The Bill Freeman Letter - Offshore Wealth
Email: escapeartist@getresponse.com 

"I Just Had My
Liquidity Moment :
What Should I Do With
$5 Million?"

Dear Friend,

Ever since I started writing years ago, readers have written to me asking for advice. I don’t offer personalized advice (though I do know good people who give good advice). But sometimes general questions are of general interest, and this is one I’ve been asked recently.

A "Liquidity Moment" usually occurs when one sells out his business, or cashes out his stock options.

Most people who come into substantial wealth quickly, just as quickly fall into all kinds of sucker traps, swindles or they often exercise very bad judgment. With the usual mismanagement, in a few years, most newfound wealth goes down the toilet.

People who have amassed a fortune in their own businesses, are typically more able to hold onto their assets - but not always. In my own case, I found it easy to make money in my chosen specialty, but once I cashed out, it was infinitely harder to hold on to wealth as a passive investor. It took twenty years of retirement and some hard knocks to get a grasp on investment management –but now I have the knack for wealth preservation.

Thus I advise, if you have say $5 Million cash, to take $4 million (80%) and put it into really conservative stuff that will surely support a modest lifestyle for the rest of your life. It is important that your newfound financial independence be used to keep you free to do as you please—work-wise and play-wise.

In my opinion, it is always good to have some kind of work you enjoy that also provides a comfortable living and also a fallback position in the event you do lose your money. My clients don’t lose their money because they are fully prepared for things like serious health problems, betrayals and thefts by trusted associates, divorces, lawsuits, or serious (even criminal accusation) problems with Big Brother.

With the right paperwork, passports, and sufficient capital, you will have both investment income and a wonderful safety net. You can afford to live anywhere in the world that you choose. You can do work you love or just sit in a pleasant sidewalk café, do nothing and watch the world go by. Earnings from your work will be almost incidental. Best of all, ideally, your work won’t really be work. You would pay someone else to let you do it—if you had to.

Every person is different in terms of needs, capital, skills, goals, and personal relationships. In your case, as a rule of thumb, twenty per cent (20%) of your assets, namely $1 million or less can comfortably be set aside as your “play money.”

Here is one piece of free advice: It is essential that you always spend well below your means on consumer goods and overhead.

What does that mean? Generally -- no flashy cars, palatial homes, ocean going super-yachts, etc. No flaunting of wealth! The latter can be dangerous to your health and wealth. Why? Tax collectors, gold digging new wives and convincing con-men. They will be attracted to you like flies to cow-pies. Most of the richest people in the world live in modest homes, drive old cars, and being low profile -- are not written up in the media. The ones you do read about are often here today, gone tomorrow.

Ideally, one lives on the interest on one's interest, or more practically -- off a portion of current earnings. People who spend serious money on big guy toys, drugs, etc. will often face bankruptcy --- as so many movie stars and lottery winners do.

I'd invest very carefully, your “play money."

It’s OK to go into fun deals that might hit the jackpot, if you are aware that something could and probably will go wrong. Maybe all of your play money will be lost. Losing 20% of your net worth is better than losing everything. Your serious money needs good adult supervision. By the way, I Bill Freeman, NEVER want control of any of your funds. In my letters I may recommend good deals, and keep you away from foolish ones, but I am only a writer. I don’t want to make your decisions. Life is a do it yourself project. My job is to teach you how to run your own life rationally and intelligently; to keep you out of trouble, and to keep you from doing anything foolish.

I have followed the PT life-style for years. If you want to find out more about my ideas for personal and financial freedom, I suggest you start with my three free reports (just email me at escapeartist@getresponse.com and I'll send you all three at no cost).

If you are a stay at home person who hates travel, doesn’t want to read or absorb new ideas, and if you regard your country club membership and small circle of neighbors and friends as the most important thing in your life –probably we don’t have too much in common. There is nothing you’d want to learn from me.

However, if you are vaguely unhappy with your present life, have read all about the “PT 6 Flags” and that life appeals to you, you will want to meet and say to me, “this is the beginning of a beautiful friendship.” In case it didn’t jump out at you that’s what Humphrey Bogart (playing the romantic PT, Rick) said to (Louis the Cop) Claude Rains at the end of what I believe is the best movie of all time, Casablanca.

Normally, I don’t “implement” PT solutions by standing in line or filling out forms. Life is a do it yourself project. In my reports I will show you how to do everything for yourself – free of lawyers, accountants, government reporting forms, and most frustrations.

Investing is Not My Biggest Talent. Recently, a few years ago I took a big hit on paper when the Dow Jones Industrial Averages of the New York stock exchange fell from 14,000 to 6,000. Fortunately, with my capital preservation model, I had set aside cash equivalent reserves to support my modest lifestyle. These reserves were in Swiss Francs and Gold. I had diversified into some good real estate too to eliminate rent and all my office overhead. My personal computer now does a better job than my secretaries ever did in the bad old days. No staff, no rent, no paperwork. It’s heaven.

In the down-market of 2008, I held on to my good stocks. As it turned out, as of 2010, I have recovered all stock losses. The gold and Swiss Franc cash went way up against the dollar, and the euro. My goal of not losing capital was achieved.

Possibly I’d suggest including a small portion of your wealth in the highly profitable “Carry Trade.” The carry trade involves borrowing money at a low interest rate, and investing in safe things that yield a higher return. By using other people’s money your own return on investment is multiplied. There are risks, but in the context of a diversified portfolio, they may be warranted. Depends on you. See my article on the Carry Trade (just send me an email at escapeartist@getresponse.com and I'll email you the article with 3 complementary free offshore reports).

For Good Things In Life,
Bill Freeman