šŸ§ 7 geoarbitrage strategies to save or make money

Cost of Living Arbitrage, Three Tiers of Tech Salaries, Offshoring Your Business, & More
Dexter Zhuang
Dexter Zhuang
February 25, 2024

Today, in 10 minutes or less, youā€™ll learn:

  • šŸ” How to Arbitrage Cost of Living Internationally, Regionally, and Locally
  • šŸ‘©ā€šŸ’» How to Navigate Tech Jobs and the Three Tiers of Tech Salaries
  • šŸ’¼ Offshoring Your Business, Hiring Remote Talent, and Establishing Residency
  • šŸ‘œ How to Arbitrage Price and Currency Differences

FROM OUR PARTNERS

šŸ¦ Business banking the way it should be

Mercury powers Money Abroad's main business bank account.* āš”ļøĀ 

We love using it for our checking and savings accounts, automated transfers, physical and virtual debit cards, domestic and international wires, and integrations.

Itā€™s smooth, easy-to-use, and not to mentionā€”trusted.

Deposits are covered by FDIC Insurance up to $5 million.

Cherry on top?

No monthly fees, overdraft fees, or minimum balance. šŸ¤©Ā 

Try Mercury today. Get $150 when you deposit $10k in your first 90 days.

*Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & TrustĀ®; Members FDIC.

šŸŒļø 7 Geoarbitrage Strategies to Save or Make Money

Iā€™ve lived abroad for the past 5 years.

During this time, I discovered a secret. And once I observed it in my life, I couldnā€™t unsee it. In fact, I started noticing it everywhere. Itā€™s transformed how I think about my life, work, and business.

In this newsletter, Iā€™m going to uncover 7 geoarbitrage strategies to save and make moneyā€”along with real examples and anecdotes.

Let me begin with a quick personal and professional history:

ā€

Timeline of My Work and Life Abroad šŸ“

  • Pre-2019 - Lived in San Francisco, California for 7 years, working as a product manager for Dropbox and growth-stage startups.
  • 2019 - Traveled the world. Experimented with being a digital nomad and remote product coach in Asia, Europe, Latin America.
  • 2020-2023 - Moved to Singapore to work for a regional fintech startup. Weathered out Covid in the Red Dot.
  • 2023 - Left my full-time job. Started building my consulting and media businesses. Got married. Lease expired in Singapore. Rent increased by 60%, so we decided to move to Saigon for 6 months, then Mexico City for the winter.
  • February 2024 - Signed a 1-year lease in Mexico City to pursue goals like gaining Spanish fluency, exploring Latin America, and gorging on delicious tacos.

As you can tell, Iā€™ve spent a lot of time navigating geographies.

ā€

What is Geoarbitrage? šŸ’µ

Geoarbirtrage is exploiting differences in price, cost of living, salary, taxes, and currency in different markets or locations to save or make money.

Whether your ultimate goal is financial independence, location flexibility, or building a business, geoarbritrage can help you accelerate towards your goal.

ā€

Strategy #1: Moving From a High Cost of Living to Low Cost of Living Country āœˆļø

This strategy is most suited for remote workers, freelancers, or business owners. By relocating from a HCOL to a LCOL country, you can cut your monthly expenses dramatically.

Notion is one of my most-used products. Itā€™s little known that its founders, in the early days, moved from SF to Kyoto to cut costs and code in peace.

When I moved from the US to Singapore, I made a lower salary in Singapore than if I worked in a comparable role in the US. But I ended up (significantly) net positive after taxes due to lower cost-of-living and taxes.

Then, when we stayed in Vietnam for 6 months, our housing costs shrunk by 60%:

  • $4,800 SGD (~$3,570 USD) for a 1-Bedroom 1-Bath Condo in Singaporeā€™s Robertson Quay
  • $1,400 USD for half of a 3-Bedroom 3-Bath Luxury Serviced Apartment in Saigonā€™s District 2 (shared with another couple)

Granted, these arenā€™t perfect apples-to-apples comparison. But enough to see the savings potential.

Duck Dynasty GIF by DefyTV
Giphy

ā€

Strategy #2: Moving From a High Cost of Living to Low Cost of Living City/State šŸš—

This strategy is similar to strategy #1, but applied through a local lens. Itā€™s good for most people, especially families with kids, who would find a global move to be disruptive.

