🐧 7 geoarbitrage strategies to save or make money

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

Today, in 10 minutes or less, you’ll learn:

  • 🏡 How to Arbitrage Cost of Living Internationally, Regionally, and Locally
  • 👩‍💻 How to Navigate Tech Jobs and the Three Tiers of Tech Salaries
  • 💼 Offshoring Your Business, Hiring Remote Talent, and Establishing Residency
  • 👜 How to Arbitrage Price and Currency Differences

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🌏️ 7 Geoarbitrage Strategies to Save or Make Money

I’ve lived abroad for the past 5 years.

During this time, I discovered a secret. And once I observed it in my life, I couldn’t unsee it. In fact, I started noticing it everywhere. It’s transformed how I think about my life, work, and business.

In this newsletter, I’m going to uncover 7 geoarbitrage strategies to save and make money—along with real examples and anecdotes.

Let me begin with a quick personal and professional history:

Timeline of My Work and Life Abroad 📍

  • 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, I’ve spent a lot of time navigating geographies.

What is Geoarbitrage? 💵

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.

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

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. It’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 Singapore’s Robertson Quay
  • $1,400 USD for half of a 3-Bedroom 3-Bath Luxury Serviced Apartment in Saigon’s District 2 (shared with another couple)

Granted, these aren’t perfect apples-to-apples comparison. But enough to see the savings potential.

Duck Dynasty GIF by DefyTV
Giphy

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

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

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

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

Imagine saving another $50k a year. How much stress that’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.

Strategy #3: Getting a Job With a Global Employer 👩‍💻

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, I’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 doesn’t work for local companies that don’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

Here’s the three groups of companies:

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

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

Strategy #4: Offshoring Your Business to a Low-Cost or Low-Tax Country 💼

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.

Here’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

Strategy #5: Hiring Remote Talent in Affordable Markets 👨‍💼

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, I’ve become a huge believer in the phrase:

Talent is distributed equally, but opportunities are not.

For example, I’ve worked with excellent teammates in Vietnam that deliver immense value—equal to or more than my highly-paid US peers. Where did I find them? I’ve mainly sourced talent via my existing networks and Linkedin. While I haven’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, it’s gotten easier as a founder to compliantly hire a remote worker from other countries as an independent contractor or employee.

Strategy #6: Get a Personal Residency in a Low-Tax Country 🏖️

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 can’t get out of US taxes.)

You’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 didn’t expect their home base. Turns out, they live most of the year in Malta—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. That’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

Strategy #7: Buying Goods in Countries with Lower Prices or Weaker Exchange Rates 👜 

If you’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 friend’s wedding in Argentina. Despite being a beautiful country (we loved Patagonia), it was sad to see the common people struggle with hyperinflation since 1970’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, I’m not a fan of exploiting a country’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!

🌐 Beyond your borders

🇸🇬 4,200 multinational firms chose Singapore as a HQ vs 1,336 in HK. If the geopolitical situation doesn’t change, I think we’ll see this trend continue over the next few years (link)

🇯🇵 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)

🚀 Brian Stoffel’s Portfolio: 3 Cheapest Stocks and 3 Most Expensive Stocks. While I’m not a stock picker, I enjoyed this breakdown of Brian’s actual portfolio (link)

📆 How I can help

That’s all for today!

Whenever you’re ready, here’s how I can help you:

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3. Work with my tax team - Get personalized guidance from a US expat tax professional.

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For daily insights, follow me on Linkedin or X (@dexteryz).

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Dexter Zhuang

Dexter is the founder of Money Abroad, a website and newsletter on building wealth for global professionals. Over the last 10 years, he's been a product leader, product manager, consultant and coach at companies like Dropbox, Xendit, and growth-stage startups across the US, Asia Pacific, and Latin America. His work has been featured in global publications like Business Insider, CBS, US News & World Report, and Tech in Asia. He graduated from Dartmouth College.

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