Episode 90
Golden Visa or Regular Visa? Getting Real About Moving to Portugal
More Americans are leaving the United States than at any point in recent memory, and Portugal has become one of the most searched destinations. But what’s driving the move, and what happens once you get there?
Richard Taylor is joined by John McNertney, Founder of Green Ocean Global Advisors, to unpack the realities of relocating from the US to Portugal. John has lived the journey himself. After moving from San Francisco to Lisbon during the pandemic, he now helps American expats, retirees, and internationally minded families navigate cross-border financial planning, US expat taxes, residency options, and long-term wealth management while living abroad.
Together, Richard and John explore why Portugal has become such a hotspot for Americans, what’s changed politically and financially in recent years, and why so many expats are now thinking seriously about building a life and a financial foundation outside the United States.
The conversation gets into the practical detail that most people miss before they move: the difference between the Portugal Golden Visa and the D7 visa, the financial traps Americans fall into with PFICs, trusts, IRAs, and cross-border investment structures, and why proper planning before the move can save years of stress and significant money later on.
Richard and John also explore the emotional reality of expat life, including integration, language learning, culture shock, and why living abroad fundamentally changes the way people think about money, opportunity, and freedom.
Whether you’re seriously considering a move to Portugal, researching second residency options, or simply curious why so many Americans are looking overseas right now, this episode offers a grounded and honest look at the opportunities and challenges of modern expat life.
—
Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management.
—
Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.
ABOUT RICHARD:
Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.
As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).
Connect with Richard on LinkedIn
TRANSCRIPT:
John McNertney:
[00:00:00 – 00:00:26] Portugal can be many things, but it is not like a snap case, like super tight kind of country. And so there are some landmines that will remain undetonated for a very long time. We’re living in a time where there is this heightened chaos at the political level in the United States. There’s a different feeling in 2025 and 2026. And some people are like, you know what? This is too much stress. I’m getting out of here.
Richard Taylor:
[00:00:26 – 00:00:34] So they really are on a path out of here, though, you know, it’s just. It’s just not yet. Because I think it is the golden visa that gets all the attention because people are selling it.
John McNertney:
[00:00:34 – 00:00:47] I’ve got the golden ticket. We love it. Americans are like, oh, can I get a. Oh, it’s golden, you say. But for most people, the golden visa is just very expensive. It’s hard to unwind. Yeah, it’s not straightforward.
Richard Taylor:
[00:00:49 – 00:02:31] Welcome to Expat Wealth, a Plan first wealth podcast dedicated to helping ambitious expatriates in America and Americans overseas thrive. I’m your host, Richard Taylor, and Plan first wealth is the business I founded and run today. And we work with successful expatriates, immigrants and internationally minded Americans to make the most of their opportunity and avoid the expat landmines. First, a quick disclaimer. While Plan First Wealth, LLC is an SEC registered investment advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views and positions of Plan First Wealth. Information presented is for educational purposes only. Now, if you aren’t already receiving our emails, please go to our website, www.planfirstwealth.com and sign up there. It’s free and you’ll be notified every time we drop a new episode and so much more. Okay, let’s get back to this week’s show. Welcome to an Ask an expert show from Expat Wealth. My guest today is John McNerney. As well as being a fellow GFPI member, John is the founder of Green Ocean Global Advisors, a comprehensive wealth management firm that provides investment management, financial planning and cross border advisory services a specific focus on Americans in Portugal. And that is exactly what we’re going to talk about today. This conversation is part of an Americans Moving to Portugal double header, following hot on the heels with my conversation with Zeb Fisher, which is episode 88, if anyone wants to go back and take a listen. And as a financial planner hugely active in this space, John is going to help me bring this journey to life. And we’ll also discuss Some of the, the, the American friendly golden visa options. So without further ado. Hi, John. Welcome to Expat Wealth.
John McNertney:
[00:02:31 – 00:02:34] Hello, Richard. How are you doing, man? It’s good to see you again.
Richard Taylor:
[00:02:35 – 00:02:55] I’m, I’m very good. Yeah. Thank you. Right, so I’m, I’ve just. I literally just had a conversation with Zeb, so I’m feeling all. I’m feeling my portug. My level of Portuguese Americans moving to Portuguese knowledge has never been higher. So I’m feeling very equipped to get into this, into this now. But before we do that, will you just tell everyone a little bit about you and your firm?
John McNertney:
[00:02:56 – 00:03:47] Sure, yeah. Let’s. Let’s get rolling while you’re white hot. So we are a cross border specific firm. Green Ocean Global Advisors was started, I guess like four years ago now after I had moved to Lisbon. I moved to Lisbon just as the pandemic was starting up. And I found myself sort of like in love with Portugal. And so we chose to specifically offer a platform where we’re working with Americans that move to Portugal and have financial planning needs. So that’s what we’re doing at all times. We now have a six person team. One of us is located in San Francisco. That’s where the firm was founded. That’s where I lived for most of my life. But a lot of these folks are working with me here in our offices in Lisbon, Portugal. So this is my life now, man, just like you, day in and day out.
Richard Taylor:
[00:03:47 – 00:03:52] Well, I’m super interested to just dive into that little bit. So you’re living and working in San Francisco.
John McNertney:
[00:03:53 – 00:03:54] Yeah.
Richard Taylor:
[00:03:55 – 00:03:56] How does Portugal come about?
John McNertney:
[00:03:56 – 00:04:41] Well, I mean, so the short story is, my wife, she earned a job in Lisbon, Portugal, and we had never really planned to move here, but yet she was fascinated with Europe. She had grown up in Europe and lived here during her childhood. And so she said, hey, can I move to Portugal with the kids and you can stay back in San Francisco and keep building your business? And I said yes. But then, you know, I like to joke that this was like that show Gilligan’s Island. You know, they get. They were on a three hour tour, but then they got marooned on their island. Well, that’s what happened with the pandemic. I was like, just going about my life in San Francisco and she got marooned here and said, you gotta come out here because otherwise you’ll be cut off from the family. So I did.
Richard Taylor:
[00:04:41 – 00:04:47] Green Ocean was founded in San Francisco not as a cross border firm.
John McNertney:
[00:04:47 – 00:05:06] No, it was cross border. I actually went back to San Francisco, after I decided to make the jump, because I wanted to for regulatory reasons, I wanted to found the company there. And so our trading desk is still officially there. And I go back and forth from time to time, but increasingly I prefer to be here.
Richard Taylor:
[00:05:06 – 00:05:13] I’ve got to ask, what’s your wife’s background? What was the job she got in Lisbon? What’s her story? Abridged.
