - where nobody knows anything, but again at high annual expenses. Also every time you trade gold, the difference between buy/sell is much higher that the -0,6% interest rate.
6. Cash. Find a secret spot in your house and burry/stash your bills there. Not just something simple but put some effort into doing it really really safe. - also against fire, water etc.
Note:
I think if we go 50 years back in time we had a situation where most people were living in one spot, they were buying ALL their groceries and stuff in the local town/city. They would buy their house a few miles away. They would buy their car at the local dealership and they would travel a few times using travelers checks maybe. All could be done with cash and basically no bank at all.
Today most people are "global", they want to travel everywhere, setup business everywhere, buy all their stuff from Amazon etc. So they are highly dependent on a bank and on some sort of debit/credit card, google pay, apple pay etc. They need to be able to take a cash out 10000 mi away without effort.
But is this just the "price" you have to pay? If you want agility, being fully independent, global, fast reacting ... you have to accept that your anonymity has gone forever and that basically everything can be gone and there is nothing you can do about it?
At the moment the cash out option where I stash the bills in a secret spot appeals the most to me (since it puts me in the drivers seat) but the problem is, the hugely limited way of life since so many things are "online" right now.
What are your thoughts on the topic? Did I miss something? What good, practical options/solutions exist to stay safe and private with the legit money you have?
TheWanderer
I am new here and I would like to start a discussion on how to handle 6-7 figures (either USD or EUR) where all has been earned in a legit way and all the income taxes have been paid.
The amount has to be used for daily life expenses, housing, maybe a new car, travels etc. Thus, the amount is not to be stashed away for 20 years without touching it. The amount has to be used in line with FIRE (Financial independence, retire early). On top of that, part of the amount can be invested into stocks/bonds/ETFs - but thats a different topic I might address later on - for now its just about handling a rather large sum (large for some, small for others
) in 2021.This applies for Europe, particularly northern Europe (=the Scandinavian welfare states).
The reason for the discussion is the increased unrest in the banking sector where they:
a) Apply negative interest rates. 1 year ago the negative interest rate of -0,6% was applied to amounts larger than approx 100000 Euros. Now (after just 1 year) 90% of all banks have dropped the bar to as low as 15000 Euros. There is a serious chance that they will drop the bar to 0 Euros. And there is nothing who can stop them from doing it! This means that low income people are getting pissed at the moment - not so 1 year ago where it only affected the wealthier part of the population. People are mad but cannot really do anything - also because they are lazy. So where will the negative interest rate end? At -3%? Will it ever end? Banks keep saying you need to invest or buy real estate since the loan interest rate is lower than the inflation why this is a good business - problem is, if you dont want to invest/buy and just keep a calm life.
b) Increase fees for just having a savings account and not use any service at all. Regardless of negative interest rates, the new weapons are adding fees to low income people. So besides negative interest rates you also have to pay fees for just owning an account and not doing anything with it at all. There is no upper limit for fees and the government will not stop them from adding fees - they can do whatever they want.
c) Threaten that you cannot withdraw or deposit large amounts without giving valid reasons. Due to the above 2 points, some people are withdrawing their funds and stash it somewhere else. But here the bank threatens the customers and explain there is a risk that they never will be able to deposit it again in the future due to money laundering regulations (even if they can prove they withdrew the money 10 years ago). This is a threat and I do not know how they will handle it in real life.
As a result, I personally dont feel safe or comfortable with the setup at the moment.
So what solutions exist?
1. I read somewhere here on the forum that once you deposit money to a bank, its not yours anymore - even if it is legit! I accept that belief since its all based on trust. But the problem is I dont really trust the northern european banking sector at the moment.
2. An alternative to savings accounts are brokerage accounts. But they also have negative interest rates, so basically you need to be invested with the majority all the time.
3. Some people are looking for more relaxed banking options in foreign countries without any KYC or very limited KYC. I know for a fact, that here in Europe, if the bank somehow misses some information from you (KYC wise) because regulations have changed over time, they will try to contact you to get the additional information. If you do not comply, they will seize your account until you do. Look at point 1. I feel that if you find a safe haven, that might chance with a short notice.
I sense that some countries have interesting offers in term of low KYC, but how stable is that bank? How stable is that country? Can you trust this bank who is located 10000 mi away more than your local bank? Will they still have zero fees and no negative interest rates?
4. Cryptocurrency. Then there is the option of exchanging all the fiat into a cryptocurrency and stay away from regular banks. Here I focus on exchanging into crypto not with the purpose of investment, higher yields etc but more into some sort of stablecoin so you dont have to deal with constant trades when markets go up and down.
I read here on the forum that many try to escape to countries to cash out their crypto - but again I feel these safe havens can change rapidly. But there will (always) be a fee when you exchange from fiat into crypto, a fee when you exchange back again, all the documentation to tax authorities and all the hazzle for just owning some legit money. And if you cash out with localbitcoin or maybe an ATM the fees will probably be higher than the -0,6% interest rate at the moment.
Basically, I only see the full potential of crypto once regular shops start accepting it so you never have to go into fiat again - and thereby deal with tax authorities.
5. Gold. Then there is the option of buying physical gold (coins etc) and stash them away in your home or find a vault. I know you can both find vaults in banks which in serious cases have to report to the authorities and then you have private vaults in for instance Switzerland or Liechtenstein - where nobody knows anything, but again at high annual expenses. Also every time you trade gold, the difference between buy/sell is much higher that the -0,6% interest rate.
6. Cash. Find a secret spot in your house and burry/stash your bills there. Not just something simple but put some effort into doing it really really safe. - also against fire, water etc.
Note:
I think if we go 50 years back in time we had a situation where most people were living in one spot, they were buying ALL their groceries and stuff in the local town/city. They would buy their house a few miles away. They would buy their car at the local dealership and they would travel a few times using travelers checks maybe. All could be done with cash and basically no bank at all.
Today most people are "global", they want to travel everywhere, setup business everywhere, buy all their stuff from Amazon etc. So they are highly dependent on a bank and on some sort of debit/credit card, google pay, apple pay etc. They need to be able to take a cash out 10000 mi away without effort.
But is this just the "price" you have to pay? If you want agility, being fully independent, global, fast reacting ... you have to accept that your anonymity has gone forever and that basically everything can be gone and there is nothing you can do about it?
At the moment the cash out option where I stash the bills in a secret spot appeals the most to me (since it puts me in the drivers seat) but the problem is, the hugely limited way of life since so many things are "online" right now.
What are your thoughts on the topic? Did I miss something? What good, practical options/solutions exist to stay safe and private with the legit money you have?
TheWanderer
