Livingstone, Vilankulo, Al Ahmadi, Palmira, Jericho, Stromboli, Capo Reinga, Zamami, Camiguin, Piranhas, Neuquen, Chiloè, Hampi, Cao Bang, Al Farafra.
What do Digital Nomads do? 💅🏼
Most Digital Nomads take advantage of the web and of arbitrage to get a lifestyle most people can only dream about
But all that glitters is not gold, because ⤵
What are the main challenges for Digital Nomads?
Keep in touch with loved ones
Sentimental life mess
Tax residency choice
Wi-fi quality abroad
Medical insurance 365
Working in noisy environment
Keep working routine while away
Nobody understands you, so your friends end up to be other DN
Getting paid abroad
Wasting time instead of working when in the Coworking spaces
Travel work balance
Here is a list of the most common sources of frustration for DN.
Please add more issues in the comments below if you have any!
💻 Digital Nomads and technology
Digital Nomads believe to know a lot about the web and whatever technology is bringing us. Very often they are right and they are ahead of times. This is because travelling makes you open to listen and to learn. Digital Nomads are early adopters and out-of-the-comfort-zone walkers Click To Tweet Curiosity: If you are a marketer you know that “early adopters” is also a Facebook ADS targeting category. Before being known as a FB ads category, Early adopters were to indicate the group of people that gets into the next big thing before others. Apple computer is about to boom? Early adopters were there already (this is a 🍏 stereotype that I love…). CouchSurfing is trending? Nah. They were already traveling free on CS 10 years ago. And so on.. We all have friends who are early adopters, but please don’t confuse them with the boring “tech fans” cueing out the Apple store for the latest mobile. Real early adopters and DN would get very upset if you do. So, if you want to know what’s trending don’t ask Google. Ask a DN.
🪙 Digital Nomads & their crypto-BIAS
When you work on the internet, you travel a lot and you get to know about the coolest next things regularly before other people, you may get a distorted view of some subjects. When the Bitcoin broke the 5k level wall in 2017 a “digital gold rush” started. Many other new cryptocurrencies started to compete and price was skyrocketing. Everybody was happy. As a trader, I was amazed to see the new army of forex traders and wannabe crypto expert that emerged in that period.
Since Digital Nomads are the most up-to-date people of the world they have heard of Bitcoin since 2009. This caused a huge Fear of Missing Out.
There was a new technology they already heard about (blockchain) and now they wanted to be among the first to make money out of it. And they virtually did, because from what I was reading on the communities in that period a lot of Digital Nomads invested in Cryptos successfully. Great money making ideas born in the few months following that rush:
Some advanced DN started trading Cryptos
Other even smarter prepared to sell courses on “how to invest in cryptos”
Brand new affiliate on Forex trading and CFDs were booming
Bitcoin mining popped up
And so on..
But then most of the cryptos lost value in the following months and most investors weren’t able to manage to exit on time and bear the stress of being potentially losing money. There was a dumb silence on the Bitcoin subject. The contagion was also fault of two other reasons. Two big Digital Nomads problems would be solved the day some Crypto would become a major currency:
Accepting payments in a universal currency (solving the exchange and banking issue forever)
Make peace with international fiscality
The BIAS was caused by:
I am a DN, I know how the web works
I am a DN, I know how to profit from online activities
I am a DN I don’t like the old banking system
…ergo, I certainly know how to trade cryptos ..or hold it ..or spend it ..or whatever is better for me. Everyone wanted Bitcoins and cryptos, but very few knew why and what to do with it.
No target price
No time horizon
No market ready for it
Big mistake. As I said before, I love Digital Nomads and I feel very close to them. What surprised me was how, smart and experienced web professionals would have believed to be able to play and win it the most competitive markets ever invented. The financial and forex markets. Working in SEO is competitive, to be a marketer you have to be competitive, job marketplaces are competitive, but believe me, the financial markets are pure madness. It’s good to know that cryptocurrencies:
I fell in love with bitcoin, so I’m gonna invest in cryptocurrencies. Deal.
Here is the second BIAS many DN experienced from what I was able to observe. If last year I’d have asked to Bitcoin fans: “Why do you want to have Bitcoins“? Most of the answers were: “Because blockchain is the future and one day the world will use Bitcoin instead of dollars”. So, people were in love with the idea of a decentralized currency and wanted to investing it to support the idea but also to make money out of it. The investment strategy was: “buy and hold” with a spoon of “see what happens” plus a bit of :“let’s do some trading”… There was no previous study of the price patterns or whatever would have given a slightly more scientific way to forecast the future price change, if the goal was making a profit from selling it at a higher price. In addition to this, cryptos do not distribute dividends or any other benefit to the holders. Taxation can be a nightmare…or not a problem at all for some. Being in love with an idea is very dangerous when it comes to investing Click To TweetWhen we fall in love with an idea we will naturally be led to think that this idea will conquer the market, even when this is not true or not yet true.The 4 old ways to profit from the crypto-boom:
Buy cryptos low and sell it high (trading)
Buy and hold ( …how long for? Hoping that one day we will wake up rich ..if we sell it)
Mine Bitcoins (not every country is good for this)
Start your own ICO (Initial Coin Offering)
Not many of the people I know have the necessary skills to do one of the above things. Not even if they are Digital Nomads.