John McNertney:
[00:05:13 – 00:05:33] Yeah, cybersecurity. So she was a cybersecurity policy analyst. And there are just loads of tech firms now that are choosing to found here or have offices here. And so they said, we need somebody to come out and provide cybersecurity. And so it was really kind of incidental to the whole project of moving abroad.
Richard Taylor:
[00:05:34 – 00:06:20] So were you a financial advisor, building a book of business in San Francisco, working with Americans? Just the usual route, yeah. This diverse. And then, yeah, your wife moving to Portugal, you then being forced to move there, essentially, to not being cut off from the pandemic has led to. Has led to the path you’ve taken. I love these stories. And, you know, look, correct me if I’m wrong, I suspect you feel some of this than I do. You’ve really, like, you’ve stumbled into, I think, a much more interesting area. It’s much more interesting in terms of, like, what you deal with. But also, I love working with expats. You know, I love people who have. Who have. Who have made this move, who have done this, who have walked this walk. And, you know, reflecting back now on this journey you’ve been on, how do you. How do you look back on it?
John McNertney:
[00:06:20 – 00:07:18] Well, you probably would relate to this is. I was always fascinated with that Walt Whitman poem about the road less traveled, Right. And it didn’t feel like a road less traveled to be a financial advisor in San Francisco, California. There’s just loads of us. And so, nothing against that. I was just prepared to live out my normal financial advisor life. But I studied philosophy and French as an emphasis in college, and so this actually became sort of a nice tie in with what I was really passionate about, which was like, leading a slightly less orthodox experience. And so I was able to sort of dovetail that with my professional career here. And it’s super motivational, right, because we get to work with super interesting people that have a slightly different perspective and trajectory. And it ties in with my language capabilities because, I mean, I was in Paris last weekend. How cool is that? Is you can hop a plane and be in Paris, France. It’s cool, right, mate?
Richard Taylor:
[00:07:18 – 00:07:38] It’s so cool. I tell You. Everyone in Europe takes us for granted. Not everyone, but I certainly did. It’s only when I left the UK and suddenly I couldn’t access. I was, I couldn’t be in Paris in an hour, Rome in three hours, Madrid in four. You know, once I lost all that, only then did I realize, wow, that is super valuable. That is incredible. Took it totally for granted.
John McNertney:
[00:07:38 – 00:07:55] I was at the palace of Versailles yesterday, right? I was like boating around in the little lake behind the castle and I’m like, wow, this is different. You know, my friend is like, wow, you’re going abroad, you’re going to do this big trip. And I’m like, yeah, I’m flying back home this afternoon. It’s a two hour flight, so cool.
Richard Taylor:
[00:07:55 – 00:08:20] So you, you’re like me, you’re you. You are not only working with expats, but you are one of them. You have, you have walked the walk, you have done it. You know, you understand much more what they’re going through, both in terms of expatriating, but also the specific journey of getting from America to Portugal and then building a life in Portugal. So let’s just like, yeah, man, just dive into that. Yeah. So who, who are you? Do people content you before they leave or when they’re already in Portugal?
John McNertney:
[00:08:21 – 00:08:45] Well, hopefully they’ll be hearing us on this podcast and they’ll hear me again when I say, get a lead on this. Like anything in life, you know, go and start figuring these things out because there are so many issues that we need to deal with that are not going to just solve themselves. So. Yeah, so most people do actually reach out to us at least a year before they decide to move. Some people don’t, but most people do.
Richard Taylor:
[00:08:45 – 00:09:18] Look, I’ll tell you some benefit from our experience. We often have people who are thinking of moving back to the UK or elsewhere. And we, like you, we always say, the more time you give us, the better. We will find. We’ll say a minimum of a year. What we also find though, is that in that year so much stuff is going on. Finances can sometimes get left and left and put off and put a million things going on about moving your families, school, all this stuff, and then before you know it, they’re moving in a month, two months, and we’ve run out, We’ve kind of run out of time to a lot what we need to do. Do you find that or is that not because people are people, because this is such a big move for someone that. And often their first move?
John McNertney:
[00:09:19 – 00:09:35] Well, we’re not the most Exciting call that they’re going to make, Richard. I mean, honestly, right. Like, we’re important to each other and to ourself and to our. No, but nobody really thinks, like, oh, I got to call my financial advisor, like, stat. Right. Like, so it makes sense that we’re one of the last people that they call.
Richard Taylor:
[00:09:36 – 00:09:54] Yeah, but, but, yeah, but I still wish sometimes we have a bit more time to prepare. I don’t know. And also when you do people, when people reach out to you who are already in country, do you often find at that point that they have, like, they’ve detonated some of the landmines we’re going to talk about or not really.
John McNertney:
[00:09:54 – 00:10:49] I mean, we’re going to talk about this with hopefully specifically with Portugal in mind. Portugal can be many things, but it is not like a snap case, like super tight kind of country. And so there are some landmines that will remain undetonated for a very long time. And so, like becoming a tax resident, for example. Right. Like you’re not going to become a tax resident in most cases. In most cases, as soon as you land. So people call me and they’re like, hey, I just moved to Guimaraes up here, north of Porto, and I need to talk to you. And I’m like, oh boy, here we go. But they just moved here four months ago. That’s usually when the people call me after they’ve decided to move and they’re a little late. It’s very, it’s rare actually that I find people that are like three years in, it’s happened a couple times and I am usually not their friend. People don’t like that because they’ve detonated the minds and they don’t like to.
Richard Taylor:
[00:10:49 – 00:12:05] Be told that, you know, this is super interesting. So some of the. This came up in the conversation I had with his ev. He was talking about moving to Italy or Spain. The tax authorities there are much more. The regimes are tighter and the rage and the authorities are much more aggressive. And I think people massively underestimate the peace of mind that coming from, from, from not being under the remit of a super aggressive authority. So that, that is one thing. The other thing is with the countries I’m most familiar with America and the uk, once you move back and forth from established residency, it’s done. You know, you’re in, you’re locked in. If you haven’t taken action beforehand, you know you’ve destinated that landmine. So I can have a conversation with someone in a similar situation who’s been here Four months and some of the stuff’s too late. Or what often happens more here is we’ll have someone who reaches out to us. They’ve been here 10 years, 15 years, 20 years, right? They moved here mid career, they left all their UK stuff in a draw. They thought they’d deal with it later on. They’ve been spent 10, 15 years working hard here and then they’re approaching retirement thinking, crikey, right, I actually need to get a handle on all this stuff now. And then that prompts them reaching out to us and by that time they could have had a portfolio pfix in an ISA for 20 years.
John McNertney:
[00:12:05 – 00:12:06] Oh, my God.