Start really localā€”i.e. within your city itself. Sam Dogen, former investment banker and founder of Financial Samurai, writes:

By moving out of ourĀ single-family homeĀ on the north end of San Francisco in 2014, renting it out, and buying a single family home just three miles west allowed us toĀ save roughly $4,200 a month, or 50%.

Imagine saving another $50k a year. How much stress thatā€™d alleviate!

Moving to a different states or region has a similar effect. For example, as an Australian, moving from Sydney to Melbourne means accessing a real estate market with 25%+ lower median rent. While time zones are still the same.

ā€

Strategy #3: Getting a Job With a Global Employer šŸ‘©ā€šŸ’»

This strategy is suited for top-tier, high-skilled professionals in emerging or developing markets.

As a hiring manager in the Asia tech industry, I saw wildly different salary ranges for people who were hired in Singapore (mature market) vs places like Indonesia (emerging market). This is often in spite of tech workers in Indonesia having attended a Singapore University or even worked for Singapore companies in the past.

To plug the gap, Iā€™ve seen high-performing tech workers successfully petition their global companies to benchmark their salary based on the more competitive market (e.g. instead of benchmarking to Malaysia, use Singapore). Note: This doesnā€™t work for local companies that donā€™t do global benchmarking.

Turns out, a similar dynamic plays out in the tech industry everywhere. Gergely Orosz explains the trimodal nature of software engineering salaries in Europe (and the world).

Gergely Orosz

ā€

Hereā€™s the three groups of companies:

  • Tier 1 companies (e-commerce IT) - benchmark against local competing companies (ā‚¬50,000-75,000/year for a senior engineering role in the Netherlands)
  • Tier 2 companies (Nike, Adyen) - benchmark against ALL local companies (ā‚¬75,000-125,000/year for comparable role)
  • Tier 3 companies (Uber, Booking.com) - benchmark against ALL regional/global companies (ā‚¬125,000-250,000+/year for comparable role)

The reality is that the global tech talent market is still inefficient. If youā€™re a top-performer in an emerging market, look for companies that do benchmark their salaries globally.

ā€

Strategy #4: Offshoring Your Business to a Low-Cost or Low-Tax Country šŸ’¼

Business is truly global these days. Financial and internet infrastructure is getting more interconnected. This strategy is all about leveraging the new environment where you can set up a business in one country, while doing business in another country easily.

I know many foreigner entrepreneurs who chose Singapore, Dubai or Hong Kong for incorporating their business. While I still recommend US LLCs to many international business owners, I get it for the reverse as well.

Hereā€™s a few of the tax benefits in Singapore:

Plus, you can setup an online business stack quickly using tools like Webflow (website), Aspire (banking), Stripe (payments), and Xero (accounting). While still marketing to clients based in the US!

Empire Taxes GIF by FOX TV
Giphy

ā€

Strategy #5: Hiring Remote Talent in Affordable Markets šŸ‘Øā€šŸ’¼

Not only can you incorporate in a low-tax country, but you can hire great talent from all over the world.

After living in the US, Southeast Asia, and Mexico, Iā€™ve become a huge believer in the phrase:

ā€Talent is distributed equally, but opportunities are not.

For example, Iā€™ve worked with excellent teammates in Vietnam that deliver immense valueā€”equal to or more than my highly-paid US peers. Where did I find them? Iā€™ve mainly sourced talent via my existing networks and Linkedin. While I havenā€™t tried using, virtual agencies are another option. E.g. GrowthAssistant, which claims to help you save over 70% compared to entry-level US talent.

Another enabler has been Global HR tools like Deel and OysterHR. Previously, companies risked getting slapped with fines for breaking labor/employment laws. Now with these platforms, itā€™s gotten easier as a founder to compliantly hire a remote worker from other countries as an independent contractor or employee.

ā€

Strategy #6: Get a Personal Residency in a Low-Tax Country šŸ–ļø

For most nationalities, you have the ability to geoarbitrage your residency for an additional safety net, spreading your assets, lower taxes, or simply for travel. (Sorry Americans, you canā€™t get out of US taxes.)

Youā€™ve probably heard of Golden Visa, Golden Passport, or Citizenship by Investment Programs. These are all shortcuts to getting that elusive residency status in your desired country.

Take this German entrepreneur couple my wife and I met in Mexico City. While they operated a successful online business, owned an apartment in Mexico City, and traveled extensively, I didnā€™t expect their home base. Turns out, they live most of the year in Maltaā€”mainly for tax reasons.

