Geographic Arbitrage Wins Again

(GCC: Over the years I haven’t been shy about how my favorite part of this little blog is the opportunity to have a positive impact on the lives of others. Now, the only thing even better than _that_ is when somebody takes an idea or concept and just… runs with it. Embrace and Extend! That is exactly what Skip has done… and now maybe you will too.)

One of the many benefits of a location-independent lifestyle is the ability to take advantage of geographic arbitrage. Geographic arbitrage is a valuable tool in our early retirement plan that provides both financial and quality-of-life benefits. It enables us to increase our purchasing power and reduce the burden on our retirement funds while traveling the world.

I first came across the idea of geographic arbitrage while reading a GCC article quite a few years ago: What is Your Retirement Number: The 4% Rule.

The article discussed developing a foundation for long-term success. The general gist was to live better for less in the early years of retirement while traveling through less expensive regions of the world. Spending less in the early years allows more of your money to grow, thereby bolstering the survival of your investment portfolio throughout a lengthy retirement.

This was a bit of a lightbulb moment for me. Although the early retirement gears were already turning, my wife and I had not really considered perpetual international travel as an option. However, the logic made too much sense to ignore. Live well for less and travel the world… all while reducing sequence of return risk on our retirement portfolio? Sign me up. (Reducing risk AND lowering future expenses too! Kickstart Your (Early) Retirement)

But… how has this concept held up under the current environment of investment portfolio losses and increasing inflation? I’m here to tell you, very well.

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