Richard Taylor:
[00:12:06 – 00:12:24] Yeah, they could have had unreported UK pensions. I mean, best case scenario, they’ve just not done anything with the UK pensions and they’re kind of languishing. You know, there’s an opportunity cost, but more often than that, there’s pfix, there’s isas, which is a PFIC problem. There’s. There’s reporting issues and it’s. And it’s been going on 20 years.
John McNertney:
[00:12:24 – 00:12:27] Oh, my God, that’s painful. It’s painful, right?
Richard Taylor:
[00:12:27 – 00:12:29] It’s really painful. And then you’re the bad guy.
John McNertney:
[00:12:30 – 00:12:37] Yeah, basically. That’s why I want to be the. I want to be the flower delivery guy. I, I hate to be the guy that gives the bad news.
Richard Taylor:
[00:12:37 – 00:13:31] There’s so many benefits to advising Americans going abroad because it’s, it’s a kind of a newer thing. I mean, I know it’s going to be going on forever, but, but it’s, it’s a hot topic now. And I also think Americans are much more prepared, used to seeking and paying for advice. And maybe I’m a bit, bit naive here, but Americans realize that they’re. I have more awareness of how challenging and are more in tune with getting advice before they go. And also a big one, I think is a lot. And again, correct me if I’m wrong here, a lot of this is Americans who’ve already made their money in America and are moving right? So they have a lot to protect and they want advice up front to protect it. Whereas a lot of Brits and others moving to America are early in their career, they haven’t really made it yet. They’re less willing to pony up however much it is to seek advice up front. And I think there’s a cultural thing and I think there’s a.
John McNertney:
[00:13:31 – 00:13:53] Fascinating. Yeah, that’s fascinating. Which, which of those do you think is the most profound? What affects the kind of conversations you’re having the most. Is it the, the fact they have a lot of money or the fact that they’re like native entrepreneurs? Like every American is a mini entrepreneur. So they really. Yeah, I mean they’re self starters is I think what you’re identifying, right?
Richard Taylor:
[00:13:53 – 00:15:04] No, it’s not so much. I just think there’s, there’s but an American moving to Portugal, 55, 60 for retirement, which not necessarily the profile of everyone moving to Portugal, but they’ve, they’ve built up millions in their various accounts that, you know, they know they’ve got stuff to protect and they don’t. They’re much more cons at stepping on a landmine that could like jeopardize that. So they’ll seek out you and seven others to make sure they do it properly. That’s at least what I hope. Maybe I’m being naive. Whereas a Brit moving here in their 30s as part of a, you know, intercompany transfer hasn’t got so much to protect back in the uk. And I think they, they do. And also I think there’s just a cultural unaware of the challenges of moving to America from anywhere that causes them to do it a bit more blindly. And then that’s why 20 years later they’ve still got these PFICs, they’ve still got these ISAs, they’ve still got these unreported pensions and we are dealing with a lot of problems I think maybe could be headed off by that you guys aren’t necessarily dealing with because it’s getting caught and headed off much, much earlier in the journey. And don’t forget as well, John, we’re living in the. If you’re moving out of country now, how easy is it to Google and find this podcast and a million others?
John McNertney:
[00:15:04 – 00:15:05] Right?
Richard Taylor:
[00:15:05 – 00:15:07] Whereas 10, 15 years ago that wasn’t the case 20 years ago.
John McNertney:
[00:15:08 – 00:15:34] Totally. Well, yeah. And we’ve got ChatGPT now too and all the rest of these, these large language models really equipping people. I mean, have you noticed just how much more educated the average consumer can seem now? I mean I have people like copying and pasting like pages of, of questions that are really like fine tuned, like formulated questions from ChatGPT. And I’m like, oh God, this is hard.
Richard Taylor:
[00:15:34 – 00:15:56] Sometimes it’s good though. Sometimes it’s good, sometimes it’s a red herring, it’s just going off, taking you into a complete wrong direction. But sometimes I’m finding people, you’re not having to cover 101. They’ve already learned 101 from ChatGPT or Claude, which I’ve actually transferred to Claude now. And they’re coming with better questions. Yeah, I find it much less annoying.
John McNertney:
[00:15:57 – 00:16:16] Well, it panders to me less. I kind of miss that. I’m like, why isn’t it being as nice to me? Maybe that says something about me less than it does about the tools. But yeah, everybody gets really schooled on the basics and you do spend less time talking about the basic stuff, so that’s good.
Richard Taylor:
[00:16:16 – 00:16:30] Okay, so, right. Americans move into Portugal. They’re reaching out to a year beforehand. In your experience, how are they moving here? Are they golden visa ing it? Are they visa ing it? Are they regular d. Whatever, visa. And then what are you doing with them before they land?
John McNertney:
[00:16:31 – 00:17:32] Well, the golden visa people, by the way, they’re getting really ticked off lately because of the nationality laws, changes. So they’ve always been a totally different conversation than the standard immigration clients. Oh, yeah, yeah. Because the, because the people with the golden visa, like, the profile is different. Right. Because they usually are very affluent. Right. They have way more assets because, you know, I mean, putting a €500,000 investment down and in a lot of cases putting them into an illiquid investment like this is not the kind of person that is like coming in with a $700,000 IRA that they’re going to be living out of. And they’re choosing Portugal because Portugal is a relatively lower cost option among the European countries. It’s a different person. And the golden visa people are oftentimes interested in staying back in the US because they are tied to something that they need to be there for. Right. And that’s why they’re doing it.
Richard Taylor:
[00:17:32 – 00:17:33] Then, John, why are they getting a golden visa?
John McNertney:
[00:17:34 – 00:18:02] Because they want to get the clock started on their citizenship process here. Yeah. So before this law that’s currently sitting before the president of Portugal gets signed, it’s a five year process. So they get the golden visa process going with the intent to be a citizen in five years, but they can stay back in the United States and their in country residency requirement is like a week, a year. They only have to be here a week every year.
Richard Taylor:
[00:18:02 – 00:18:04] A week, A year. Wow.
John McNertney:
[00:18:04 – 00:18:27] Yeah. I mean, who cares, right? This is what these people normally say to me. They’re like, a week. I would love to go to Portugal once a year for a week. In the first two years, you only have to actually be here two weeks out of the first two years, meaning you can just delay being here entirely. But you set yourself up for a perfect plan B. So it’s Fantastic. As long as everything else works out.
Richard Taylor:
[00:18:27 – 00:18:30] John, is that what these people are thinking? Are they coming to this as a plan B?
John McNertney:
[00:18:30 – 00:18:35] Oh, for sure. Yes, that’s a plan B.
