Author Topic: Income from two countries, one I don't live in: invest it all?  (Read 431 times)

houwat

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Hi Mustachians,
Glad to be on here! I've been following MMM for years now, but I just joined the forum.

My situation: I live and work in the US and am pretty much set with my 'frugality' strategy here. But thanks to family inheritance, I have rental income in Brazil. The money has been collecting into a savings account for years, one that doesn't yield much return. Now that I have control over the account (Brazilian banking is full of red tape), I want to invest it more aggressively.

My question: I don't live in Brasil, don't plan on doing so for the next 5 years, and don't have expenses over there. Should I go full hog and invest all the money from my savings account? I remember MMM writing about investing all his income when he still had a job. I wanted to see if that was the right approach for me or whether I might be missing anything...

Thanks for the help!

Andy R

  • Bristles
  • ***
  • Posts: 294
Re: Income from two countries, one I don't live in: invest it all?
« Reply #1 on: April 01, 2019, 07:56:38 PM »
Your asset allocation should be related to your risk tolerance.
Generally as your money grows relative to your remaining human capital, your risk tolerance goes down.
For example, it is not the same seeing 100k drop to 60k as it is to see 1mil drop to 600k.

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1891
Re: Income from two countries, one I don't live in: invest it all?
« Reply #2 on: April 01, 2019, 10:09:42 PM »
If as an American you start investing outside the US, the red tape has only just begun.  I'd caution you against it until you've met with a tax lawyer.  You owe taxes on dividends outside the U.S., but what if the foreign investment doesn't pay out their dividends?  You have to calculate a dividend you didn't actually receive, and pay on that.  At least, that's what I understood before I gave up on the idea.

Speaking of which, if your bank accounts outside the U.S. ever add up to $10,000 you have to start filing "FBAR".  While they would probably be lenient to a first time violator, if you fail to file FBAR knowingly they can penalize you for 50% of the account value or $100,000 (unfortunately I think it's whichever is larger...).

houwat

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Income from two countries, one I don't live in: invest it all?
« Reply #3 on: April 02, 2019, 05:52:39 AM »
If as an American you start investing outside the US, the red tape has only just begun.  I'd caution you against it until you've met with a tax lawyer.  You owe taxes on dividends outside the U.S., but what if the foreign investment doesn't pay out their dividends?  You have to calculate a dividend you didn't actually receive, and pay on that.  At least, that's what I understood before I gave up on the idea.

Speaking of which, if your bank accounts outside the U.S. ever add up to $10,000 you have to start filing "FBAR".  While they would probably be lenient to a first time violator, if you fail to file FBAR knowingly they can penalize you for 50% of the account value or $100,000 (unfortunately I think it's whichever is larger...).

Thanks for the response. Although I'm not American (Brazilian), I've lived long enough in the US that the IRS considers me a resident because I pass the 'substantial presence test.' So, I'm 'American' for tax purposes.

I was thinking of talking to a tax lawyer there, factoring in only the current rental income. But you're right that I should ask about further investments before I make any other leap.

Regarding FBAR, I've been on top of it, as far as I know. TurboTax has a nifty feature where it flags whether you need to fill it out.
« Last Edit: April 02, 2019, 05:56:03 AM by houwat »

houwat

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Income from two countries, one I don't live in: invest it all?
« Reply #4 on: April 02, 2019, 05:58:43 AM »

You could always diversify your investment. have you thought about property crowdfunding? This way you could invest in two countries, for example.

That is awesome! I just learned about property crowdfunding this past week when asking about investment options in Brazil. It seems like the investment cycle is short and the returns decent.

Is the risk relatively low, if a developer is serious?