After doing some research, I discovered that Maltese tax residents are not taxed on foreign income if that income is not transferred to Malta. Thatā€™s pretty attractive if your business is run primarily from outside Malta.

Marsaxlokk Malta old fisherman village and important tourist attraction on the island
Unsplash

ā€

Strategy #7: Buying Goods in Countries with Lower Prices or Weaker Exchange Rates šŸ‘œĀ 

If youā€™re not into making a big move, then this strategy is for you. Buying low (and selling high) sometimes just requires you to shop more while traveling the world.

In November, my wife and I went to a friendā€™s wedding in Argentina. Despite being a beautiful country (we loved Patagonia), it was sad to see the common people struggle with hyperinflation since 1970ā€™s. In 2023 alone, the inflation rate hit 211%.

As a result, our US dollars went a very long way and popular items like wine and leather goods became a lot cheaper. With that said, Iā€™m not a fan of exploiting a countryā€™s turmoil - so please employ this strategy thoughtfully.

In Japan, luxury brands sell items for cheaper than in the US or other developed markets. A Gucci Marmont bag that retails for $2,290 in the US can be found for around $1,900 in Japan. Or a Prada Cahier bag that retails for $2,850 in the US can be found for around $2,400 in Japan.

Why are these cheaper? Potentially lower transportation costs, lower wages, and deflation.

So there you have it. Take advantage of your next trip abroad and buy yourself a gift!

šŸŒĀ Beyond your borders

šŸ‡øšŸ‡¬ 4,200 multinational firms chose Singapore as a HQ vs 1,336 in HK. If the geopolitical situation doesnā€™t change, I think weā€™ll see this trend continue over the next few years (link)

šŸ‡ÆšŸ‡µ Japan launches a 6-month Digital Nomad Visa (finally). The land of the rising sun joins countries like South Korea, Estonia, Portugal, and Taiwan in attracting digital nomads to boost its tourism economy (link)

šŸš€Ā Brian Stoffelā€™s Portfolio: 3 Cheapest Stocks and 3 Most Expensive Stocks. While Iā€™m not a stock picker, I enjoyed this breakdown of Brianā€™s actual portfolio (link)

šŸ“†Ā How I can help

Thatā€™s all for today!

Whenever youā€™re ready, hereā€™s how I can help you:

1. Monetize Your Expertise (free) - Click here to receive my free, 5-day course teaching you the foundations of monetizing your expertise outside of your day job.

2. Part-Time Consulting Launchpad - Click to join the waitlist for my January 2025 cohort. This teaches the system I used to earn 6-figures from my consulting side hustles taking 10 hours/week.

3. Tools I use and recommend - Discover my favorite tools for my personal finances and remote business.
ā€
4. Promote yourself to 6,000+ high-performers by sponsoring my newsletter.

If you liked thisĀ post, you'll LOVE my newsletter

Every week, get a free 5-minute deep dive on money, portfolio careers, or life design in your inbox:

Dexter Zhuang

Dexter is the founder of Money Abroad, an online education platform that helps people shift from "live to work" to "work to live." He writes about money, portfolio careers, and life design. Starting his career in San Francisco, he has lived and worked across Southeast Asia and Latin America for the past 6 years. He has 10+ years of experience building products and teams at public companies (Dropbox) and scaling startups (Xendit). His work has been featured in global outlets like Business Insider, CBS, US News & World Report, and Tech in Asia. He graduated from Dartmouth College.

Continue reading

šŸ§ How to Write a 2024 Annual Review
Personal Growth & Reflections

šŸ§ How to Write a 2024 Annual Review

INSIDE: Free Notion Template, 6 Essential Questions for Personal Growth, Actionable Insights for 2025
šŸ§ 5 Ways to Automate Your Finances
Manage Finances

šŸ§ 5 Ways to Automate Your Finances

INSIDE: 5-Part Money System, 3 Automation Tools, International Transfers, Investing, Bill Payment, Family Accounts, Business Finance
šŸ§ 4 Portfolio Career Paths (+14 Real-World Examples)
Start a Business

šŸ§ 4 Portfolio Career Paths (+14 Real-World Examples)

INSIDE: 14 Real-World Case Studies, Why Portfolio Careers, Benefits & Trade-offs, Which Path is Right For You

Want to live and work on your own terms?

Join over 6,000 people getting my best insights on money and portfolio careers every Sunday.

I'll send you my Top 10 All-Time Newsletters as a thank you:

Search

Enter keywords and click search.