Richard Taylor:
[00:18:35 – 00:18:38] From what, though? What they running, what they scared of?
John McNertney:
[00:18:39 – 00:19:35] This is a really interesting conversation once you start getting into it, because, you know, I mean, we’re living in a time where there is this heightened. There’s chaos at the political level in the United States. Right. I don’t want to get into politics, but there is definitely. There’s a different feeling in 2025 and 2026. And some people are like, you know what? This is too much stress. I’m getting out of here, but I’m making good money at my job. And so I don’t want to exactly leave that yet. And as a financial planner, I laud that decision, like, yes, you should not cut those last few remunerative years out of your career. And so they’re going like, okay, cool, I can actually get to citizenship in five years from now and I can keep working at my good job for three years, right. And then move to Portugal, and then I’ve only got two more years and I’ll get my passport. Awesome. That’s the usual thought process.
Richard Taylor:
[00:19:35 – 00:19:50] So they really are on a path out of here, though. It’s just not yet. It’s not like a plan B that gets put in a drawer never to be used. It’s a plan B that I am going to. I am going to. This is a plan I’m going to take. I just. Just not quite yet. Let’s get that clock running. Yeah, that makes total sense.
John McNertney:
[00:19:50 – 00:20:04] Yeah. Because, I mean, we’re a financial planner, right. Like, it’s really cool that people are thinking about this optionality years out because we know that life can change. And so they’re giving themselves that option in advance. I love it.
Richard Taylor:
[00:20:05 – 00:20:17] So do you see. Do more people contact you or do you work with more people who are going down that route, the golden visa route, or down the traditional working visa, digital nomad visa, residence visa, I prefer the latter.
John McNertney:
[00:20:17 – 00:21:04] I am sorry. If you’re a golden visa person, I love you too. But what I’ve noticed is that the folks that I really love to work with. So I’m a guy who is obsessed with Portugal. I’m just obsessed with it. Follow Portuguese. I speak Portuguese. I love it here. So those people that are moving here, they’re my people, right? And so they’re going to go, man, this guy. Not only do I know, you know more about the business community here, Inherently, But I have all of the little tips and tricks mastered at this point in time, or I’m on my way there, I should, I should settle down. But like, people that are going to be here and live here, that, you know, there’s a kinship that they feel and, and I. And they’re going to become Portuguese tax residents. That’s actually the really big deal.
Richard Taylor:
[00:21:04 – 00:21:05] Straight away.
John McNertney:
[00:21:05 – 00:21:09] Straight away, or at least, you know, within about six months in most cases of being here.
Richard Taylor:
[00:21:09 – 00:21:18] That regime that has just changed recently where you can be exempt from local taxes for 10 years, that’s only if you go down the golden visa route. Is that right?
John McNertney:
[00:21:18 – 00:22:30] No, that’s for all of us, man. Yeah. Yeah. Like the government here has been just sort of like on this glide path. They’re just shutting things down. There was just too much easy access to these great programs. And so there was just a lot of political pressure from the right to shut down a lot of these juicy tax incentive programs. It’s really what it comes down to. Because actually my family and I were on TV a few years ago. Okay. So a local reporter reached out to us and they said, hey, can we talk with you about your life? I said, sure. Pretty cool, right? And I’m a financial advisor. I love the free press. But then like, after we talked about like, oh, we love Portugal, the healthcare is reasonably inexpensive. We have our kids in private school here. You know, like, number one, there was a lawyer that they partnered our part of the program with that was a very serious guy. And he was like, yeah, so that guy that you just saw, he was an example of the kinds of people that are coming in and taking advantage of our very low cost healthcare. And they’re getting.
Richard Taylor:
[00:22:30 – 00:22:32] They set you up kind of.
John McNertney:
[00:22:32 – 00:23:22] Yeah, that’s what my wife said afterwards. She turned to me, she’s like, see, I told you we shouldn’t have told them what we were paying for private school. They’re just setting us up, make us look like a bunch of, you know, a bunch of exploitive Americans, you know? Yeah. So the, so the, that was, the story is like, people are coming in and taking advantage of the very good social net that exists and not paying taxes. Like, that’s not cool. It was the bottom line. So the government was like, let’s just kind of make it less easy to have all of the social benefits and none of the taxes that subsidize it. And so that’s why they’ve been kind of curbing, not completely shutting down, because you can actually still get into a version of the old ten year regime. It’s called efficiency. It’s NHR 2.0 in common parlance. You can still do it, but it’s just different.
Richard Taylor:
[00:23:24 – 00:23:27] What’s your interpretation of this direction of travel?
John McNertney:
[00:23:27 – 00:24:38] I think I’ve kind of hinted at it is. I think that it’s reasonable that the politicians take the stance that we want to preserve our country’s economic stability. We don’t want our stability to. Because I’m from San Francisco, California. Okay. And I saw this happen in San Francisco. There’s just money trucks constantly coming out on every wake wave of tech innovation. And it dumps money on the city and it creates gentrification and it’s not a great experience for people that aren’t part of the tide of money. So if you’re a realtor and you’re selling luxury condos on the waterfront, of course you love all these Americans coming in, Germans, Chinese. But for the average person, it does create an unsustainable inflation and you’re getting priced out of living in your own city. That’s what happened in San Francisco, that’s what happens in Lisbon, is the average apartment goes from €200,000 to over €1,000,000 in three or four years. So that’s tough if you’re living here.
Richard Taylor:
[00:24:38 – 00:25:05] As a Portuguese resident, lover of Portugal, not as a financial advisor benefiting from this. What’s your personal thoughts on like, where this is heading? Is it. Do you think it’s. It’s good what’s going on now that, that this influence, this, this influx into Portugal from. Not from America, but also from other places. Do you, do you have concerns like what’s the way out? What’s the best way to manage this?
John McNertney:
[00:25:05 – 00:25:49] So I mean, at the risk of sounding like the, the fancy pants kind of guy, I was, I was hanging out with my personal trainer. Yeah. And the guy is like, you know, it’s really cool that Americans are coming in and because they actually use my services. You can’t get a Portuguese person to pay €50 to some guy to help you to do your squats. And so he’s like, it’s cool that I can stay here and I can actually make money here versus having to leave. So he’s kind of like the perfect example of, yes, gentrification is hard, but it does actually allow your children to have the opportunity that comes from a more affluent environment later on.
Richard Taylor:
[00:25:50 – 00:26:07] It’s a balancing, it is a tightrope. It really is like the alternative gentrification taken to an extreme is the neglect of an area and you know, so, yeah, there’s very much. It’s a tightrope to be walked.
