Thanks to the fine mess the country is in, with exploding debt and ever-increasing taxes, evidence is mounting that an increasing number of wealthy investors and high earners are seriously considering emigration. But, apparently, it isn't that simple.
Television presenter Jeremy Clarkson recently wrote an article going through all the places in the world to which you might fancy emigrating and, one by one, dismissing them.
If it wasn't the mosquitoes or expat communities, it would be the boredom and the probability of an alcohol-fuelled early demise. He's got a point. So wouldn't it be a better idea just to emigrate your savings and income, enjoying in the process greatly reduced taxation and increased security? After all, this isn't such a bad place to live if you can enjoy the low tax returns of Hong Kong and investor protection of Luxembourg.
One good thing about the European Union is that it has at its heart Luxembourg. It provides us with all the investment products you need in order to avoid or restrict taxation, removing even UK investors from income tax, capital gains tax and inheritance tax.
At the same time, investors can get 100 per cent security on investments, should any saving institutions fail again. And inside the investments we could plant some interesting funds to give a bit of sunshine, brightening up our returns. How about Brazil, for example?
Now, when most of us think about Brazil, we probably think of poverty, football players, Rio's beaches, rainforests and Third World economics. But Brazil has come a long way in the past ten years.
It has a population of 192 million, with 15 cities of one million inhabitants or more, and its biggest city, Sao Paulo, has more than 11 million people. Compare that with the UK. We've 60 million people and only one city greater than one million, London, with a population of a mere seven million.
Brazil is the second biggest economy in the Americas after the United States. And its gross domestic product (or income, if you prefer) is now 60 per cent of the whole of South America.
Independent US analyst Ned Davis, in a recent piece of research, confirmed that Brazil's economy and stock market are in a long-term secular positive period. So its stock-market outperformance over the UK and other developed countries is likely to continue for much of the next decade. Since October 2008, the Brazil stock market index has increased 150 per cent for UK sterling-based investors, compared with an 8 per cent rise in the FTSE over the same period.
These days, Brazil benefits from a diverse economy and an expanding middle class that now accounts for half of the country's population. It has very favourable demographics, with the world's second highest ratio of working population to those who are retired.
It's a world leader in agriculture exports, number one in sugar, coffee, tobacco, chicken and livestock, and soya beans. And it's the world's leading exporter of sugar cane ethanol – 90 per cent of new cars sold in Brazil (it's also the world's sixth biggest car producer) run on gas and/or ethanol.
It's at the epicentre of the China-driven commodity demand theme, boasting the world's biggest iron ore producer and the biggest brewing company, and the enormous oil and gas discoveries offshore this year will lead to Brazil being a major oil exporter over the next ten years. It's China's biggest trading partner and has signed up to provide China over the next decade with 75 per cent of its oil production.
With the commodity demand theme intact for at least the next decade, Brazil and Latin America deserve a closer look for investors. There are a few well managed unit trusts investing in this area. So those investors who fancy the idea of emigrating their money to be more tax efficient and secure, could add a bit of sunshine to their returns by having more exposure to Latin America and Brazil in particular.
Courtesy of The Scotsman, 19 December 2009.
