So what is this PT thing?
Back in the mists of time, an international financial services author named Harry D. Schultz published a paper recommending readers use “3 flags” to preserve their freedom and wealth. Each of those flags represents a different country in the world. It is also why the header on this website has different national flags.
His core idea, which is actually quite simple, but can be complicated and expensive to implement, was that a person’s liberty and financial freedom will be enhanced by internationalization. In other words, when every part of your personal finances relates to one nation, that nation controls you. When you add in a second nation, the first nation controls you a little bit less and so on.
This idea is enhanced by carefully selecting countries for their existing rules – seeing the world as it is and choosing to use countries more like service providers or businesses than nation states.
The key word is FREEDOM. This means that the theory is different shades of libertarianism, though often quite extreme in it’s views. Personally, I think I am only a very moderate libertarian, at best, but that does not stop me from thinking that freedom is generally a good idea.
How To Be A Perpetual Traveler – Version 1.0
In the original idea, a person would need a passport from a second country. Ideally, that country would not want it’s subjects to serve national service in the military and would preferably be an independent nation that is highly regarded throughout the world, such as Ireland, Sweden or Denmark.
The same thinking was applied to residency. If a person wanted to avoid excessive taxation, one way to do this would be to be personally resident for taxes in a tax haven. This might be an island in the Caribbean, for example. In Schultz’s case, he was a resident on Monaco for decades.
In his original idea, the suggested plan was to drop out and travel extensively. This would mean that no single government would think the person to be their resident and so would ignore him or her for tax purposes. This might have been possible in the 1970s, but in our computer and database age it is very difficult to do in reality. Databases have long memories!
However, it was this concept of regular travel that spawned the idea’s enduring name: Perpetual Traveler
The third flag of his theory related to where a wealthy person might locate his or her liquid assets – international banking and asset management. Once again, carefully selecting a location where privacy and financial management talent and services prevailed would be important. If the location happened to also have low taxes on savings and capital gains, then even better!
How To Be A Perpetual Traveler: Version 2.0
The founding concept was later expanded on by WG Hill who authored a number of books on the subject. His thinking expanded the number of flags still further.
These extra flags were a business base and what are termed playgrounds – other countries where your own personal lifestyle tastes are considered to be normal and accepted, letting you live your life with little or no fear of the law.
This meant that the full list of flags became:
1. Citizenship – hold documents from more than one country
2. Personal residence – preferably in a low tax nation
3. Business base – where you earn the majority of your income
4. Asset base – where you keep your money and funds
5. Playgrounds – several locations where you choose to spend time each year
Through the 1990s, a UK publishing firm called Scope International published a series of books relating to different aspects of the theories, focusing on one aspect – such as passports or banking – or suggested locations – such as Monaco or Andorra. There are also a wide number of stories relating to the efforts of government to catch up with and shut Hill down – how true they are, who can say, but they seem plausible. (For reference, both Schultz and Hill were Americans by birth).
As with anything that has a counterculture feel, is riddled with conspiracy theories, or is just plain old confusing, there were also scammers and fraudsters in the space. One such character was Adam Starchild. I highly recommend that you click on that link and read his profile. There are few people like that in the world! Even that wikipedia page describes that, “He left behind a remarkably diverse list of registered companies”.
What Is A Perpetual Traveler?
The reality is that PT is designed to maximise personal freedom through travel, wealth and the careful use of international locations. This means that a PT could be almost anyone.
In recent years your author has spent some time in Malta, a tiny Mediterranean Island. It has low personal tax rates and lots of sunshine, both of which attract wealthy retirees. This has lead me to meet quite a number of people that either live or identify themselves as PTs. I have probably met 30 or more people like this, which is actually quite a number.
Who Are Perpetual Travelers?
They came from a wide range of northern European countries, such as Germany, Sweden, Denmark, Ireland and the UK. They mostly speak excellent English, which is why they are not in Monaco. They are mostly aged 55 or more, like sunshine, are well educated, have made some nice money in their working lives and like to have fun. That could be almost anyone!
Of the people I met, the reality is that most had not heard of or were thinking about a fixed strategy. Instead, they simply wanted to move to sunnier climes for their early retirement and if they planned to do that, they were going to go somewhere low tax. People that had made it their life’s work, were very rare in comparison.
Does Being A Perpetual Traveler Work?
The reality is much more complex these days than it ever was in the 1980s or 1990s. In Schultz’s time people really could “drop out”, travel the world and untangle themselves from government. This is almost impossible today. Not being resident somewhere, at least as seriously as is required for everyone to believe that you are actually resident, is a strategy that is very likely to cause legal problems. Don’t do that.
Additionally, things like offshore banking and offshore companies are much more complicated and expensive to set up now than they were some years ago. In early 2016 a data leak lead to The Panama Papers which essentially proved a few things: rich and powerful people routinely cheat on their taxes and offshore companies and attached bank accounts can be very hard and expensive to set up, even when working with one of the shadiest operators in a shady industry…
This is one of the reasons why this website does not look at offshore banking and / or companies. Their potentially very high costs (both financial and legal) make them unlikely vehicles for most people to use, unless the level of their wealth is really high or their legal situation is conducive to safety.
Additionally, the rules of the banks that offer accounts changes regularly in line with ever changing anti-money laundering and Know Your Client rules. This website is not designed to offer you consulting advice or charge fees in these areas, so it feels better to not discuss them in any depth. Any steps you take in these areas will require your own first hand research.
However, just looking at the news in 2016 showed that some level of internationalization is preferable, if possible. For example, the atrocities of civil war in Syria showed the costs of not being able to leave a country when times get scary. The surprise Brexit result in the UK plunged several million people (approximately 3.5 million EU citizens that live in the UK and around 1.5 million UK citizens that live in the EU) and their legal status into doubt.
Perhaps a more direct example happened in January 2017. As you will read here, holidaymakers from the UK were being evacuated from The Gambia after a political crisis. Many other firms and governments were trying to help their citizens. Nobody was offering to help Gambians, they were stuck and had to suffer through the problems.
Having a second passport is mostly a very good thing for you and your family. Situations like these, with people suddenly stuck in some form of legal limbo, not of their own doing, shows some of the benefits of being an international citizen – whether or not that means PT to you is your decision.
If you don’t believe me, then look at the example being set by American billionaire Peter Thiel as was exposed in January 2017. He has arranged for citizenship in New Zealand and also purchased a large estate in the nation. He is ready for anything! It seems unlikely that he is a PT as we might imagine, despite his initials, but he has certainly taken some of the steps and has probably calculated that this is an optimal approach for his lifestyle.