The Sovereign Individual Stack
The Sovereign Individual Stack
What to take into account when moving to Latam from a "developed" country
Welcome Avatar! Today I will go over what to take into account when moving to Latam from a "developed" country. The developed part is in the eye of the beholder, that is why it is in quotes, but you get the idea. What should be in your Sovereign Individual stack before you make the move to uncharted territory?
Keep your “first world” access
As mentioned in previous articles about my personal journey, some folks feel like they have to burn all bridges when they move. Don’t.
Keep everything as is, just optimize for your tax situation (which really depends on each particular case). Depending on the country you’re moving to, it might even make sense to stay a resident in your country on paper of origin just to avoid double taxation. Disclaimer: always speak to a tax advisor for your particular situation.
Latam (or any emerging country) is fundamentally different from Europe or the US, and some countries have strict capital controls. That means moving money around can be a massive pain in the ass.
The kind of access I would recommend holding on to even after moving is:
Credit cards
Bank accounts (personal + business)
Stripe / payment processors linked to your bank accounts
Crypto exchange accounts
Trading accounts for TradFi finance
An address (change your address to your parents or a family member if you don’t own your own home), so you have someone to open important mail.
Your mobile US / EU phone number
Autist note: think about any strict KYC service that would be beneficial to you, or that requires your physical presence in order to open it. For example, if I were leaving Europe, I would make sure to open up at least 1 additional personal bank account in the country I am emigrating from, before effectively leaving. KYC rules in the EU generally require you to personally visit the bank if you haven’t had an account with that bank yet, and the US is similar. The name of the game is redundancy. You absolutely do not want to depend on just 1 bank. If that account gets shut down, it would be game over.
Remote Work / Foreign Income
Just as your continued access to banking etc, ideally you either 1) have a remote job that allows you to move anywhere (or multiple jobs, more about that later), or 2) a company that allows you to bill from anywhere.
After Covid, it has become a lot easier to get a remote job as an employee, and increasingly easy to get hired as an offshore freelancer by companies in the US or Europe.
Once you move to a cheaper country, you can be more competitive in terms of pricing, since you don’t have to pay thet $5,000 rent for a studio apartment in New York anymore, or that $3,000 rent in Paris.
Rents in Latin America and most upcoming countries are vastly cheaper, depending on the amenities you want. With $1.5k you can already get very very good apartments in Buenos Aires or São Paulo, not to mention if you go to smaller cities in the interior of LatAm countries.
General cost of living is also significantly lower, which all translates into more competitive rates, but still a lot higher than what you would be able to charge locally.
If you do not have a company yet, I recommend you start asap, and in the meanwhile focus on generating more income through a remote job at any company. The MyLatinLife podcast episode about jobstacking was awesome to get a better perspective on the ease of getting multiple remote jobs, and the mindset around it.
In the meanwhile, focus on setting up a company to make sure you don’t depend on an income forever.
If you already have a company or you’re a freelancer with multiple clients, just keep doing that and expanding.
Autist note: here, the same principle applies: with your companies, you do not want to depend on one bank account. Have at least 2 per company, so you have redundancy built in. Closing an account is always easier than opening one and most accounts do not even charge you to keep the account open. For more on company structures + setups, you can check out this WifiAgency post (paid)
Should I start a local company?
Every country has its own specific benefits and particular economic situations. Depending on those it can make sense (or not) to start a local company and service the local economy.
In “Making the long or short move down south” I discuss this in more detail, and I also mentioned my personal mistake of focusing too much on the local economy after moving here in my piece about “How to survive in a world of hyperinflation” for BowTiedBull.
In a 100%+ inflation scenario as we currently have in Argentina, it does not make a lot of sense to open up a local company and bill in pesos, unless your base costs are very low, as in software as a service.
Hiring people through a local company can be a massive pain, depending on the country. At least in Argentina, just because of the litigious mindset whenever someone gets laid off (remember: here the employee is always right, even if he/she is wrong), this translates into additional company savings that are spent on unproductive things like law suits and ridiculously high severance pay.
Try to speak to as many local entrepreneurs as you can and get a feel for the employer/employee mechanics, and employee churn rates etc. This can vary wildly from country to country.
For example, in Brazil, employers can check litigation records whenever someone applies for a job, to see if this person has a history of suing his employers. In Argentina, this is not possible, so there’s no way to know.
The employer/employee mechanic is in my mind the second most important one to focus on after the general economic outlook and local spending capacity. Having lived in both Brazil and Argentina, my personal recommendation for both would be: don’t if you can avoid it.
Much better to work through a foreign LLC, bill clients abroad that have a higher spending capacity, and that’s that.
Book stack
Even before moving, I recommend the following titles if you haven’t ready them yet:
These books have really changed my view on Nation States in general and remote work in the Digital Age in particular.
Local only access
Many things in LatAm can only be accessed if you have legal residency (not on a tourist visa), but luckily legal residency is easy to obtain in most countries.
In this thread I go into some of the benefits of setting up a fixed base in one location:
On SovSpot you can download a step by step guide for obtaining residency Brazil and Uruguay, and for Argentina the process is fairly simple as well.
This article goes into a bit more detail about the Argentina digital nomad visa and the Rentista visa, and which visa makes more sense.
In all cases, the best way to handle this is to be on the ground, and see what makes most sense given your situation. For example, you might know a business owner who is willing to put you on the books as an employee, which will give you residency and after 2-3 years permanent residency (then you cut ties with the company on paper).
Things you can usually only get access to with local residency:
Rentals in local currency (3-4x cheaper on average)
Mobile phone subscriptions
Bank accounts
Private healthcare plans (top tier healthcare in Argentina for example is about $300/month, and this gives you access to literally everything, the best clinics, and everything is included).
Autist note: in my article “Buying Property in Argentina part 1” I lay out why it can be beneficial to get local residency, even if from a tax perspective this might not make sense at first sight. It all depends on your current wealth level. Paying 4x less for a rental in Buenos Aires in pesos, or an apartment in Rio in reais vs temporary furnitured rentals priced in USD, can make a world of difference depending on your starting point.
Wrapping up
This would be a good first list in my mind, but let me know if I missed anything in the comments.