What is Geoarbitrage

Some readers may not be too familiar with the term “geoarbitrage” and what it refers to exactly. In this post we’ll elaborate on what geoarbitrage is in this day and age.

geo” = prefix for “the earth”, commonly relating to location

arbitrage” = (financethe simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.

In other words, arbitrage refers to profiting by capturing the difference in prices between different markets, and in this case, different geographies.

This applies to not just investments in different countries, but prices in doing business and even your personal cost of living. If leveraged correctly, geoarbitrage could potentially change your life for the better drastically, both financially and socially.

Arbitrage Your Cost of Living

As Millennials born in the West, we were fortunate to grow up in the wealthiest nations in the world in this era. This gave us a tremendous advantage in an era of globalization, as we could easily travel or move our life elsewhere for a fraction of the cost, while potentially earning the level of salary earned in the West.

For example, if you are a digital nomad or a remote-working software developer making $100k USD a year (arbitrary number) living in Washington DC, you could easily move to a country like Thailand or Portugal with a high quality of life and much cheaper cost of living – not only will you enjoy better weather and better value, you will save an enormous amount of money of which you can invest towards your future.

Let’s do the simple math: $100k salary in a place like Washington DC means you need to pay 33% of your salary to the IRS, meaning that you get $77k in-hand, which is approximately $6,417 net income per month. If you are renting a one-bedroom apartment in a good part of town, you are likely spending between $2,000 to $2,500 on rent (let’s pick $2,417 to make the math simple). That leaves you $4,000 of disposable income, and according to statistics the average cost of living (without rent) for a single person in Washington DC is about $1,200, which means if you live relatively normal and frugally you will be left with $2,800/month of savings – pretty good if you are a single person!

Now, let’s look at what happens if you make the same level of income (by working online/remote) but live in a city like Bangkok which has a high quality of life with good weather, great safety, and vibrant nightlife. The same one-bed apartment in DC would only cost you about $650/month in Bangkok, which is 70% in savings on rent! The cost of living without rent, even for a fairly lavish expat lifestyle should not cost you more than $1,000/month, which brings your monthly total cost of living to $1,650, which is nearly 1/3 of what you would be spending living in Washington DC (not to mention the crime rates and obesity).

That’s not all – the best part about leveraging geoarbitrage and living abroad is: taxes. If you become a tax resident in another country (and thus becoming a non-tax resident of the US), you are exempt from paying income tax on your first $120k of worldwide annual income. Note that this does not mean giving up your US citizenship – you are simply a resident in another country, meaning that for the time being you are not living in the US and therefore not using the US’s social services. Taxation on income in most non-Western countries are significantly lower than in North America and Europe, and therefore you will have a lot more money in-hand to begin with.

The cumulative effects of the above should be obvious – in most cases you are likely to be doubling your amount of monthly savings by moving abroad (whether temporarily or for longer periods). And, if you can set aside your American rose-tinted glasses briefly, you’ll realize that the rest of the world has caught up in many ways and the quality of life for expats in many countries is now fantastic and perhaps even better than in the West.

Arbitrage Your Cost of Business

As I wrote many months ago near the start of the global COVID pandemic, remote working will become the norm after this pandemic (already in the process of normalizing). This means that more businesses will stop renting office space and even lay off pointless middle managers, but start looking worldwide for skilled digital workers.

This spells the migration of the “model of work” from location-dependence to location-independence, which will over time level the playing field and salary discrepancies around the world. This also means that the window for geoarbitrage will likely get smaller in terms of HR costs.

This is why if you are doing some sort of business that requires employees with digital or English language skills (programming, customer service, etc.), you should look into geoarbitraging ASAP, before the herd comes.

This means hiring devs in Eastern Europe, India, Pakistan, etc. and hiring virtual assistants in English-proficient developing countries like the Philippines and India.

I used to work with a virtual assistant from the Philippines, whom I paid $500/month for full-time market research and social media work. She was also competent, professional, and hardworking – compare that to the typical lazy, self-centred American employee who earns $3,000/month while pushing their socialist “woke” agenda, and there is really no contest.

If your business has no need for a local physical location (e.g. cafe, bar, fitness studio, etc.), then there is no reason why you cannot outsource your hiring globally, while living in a different place yourself.

Both moves will save you serious money, which you can then save and invest towards a comfortable future and faster retirement.

Arbitrage Your Lifestyle

I won’t go too in-depth into this one as I don’t want to run the risk of getting too political or red pill on this topic, but simply put, you can also leverage geoarbitrage to improve your social life and general lifestyle.

Let’s say if you live in a town where all your friends ever want to do is get hammered Thursday Friday Saturday, but you’ve moved on past that and no longer enjoy it. Or if you live in a place with shitty weather and you absolutely hate the cold. Or if you live in a town where people are rampaging through the streets chanting absurd “woke” slogans while looting your local supermarket. Well then, you can move to a city or country that has a more suitable lifestyle for you – more culture, better climate, better safety, less obesity and better personality in the opposite sex, etc.

Geoarbitrage your lifestyle.

Prior to COVID throwing a wrench into the wheel of global travel, the world was literally your oyster. Intercontinental flights are cheap nowadays and you can easily pack up and go live somewhere else for a while, and take advantage of specific things in that destination to improve your finances or social life.

The only thing you need for doing so is the ability to make a living online.

If you have an in-demand digital skill like coding, graphics design, video editing, or animation, then congratulations because you are already set for life. All of those skills are in high demand and will be in even higher demand in the future.

If you don’t have a digital skill, you can always start learning. Alternatively, you can use your non-technical skills (sales, marketing, consulting, copywriting, translation, podcasting, etc.) to start freelance work or your own agency. Or, if you have some capital saved up, you can use that to start a physical product business such as Amazon FBA.

Here’s a list of books I recommend if you are new to the idea of working for yourself.

Don’t delay, get started now. Geoarbitrage opportunities are waiting.

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