What Is The Five Flags Theory?

Many people in investing talk about diversification, but there are more complex ways that you can invest. The five flags theory provides the option to diversify in other jurisdictions.

Why would you want to consider living in or having residency in another country? Possibly even multiple countries? Just because you were born in a country does not mean you must always live there if you can live in other places part-time or full-time. The five flags strategy gives you more options if you can own real estate in other countries to have a residency in another country.

You may think that you live in the greatest country in the world. After all, every country most likely tells its citizens it is the best. The United States especially likes to say this to Americans. The United States government markets everything to the people in the name of fighting for “freedom and democracy” when it is often the exact opposite.

Just using the United States as an example, these are some reasons to consider the five flags strategy or some version of it:

• United States passport became unfavorable during covid. If you had a passport from another country, you could still travel. The value of the United States passport has declined. That is just one example of having many passports if you can.

• United States banking laws make it difficult to open an account overseas, but not impossible. This is a consequence of the Common Reporting Standard, or CRS regulation. Banks overseas must comply with CRS due to the Foreign Account Tax Compliance Act (FACTA).

• Political, social, and economic diversification from your country.

• Potentially a lower cost of living.

• More affordable healthcare than the United States (depending on the country).

• You may have additional reasons not included on this list for why you may want to live outside your current home country part-time or full-time.