John McNertney:
[00:26:07 – 00:27:10] Yeah, it’s just such a cause. Portugal for many years has had this very well earned reputation for, for having a chief export that was really smart kids that graduated from the excellent educational system here and moved abroad so that they could obtain well paying jobs and then they would come home later in life. Right. And that’s not great either. The country had a net negative population growth for many years and so that’s not the best situation, but it’s what it is. So now, yeah, you’re in that tightrope where there’s more affluence, there’s more money coming in. Hopefully the economy is adding jobs that are good jobs. Right. Jobs that are educated people can have and make more money. This is the sort of thing that happens everywhere around the world. And it’s not like Portugal is the first country to have ever experienced this issue. So it’s a touchy thing. Your average 60 year old that’s working at a manufacturing plant is going to find this rather annoying because they didn’t get this opportunity.
Richard Taylor:
[00:27:10 – 00:27:12] So you have learned Portuguese?
John McNertney:
[00:27:13 – 00:27:16] I have fluent now, yeah, more or less.
Richard Taylor:
[00:27:16 – 00:27:17] How long has that taken, man?
John McNertney:
[00:27:18 – 00:27:19] How many languages do you have?
Richard Taylor:
[00:27:19 – 00:27:20] One and a half.
John McNertney:
[00:27:21 – 00:27:43] Every Brit that I meet, I always have to joke with them like, how is your Portuguese? The British are as bad as Americans. We don’t learn languages because they go like, well, why the heck would I need to. It’s not necessary for me. I like studied this and I continue to two or three hours a day every day for four and a half years.
Richard Taylor:
[00:27:43 – 00:27:46] For four years. And you already had a second. Were you already fluent in French?
John McNertney:
[00:27:47 – 00:27:51] I wasn’t really fluent in French because I didn’t live in a francophone country.
Richard Taylor:
[00:27:52 – 00:27:56] So four years hard work has got you fluent in Portuguese? Hard work.
John McNertney:
[00:27:56 – 00:27:57] It’s really hard.
Richard Taylor:
[00:27:58 – 00:28:09] How integral to both yours and asking that question, the generic, wider expat, how important do you think it is to your success and experience living in Portugal?
John McNertney:
[00:28:09 – 00:28:27] I think it’s, yeah, integration, it’s 100% necessary. Can you, can you imagine like in America embracing your average stranger foreigner that moves in and doesn’t have any interest in learning English? It’s inconceivable, John.
Richard Taylor:
[00:28:27 – 00:29:17] I, I can’t imagine it. I, I actually spent six months living in San Francisco and I moved here and I, I rent for the first two months. I rented an Airbnb on Grant Avenue in San Francisco, in Chinatown. I repeatedly encountered Chinese people who spoke not a lick of English and it blew my mind because these were like they’ve been, I mean I’m putting two and two together and I’m assuming four, but, but maybe I’m getting it wrong, but they were old people and I assume they’ve been here for, for decades, but they lived in this tiny little enclave and never learned English. And that blew my mind. And no, I, I like you would, would. I like to think I’d learn the language, but it’s a, it’s, you know that some, is that something, Is that advice you give to these people who are reaching out to you before they move here saying look, you should get on the language now and are they open to that? Are they already doing that?
John McNertney:
[00:29:17 – 00:29:39] I advise them to do that and they’re usually pretty open to it. I mean, I think that there’s a self selection bias. I know there is for people that want to do this. Right. Like your average person that is moving to Portugal is not your average American. Okay. Like 10% of Americans or something have passports. And like can you imagine the kind of mindset that you need to already have to go, wait a minute, you.
Richard Taylor:
[00:29:39 – 00:29:40] Just made that number up or is that.
John McNertney:
[00:29:40 – 00:30:21] Yeah, I made that 10%. But it is that. No, it is that. It’s, it’s, it’s a drastically lower number than you would think. Well, because most humans live within like 50 miles of where they were born. That’s, there’s like these wild statistics because we don’t think about everybody when we think of especially you and I. Right. Because like my population is, is the most, it’s the most niche, like tiny pop. We all live in our bubbles. So yeah, so like your average guy that’s going to move here, he’s going to have that perspective by default. So I can tell them, yeah, you need to learn the language and they’ll go, yeah, I’ve got Duolingo. And I’ll say don’t use that because that’s the Brazilian version. But yeah, duolingo does Brazilian mostly because they’re a much larger population.
Richard Taylor:
[00:30:21 – 00:31:33] I’m excited to announce that Expat wealth has its first sponsor, the Global Financial Planning Institute. The GFPI exists to provide education, community tools, resources and ongoing research for financial planners and other advanced financial professionals working with international and cross border clients in the US and Americans abroad. I’m a GFP Institute fellow and I’ve put all our employees through their GFPI programs when they join us. I’ve met some great people, I’ve learned a ton. It’s a genuine community of internationally minded folk doing their best to serve their clients properly and critically sharing what they know in the oftentimes challenging and ambiguous US cross border environment. And as anyone in this sector will tell you, you’re always learning. So if you work with international clients and or Americans abroad or if this is an area you’re looking to get into, check out the GFPI at www.gfp.instute you will be glad you did and I hope to see you there soon. Have you found then that when these people you work with, you work them from before they arrive to like getting here and like two, three years in, are people sticking with it? Are your clients really learning Portuguese?
John McNertney:
[00:31:33 – 00:31:34] Yeah.
Richard Taylor:
[00:31:34 – 00:31:41] And are they doing better as a result of it? You must meet plenty of Brits and Americans who haven’t learned any Portuguese other than the standard places.
John McNertney:
[00:31:41 – 00:31:43] Loads. Loads, yeah.
Richard Taylor:
[00:31:43 – 00:31:48] How do they compare to what, what does the experience compare like those to the ones we’re talking about?
John McNertney:
[00:31:48 – 00:32:42] Well, I mean if you’re learning the language there’s just a, there’s a higher, you’re feeling integrated. I mean that’s the word right? Is integration. And so a lot of folks who don’t get outside of the expat bubble, there’s a kind of brittleness because they feel exposed if they’re not among their friends and that they’re kind of always a little bit herky jerky every day they’re a little nervous. Like there’s just some awkwardness, you know, and, but, but for me, and I’ve noticed I’m of course like all of us, I, I’m, I’m comparing with my personal experience as I’ve, I’ve developed in Portuguese. There’s a comfort that you feel everywhere you go because there’s not going to be any awkward moments where somebody’s going to say did you come here to get that piece of wood cut or did you want to buy it outright? Right. Like when I first got here, just navigating the grocery store can feel like a challenge. Where’s the eggplants? You know, good.
