Don't Panic—Geo-Arbitrage Your Way Through the Next Recession
Your Passport Is More Powerful Than Your Portfolio in a Crash
Hi Geo-FIRE Folks,
Things have certainly taken a turn for the more volatile over the last few months, and it doesn’t look like it’s going to simmer down any time soon. This surge in uncertainty has had serious effects on the stock markets, with share prices diving and people scurrying to find safe havens for their assets. There’s a lot of talk about recession and economic downturns in the news, and it can be scary. People who were planning to retire this year, relying on their portfolios, might need to make some adjustments or even delay retirement depending on their situation.
But how do you plan for things like a recession? How long do they last? On average—around 10 to 18 months. Yikes.
Planning for the “What Ifs”
Whilst I'm not a wizard who claims to have seen this coming, I am still a soldier at heart—and soldiers are good at planning. Planning for the what-ifs. That’s why, a couple of years ago, I came up with an escape plan in case the markets crashed while I was still accumulating assets.
It was a plan that would allow me to leverage geo-arbitrage to continue living a high-quality life while still having excess income to invest in a falling market. My current savings rate depends on what’s coming up but is usually between 25% and 50% of my income each month.
The idea being that after living in a few low cost places for the statistically average recession period of about 10 to 18 months, I would not only have built up a large number of shares in solid companies, but have increased my options income, and had a tonne of new experiences from living in new countries.
Why This Plan Matters
Just a note here—this plan is all about taking action. When you take action, you move forward and often step outside your comfort zone. That moving element? It’s the hardest part for most people. So, if you’re seriously worried and considering moving to reduce costs, then treat this plan as real. It could save your retirment.
The plan is simple enough that anyone can create their own, regardless of where you live. Here's mine—steal my homework and build your own. A final note on this, you dont need to go from A to B to C etc etc. You can go straight from A to D and just stay there for the entirety of the financial down turn? Why not it’s your plan.
Plan A – Panama (Current)
Monthly Budget: $3,500–$4,500
If the market dropped and I was unable to generate as much income, I could easily reduce my spending each month by eating out less and cutting back on paid activities. I could bring this down to around $3,500 and still live well. The weather is always warm here and the airport is well connected to the rest of the Americas and Europe. Finally, by being a Panamanian tax resident you are able to legally reduce your taxes in most scenarios.
But what if the market drops further, and I miss the chance to invest even more into the falling market and lower my cost basis? The easiest way I’d free up funds is simple: I’d move somewhere cheaper. Off to the airport I go!
Plan B – Mexico City, Mexico
Monthly Budget: $3,000–$3,500
This place is a thriving megacity with one of the best food scenes in the Americas (oh, my heart). Prices are lower than Panama, and the people are friendly. Mexican food is my favorite cuisine, and they actually have spicy sauces—something that’s surprisingly hard to find in other parts of Latin America, believe me.
You can rent a nice apartment in a walkable part of the city for 6 months for between $1,200 and $1,600 per month. Food is cheap and incredible, and the internet is fast. There’s a reason this place is so popular with digital nomads from around the world. The climate here is a little cooler than other spots in Mexico due to its elevation, but it’s still pleasant—and Mexico City has a globally connected airport.
But… what if the market fell even further?Like a duck, I’m heading south for the recession.
Plan C – Medellín, Colombia
Monthly Budget: $2,500–$3,000
Just a one-hour flight from Panama City is Medellín, Colombia—a beautiful and very affordable place where the cost of living is low, the quality of life is high, and the food is amazing.
On the above budget, you could live in a nice area, eat out regularly, join a gym, and Uber anywhere you need to go. There are far worse places in the world to wait out a market downturn. The almost constant temperature of 20–26 degrees makes the “City of Eternal Spring” a pleasant respite from the other cities on this list.
Ok… so the recession has gone on a little longer than expected or income is less—what shall we do? Give back!
Plan D – Volunteering / House & Pet Sitting
Monthly Budget: Near Zero
Long-time subscribers will know I’ve already written about how you can lower your costs and reach FIRE faster by volunteering, teaching, or house sitting around the world.
Using platforms like Workaway, you can find volunteer or even paid gigs worldwide—pet sitting, helping on permaculture farms, working in animal shelters, teaching English, etc. In exchange, you often get free accommodation, most meals, internet (depending on location), and a chance to learn and give back.
All the while, you could cut your cost of living by 50–80% or more. This option is perfect if you’re looking to ride out a crash while keeping your expenses near zero and staying active and engaged.
Personal story: Pet sitting is one of my favourite ways to cut costs to almost zero and help someone out. I pet sat a person’s dog for 6 weeks, in a beautiful apartment with a gym and a pool, and it was incredible. I just had to sort out my food. This helped me cut my costs by 90% and enabled me to travel to more expensive cities in Europe whilst keeping my average burn rate low. I can’t recommend this highly enough.
Final Thoughts: Be Ready, Just in Case
The takeaway here is simple: Have a plan before you need it.
As we’ve seen, markets can turn on a dime… or on a social media post. If you’re in the wealth-building phase or in the retirement phase and want to avoid selling assets or panicking when volatility hits, geo-arbitrage can be a powerful way to adapt, reduce your expenses, and continue growing your portfolio—all while living well and exploring the world.
If you’re in Australia or New Zealand, could you handle spending up to 18 months living a low-cost, high-quality life in Southeast Asia? If you’re from the US, fancy heading south where costs are lower and that dollar of yours goes a lot further?
Think about it, talk about it with loved ones, and then plan it out. There’s no harm in being prepared. But remember a plan is useless unless you’re willing to implement it. What do you have to lose?
Cheers
Andy
Medellin, Colombia
Comuna 13 in Medellin. Use to dangerous, now is full of people and vibrant art.
Love this Andy!!