Digital Nomads investing BIAS
When I went on YouTube to write this post and see what was the main video content about “Digital Nomads” I knew I would have found something valuable for my search. This is the most significant / most viewed video on Digital Nomads on YT:
Working online and traveling the world - digital nomads | DW Documentary
The smart girl in the video has an enviable lifestyle. She is an influencer and says many interesting about overworking and being aligned with her true purpose in life. She does what she likes to do and she performs very well because of this. She also mentioned one smart thing (from a DN point of view) that is planning to become fiscally resident in Cyprus. Other observations on investing were “not so balanced” from my boring point of view. She mentioned:
Investing in an organic coconut farm in Colombia
Pouring some money in startups and small companies
Buy a property in Panama to apply for dual citizenship (..only residency is allowed)
She did not specify how much of her total assets are about to be invested that way. The first two are high-risk activities that should not represent more than 5% of a normal portfolio, even if an aggressive one. Panama is still a convenient country to buy apartments to rent and I know people who did it successfully. The price to rent ratio in Panama City is 11,29 so it can still be convenient (below 15 is ok). The issue with real estate and small investors is diversification. If most of one investor money goes into one apartment in a single frontier market country I’d say it may not be a very balanced choice. The cool guy in the video says he runs a rather frugal lifestyle so if he will make enough money with cryptos he co-buy some land in Asia and will start a hostel or a coworking somewhere. Beware, I am not judging the choices, nor the people. I am only making a boring analysis from a long term investor point of view, I don’t have enough data and I may be wrong.
Digital Nomads retirement plan is on f.i.r.e.
When one does not pay the social security in his home country (or in some specific place) he will probably not get a fabulous retirement check. Unfortunately even if one is contributing steadily may not get that much, but this is another story. The best way to retire DIY is:
To save a huge slice of what you earn on a regular basis
Invest it properly
Let it grow
If this commitment is started very early in life it can bring to huge rewards. Retirement is subjective. What’s retirement? Retirement may be to be able to stop working and spend less of what one is earning without active work. So one can retire at any age. The key problem is to lower the expenses by living in a low-cost country and build a reasonable safety net to deal with the unexpected. Another option is to earn more money and save even more, but incredibly this is very difficult to achieve while living in a first-world country. This knowledge is at the base of the brilliant F.I.R.E. movement.
Where do Digital Nomads pay tax?
If you live as a DN you might enjoy becoming a fiscally perpetual traveller! If you design your life so that you’re not the legal resident of any of the countries in which you spend most of your time you may become a PT. When one is a perpetual traveller, so he doesn’t stay more than 183 days per year in any specific country, in theory, he might try to detach from any fiscal/legal/obligation. This statement needs to be proved, and as a matter of fact, most perpetual travellers end up getting residency in countries like Thailand, UAE, Georgia where tax is zero or almost zero. Tax is a main worry for most digital nomads I am not a tax consultant but I know some websites that share information about it. If you do freelancing for living a digital nomadic life you would be curious to know what are the countries that have the best tax laws for freelancers. Chile, Mauritius and Bulgaria are three of the countries with good tax law nowadays. In the Newsletter there are more details about this.
Invest like a funkin’ digital nomad
If I were a DN and I was wandering how to invest, I would follow some common sense and apply some known rules like any other investor.
Even if I am “very digital” maybe my investment style doesn’t necessarily have to be “too digital”.
It is a dangerous activity but if you work online and you are specialized in building or marketing other people business, it may be a good time to start checking if you can buy and flip some small online business.
The strategy is simple:
Go to websites marketplaces
Scan the websites on offer
Find something that fits your taste/knowledge
Make sure you can improve it
Make an offer to buy it
Renovate and improve UX and profitability
Keep it or sell it
Where are this flipping websites? Here are some examples:
Buying and selling domains is another activity between investing and working that can be suitable to generate profits to some DN.
As a Digital Nomad I’d avoid to make things too complex.
I’d avoid focusing my investments on small business abroad if I am not able to assess the risk properly or if I don’t have someone that does it for me.
I have found myself involved in small projects in frontier countries but believe me, even if we know people there and we trust them it is still extremely dangerous and the chances of losing money are high.
Beware also of insurances. Most of this products mix investment, retirement and LTC.
Just don’t mix.
When a financial product is too complex, it is very sure that it is not good or that it is too expensive.
Keep in mind that not having a LTC in some countries may be devastating for your finances.
It is better to ask for help and make an informed decision.
Or to avoid.
I always thought that it can be dangerous to rely entirely on our active work for living. It is always a good time to start building a safety net (the bigger the better) on a separate bank account that we don’t use for daily activities.
Another very good idea is to save as much as possible and invest as much as possible.
During our lives it is very normal that our wages or our hourly rate will grow over time.
The trick is not to rise the expenses accordingly, but to rise our savings rate to the maximum….and invest properly.
What are your challenges?
Are you a Digital Nomad that wants to build his financial future?
How are you investing as a digital nomad?
Let me know in the comments below!
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Sal from Revenue Land
Passionate DIY investor building my financially peaceful future. I believe in helping people, which is why I share what I am learning.