Richard Taylor:
[00:32:42 – 00:32:46] Just know what going on in your day to day life where the first thing that springs to mind is you’re taking a piece of wood to get a cut.
John McNertney:
[00:32:46 – 00:32:58] Yeah, well, I mean it’s a thing you gotta do like a construction project feels like awful because if you’re going to the lodoy Merlin and you can’t talk to anybody, it’s terrible, it’s terrifying.
Richard Taylor:
[00:32:59 – 00:33:03] How long did it take you to get from landing There to that level of comfort.
John McNertney:
[00:33:03 – 00:33:06] Oh, God, I was just getting there this year, actually.
Richard Taylor:
[00:33:06 – 00:33:26] Well, no, it takes, I think going from Britain to America takes two years plus, and that’s speaking the same language and longer, really, to let go of my. Your unreasonable expectations and accept that it’s a completely different culture and they do have their own way of doing things. And some, sometimes those ways are better than what you’re used to.
John McNertney:
[00:33:27 – 00:33:30] Did you, did you wear your pants today? Well, of course I wore my pants,.
Richard Taylor:
[00:33:33 – 00:33:33] Yeah.
John McNertney:
[00:33:33 – 00:33:52] You know, yeah. Britain and the United States and the British, or. Yeah, the British and the Americans have a similar chasm between them as the Brazilians and the Portuguese do. It’s really interesting. Oh, it’s super interesting. Yeah. Words mean things in one language and they don’t mean that in the other.
Richard Taylor:
[00:33:52 – 00:34:16] Yeah, yeah, Turn of phrases. Yeah. Right. So before swim moves, do you have to restructure them? Do you? So in the uk, so if we have a Brit who’s mo or an American who’s moving to the uk, we want to make sure that they’re, they’re invested in US funds that are compatible with the uk. We call it reporting and non reporting funds.
John McNertney:
[00:34:16 – 00:34:17] Right.
Richard Taylor:
[00:34:17 – 00:34:36] Is, is there such a thing with Portugal or are there any other examples? Do you want to structure people in a certain way? What you do about the custodians? I saw a great post that I’m sure no one thinks about that you posted yesterday about just getting your bank account. Right. You know, what are the. What are these little tips before someone moves that you’re getting them set up. Right, well, that was me for a smoother ride.
John McNertney:
[00:34:37 – 00:34:40] Yeah. I just wrote one on LinkedIn two days ago about bank accounts.
Richard Taylor:
[00:34:40 – 00:34:42] Yeah, no, sorry, I sent it to my colleague.
John McNertney:
[00:34:42 – 00:35:06] Right, yeah, no, you got to think about that because it’s annoying to have to redo your banking relationships from abroad. In some cases it’s impossible because they want to see a local address. And so if you’ve already sold your house and you don’t have a local address, then you’re kind of up a creek. So, yeah, we want to do restructuring. We want to maybe change your IRAs over to a Roth IRA. Quick plug. I’m going to be doing a webinar on that next Tuesday, all y’.
Richard Taylor:
[00:35:06 – 00:35:06] All.
John McNertney:
[00:35:07 – 00:35:23] But yeah, you got to be thinking about whether you’re going to change the configuration of your retirement accounts. Are you going to do something different with your trust? Right. Because the trust is not really generally recognized in continental Europe, not in the way that it is in the United States. Anyways.
Richard Taylor:
[00:35:23 – 00:35:30] Do people get into trouble with trusts? You know, like, it’s not the same as like going to France with a revocable trust so you can get yourself into real trouble.
John McNertney:
[00:35:30 – 00:35:51] That’s a good question. Actually. I was just thinking about France because you can get in trouble with the trusts, but you can also get away with more in France because they’re much more lax with regards to unpacking your IRA account. So they don’t. Yeah. So there’s just. Yeah, it’s, it’s, it’s a game that’s, that’s for me, fun to play.
Richard Taylor:
[00:35:52 – 00:35:54] It sounds like there’s less landmines with Portugal though.
John McNertney:
[00:35:54 – 00:35:56] There’s less landmines, yeah.
Richard Taylor:
[00:35:57 – 00:36:04] Which is very appealing. Which is very appealing. Yes. Less traps that are just going to whittle away your wealth and your sanity.
John McNertney:
[00:36:04 – 00:36:33] Yeah. I mean life is funny. You have different difficulty levels of things that you do. Everything that you want to do from a home construction project to, I don’t know, balancing your checkbook can be harder or easier. If you’re moving to Europe, I think that the level of difficulty is at like it’s one of the lower ones moving to Portugal, they’re just less punitive. The landmines are there, but they’re not going to kill you as quickly as they might.
Richard Taylor:
[00:36:34 – 00:37:06] So make sure. Think about your banking arrangements, retirement accounts, investor gay. Converting your IRAs into a Roth. I. Presumably that’s because tax rates are lower in America than they are in Portugal. And Portugal under the. Obviously the treaty respects the Roth. So having a Roth ira, which, and if I’m right, retirement accounts don’t benefit even under this beneficial tax regime. Retirement accountants don’t factor in it. Right. So they’re always going to be liable for the higher Portuguese tax. So if you can get into a tax free Roth, that’s a massive win.
John McNertney:
[00:37:06 – 00:37:35] Actually the tax regimes do respect those pension accounts is what they think of them as. And so pensions are going to actually be treated to a 10% maximum taxation under the old NHR regime, which is awesome compared to the full progressive regime, which can go up to 48%. So yes, if you can be under NHR or now NHR 2.0, then you can actually continue to do your restructuring activities after you move.
Richard Taylor:
[00:37:36 – 00:37:39] Oh really? Oh God, that’s such a benefit.
John McNertney:
[00:37:39 – 00:37:40] Oh, it’s massive. Yeah.
Richard Taylor:
[00:37:40 – 00:37:50] But then if you get your IRA monies into a Roth, you know you’re never going to get taxed in America again. You never get taxed at Portugal up to these crazy, crazy percentages in for a Roth, Right?
John McNertney:
[00:37:50 – 00:38:17] Yeah. I mean, so this is actually something that is controversial. And so if you get listenership with this, I’m expecting to get a few emails from people saying that I’m dead wrong. But that actually hearkens back to the reason that tax planning is inherently more difficult here, is that there’s a ton of gray area. It’s totally open to interpretation. There was a tax lawyer who said, you know, the narrative around how we present your tax return is just so important.
Richard Taylor:
[00:38:17 – 00:38:49] Yeah, we have the same. It’s an interpretation of the treaty. And you know, I have one tax advisory says doing that will send you to jail. Another one says it’s totally fine. And then most people like, it’s kind of, you know, some, it can be supported. But you know, you need to be aware of this. And if you take this position, you got to be aware that it could one day come back and you have to get challenged. And people don’t like that ambiguity. A lot of the time though, that ambiguity plays into their benefit. It’s better than a flat. No, it just means you’ve got to understand this and you’ve got to understand that there are risks to it, but it’s up to you to understand what those risks are and whether they’re worth taking.
John McNertney:
[00:38:50 – 00:39:27] Yeah, it’s just human psychology. Some people have a tolerance for risk, for example, Right. I mean, we know this as investors. Some people just can’t tolerate risk. I’ve got one guy who says, I need to have 100% stock. And by the way, I’d love to have a bunch of bitcoin, right? Because I think that crypto’s the way. And then I’ve got another client who’s like, I have lost my shirt in stocks, I’m not going to touch them. And I’m like, eh, that’s fine. So everybody’s a little bit tolerant of ambiguity to a certain degree. Some people are super intolerant and I respect that. And we can help you plan for that.
Richard Taylor:
[00:39:27 – 00:39:48] So we’ve got retirement accounts, you’ve got trusts, you’ve got business structures. These all need to be looked at to make sure they’re efficient and optimized. But if I’m hearing you correctly, the pressing need to do that before you set foot in Portugal. That’s not. You do not have that same, you know, hard line in the sand.
John McNertney:
[00:39:48 – 00:40:44] Well, look, let me be clear. You, you should give yourself years to do this if you can, because you’re still going to become a tax resident at the six Month, mark or you know, when you’ve been here for half a year or if you register your Portuguese address with the tax authorities, then you become instantly a tax resident. And so you have at most a year. So if you’re going to be doing something that takes multiple years, again, that Roth conversion is a great example. You might like need to take four or five years to unpack your ira. Just so you don’t. Of course, yeah. So I mean it’s different. And then some people, let’s not forget, they’re not going to be here forever. They’re planning on being in Portugal for maybe five years or 10 years and then they’re moving on to France or back to the uk. So then you don’t even have to worry about all those things I just said about the ira. Forget about it.
Richard Taylor:
[00:40:44 – 00:40:50] Do you see much of that? Do you see people moving with the plan of moving on and moving on again?
John McNertney:
[00:40:51 – 00:41:03] Not really. I think most people’s position is I’m doing this thing and I’m burning the boats, I’m doing this thing thing. I don’t see as many people that are, you know, creating like a multi leg journey.
Richard Taylor:
[00:41:03 – 00:41:32] No, I, I, I don’t. But, but the, what I do, what I found is that the life of an expat is inherently changeable. You know, I, I can’t tell you the amount of people who I’ve spoken to who have. When I first started working with them. Were you set on America? They’re going to stay in America forever. That was it. And you know, some of them, since then, a lot of those people have moved back. You know, things change, you people change, we change, family situations change. And you can never say never as an expat.
John McNertney:
[00:41:33 – 00:41:34] That’s true.
Richard Taylor:
[00:41:34 – 00:41:35] Really think that’s kind of exciting.
John McNertney:
[00:41:36 – 00:42:05] It’s super exciting. And I mean think about this too. Once they make the jump and I see people do this all the time, they’re like, oh, I can’t leave my job because I’ll never get another job once I get there. But then once they’ve made the jump and they’ve gotten over it, then they look back and they’re like, well, that was easier than I expected it to be. And so then there is actually this, this, this sense of like, oh, well, I have flexibility that they gain as a consequence of the move. And then they realize they can do other things too.
Richard Taylor:
[00:42:05 – 00:42:22] I grew up in and around Manchester and I thought I was always going to be in and around Manchester. Maybe one day I’d move to London and then I ended up moving to Dubai and I didn’t want to stay in Dubai. But what it did do is it opened up my eyes to, you know, I can kind of go anywhere and do anything. And I’m in America now, and maybe I’ll stay in America forever, maybe I won’t, who knows?
John McNertney:
[00:42:22 – 00:42:44] Yeah. I mean, it is nice to have that sense. I mean, it’s a very privileged sensibility that we can have around that, and I don’t take that lightly. Now. When you went to Dubai, though, I’m curious, have you seen what’s going on there? After the war broke out? There’s been a slight exodus from Dubai right now, isn’t there?
Richard Taylor:
[00:42:44 – 00:42:48] There is. I’m kind of enjoying watching.
John McNertney:
[00:42:48 – 00:42:58] I knew it. You enjoy. I do, too. It’s a little schadenfreude because I was a little jealous. I was like, oh, look at you guys with your 0% tax regime. And it’s amazing. And no, it’s.
Richard Taylor:
[00:42:58 – 00:43:20] It’s more what I’m. So. I’m plugged in. I’m plugged into the UK and the us, Right. And watching the UK just hate on Dubai, just gloat over the. All these people who have left there who are now flooding back or discombobulated and watching the UK being, like, sticking two fingers up at them gleefully.
John McNertney:
[00:43:20 – 00:43:22] Yeah. So many memes.
Richard Taylor:
[00:43:22 – 00:43:23] I kind of enjoyed that.
John McNertney:
[00:43:23 – 00:43:30] Yeah. So many memes on Instagram of people watching the UK expats that went to Dubai, coming back.
Richard Taylor:
[00:43:33 – 00:43:36] I’ve been. I admit to. I’ve been enjoying that.
John McNertney:
[00:43:37 – 00:43:38] Yeah. Yeah.
Richard Taylor:
[00:43:38 – 00:43:38] We all.
John McNertney:
[00:43:38 – 00:43:55] We all have those issues. I mean, expat life. Yeah. I’ve toyed with the idea of becoming a comedian off and on over the years, and I’m like, there’s got to be a comedian that can specialize in this, like, expat scene, because there are so many things that are uniquely funny just to us.
Richard Taylor:
[00:43:56 – 00:44:03] You should look into that. I could see that there’s plenty of material, but it might be, again, like a niche audience.
John McNertney:
[00:44:04 – 00:44:12] Right, that’s fine. I’m going to play in Lisbon only. I’m popular in Lisbon. Yeah.
Richard Taylor:
[00:44:12 – 00:44:30] You got these clients, you’ve worked with them to get the house in order, move over to Portugal, and then they’re in Portugal and. And I mean, what are you managing? Do you focus much on the US side? Do people end up building Portuguese assets? Do they need to really wrestle with and understand the Portuguese system?
John McNertney:
[00:44:31 – 00:44:39] Well, you talked with Zev about this, right? And so you might have touched on the fact that Americans investing in Non US Assets have to consider the PFIC risk.
Richard Taylor:
[00:44:40 – 00:44:40] Right.
John McNertney:
[00:44:40 – 00:45:17] And so I actually do have. I had a client today who I referred onto a Swiss firm, and he started working with this Swiss firm term. And so he had to sort of adjust his expectations. They’re not going to charge him 0% if he wants to invest in securities here in Europe, they’re going to have to be PFIC friendly, meaning if they’re a managed fund, if they’re not just an individual security, then they’re going to have to make sure they have their qualified electing fund letter, you know, all these things that they have to consider. So for the most part, I tell people, you know, unless you have a very specific reason for investing in Europe, then don’t go there.
Richard Taylor:
[00:45:18 – 00:45:20] A question then. Why is that? What’s this person’s reason?
John McNertney:
[00:45:21 – 00:46:01] Oh, boy. So this is the Pandora’s box that we’ve just opened this past year. Literally 20% of my discussions these days, one out of five are people that are either fleeing the United States because they think the place is on fire or they think that there’s an actual economic advantage to be gained. It’s like a traitor mentality of like, I’m going to trade into euros now. And both of those people have this background assumption that the US is on an economic death spiral right now. And, you know, when people get scared of things, it’s natural to think that, like, that’s happening. Like, soon.
Richard Taylor:
[00:46:01 – 00:46:03] Is Ray Dalio your client?
John McNertney:
[00:46:04 – 00:46:18] This is a Ray Dalio premise. No, serious, like people on call number one. They’ll ask me if I’ve read Ray Dalio’s this Works. If that’s going to be the conversation we’re having. I know right away I’m like, oh, boy, here we go. We’re on the big debt spiral.
Richard Taylor:
[00:46:18 – 00:46:29] This is super interesting. So you’re working with people who are. Who are saying, I’m an American, but, like, I want Euros, I want PFIC free. I want, I want, I want it all out. The U.S. because the U.S. is done. We’re going down.
John McNertney:
[00:46:29 – 00:46:30] Yeah, I have.
Richard Taylor:
[00:46:30 – 00:46:31] Put your oxygen mash on, boys.
John McNertney:
[00:46:31 – 00:46:53] Exactly. I have many clients who are like the financial equivalent of a prepper. You know, they think that, like society, you know, the preppers, they’re like, society is about to head into the fifth turn or whatever kind of term that they have for it. And I need to hit the deck and I need to get my bunker. And so, yeah, there, that’s the bunker mentality is things are about to go, you know, full so.
Richard Taylor:
[00:46:53 – 00:47:00] So for them, European stocks are literally like tins of spam and tins of baked beans in the bunker, I guess.
John McNertney:
[00:47:00 – 00:47:04] Yeah. And bullying and bullets. They’re diversified.
Richard Taylor:
[00:47:04 – 00:47:10] Much more American. Sorry, I came from a British Second World War mentality. You came pure American bullets.
John McNertney:
[00:47:10 – 00:47:34] Yeah. Chamberlain is on the radio advising all of us to please be calm and carry on. No, it is that they’re like, I’m going to make this trade right now. I had an email from a guy, we’ll call him David. And David called me two years ago and he’s a self directed guy and he’s like, I’ll never charge a fee for anything, John. So I’m never gonna have you working with me to manage my money. So no offense, but like he’s a super smart guy.
Richard Taylor:
[00:47:35 – 00:47:36] What a great way to start a call.
John McNertney:
[00:47:36 – 00:48:13] You know, I’m open to learning from others and cause a lot of my fire clients, the people that don’t want to pay for anything, they’re among the smartest people you’ll meet. I respect the position. I can’t live off of it, but you know, I respect the position. So he comes back to me last year and he’s like, I need to get out of the US with part of my money. Right. And so I introduced him to this Swiss firm and he emailed me a couple hours ago and he said, I did it. I started working with these guys. And here’s where it gets a little bit weird is he starts telling me about the fees they’re charging and I’m like, wait a minute, you’re charging 2, they’re charging you 2% all in. This guy is willing to now pay 2% to work with a Swiss firm.
Richard Taylor:
[00:48:13 – 00:48:25] And he knew that he had added it all up and he was like, to get this money out the US Mr. I’ll never pay a fee to anyone for anything. So I can do it all myself. That has now become a price willing to pay to get out of the U.S. wow.
John McNertney:
[00:48:25 – 00:48:56] Isn’t that interesting? So there was a famous Wall street great analyst who once said, it’s fear and greed. I think it was Warren Buffett. Fear and greed run the markets. And he was afraid. There’s a lot of fear that are permeating this Ray Dalio set right now. And I get it because I’m a little bit. I’m in. I studied philosophy. I know that times change, but I don’t think it’s going to change now. But some of these folks do. And so they’re willing to get. He got A third of his money out of the U.S. john, we’re straight.
Richard Taylor:
[00:48:56 – 00:49:33] We’re so straying miles from where. But I mean, I’ve got to ask you now, like, so, yeah, like, I see the U.S. and, and, you know, I’m not immune to being affected by what’s going on right now, but I look at Europe, I look at the. I look at the uk, which is ripping itself apart right now. You know, we’re gonna have it. Farage is going to be the Prime Minister, I think, which blows my mind. He’s just a mini Trump. The. And. And you look at. You look at Europe, and you’ve mentioned on this call, Zev, mentioned on this call, changes that have been. That are essentially been. That have been happening because of the right wing. Not necessarily because the right wing are in power, but because Ascend is having to pander to the right wing. Like, is Europe going the same way?
John McNertney:
[00:49:33 – 00:50:59] Pretty much. That’s my view. I mean, when I first moved here, it felt like I had escaped from some madhouse, right? Like, oh, Americans, there’s a lot of racism, there’s a lot of cultural friction, all this kind of stuff that’s happened. And I didn’t think it existed here. But guess what? Humans are pretty much humans everywhere you go, as it turns out. And once my level of Portuguese got to a certain level, I’m reading the newspaper or online and I’m seeing like, oh, there’s, you know, there’s forest fires up and down the coast and there’s chronic homelessness in Lisbon and there’s inflation afoot. And I’m like, oh, San Francisco. This is San Francisco all over again. So, I mean, wherever you go, there you are. And that’s kind of the whole story that all of us find, especially as we get older, right? I’m almost 50 now, and I’m like, God, you know, here’s another one of these. Like, whatever. Like, so, yeah, so we help people to manage their situation because once people have a plan for things, then they can actually feel like they’re, you know, they’re. It’s like you guys say, like, they can keep calm and they can carry on because they have a plan. Has it changed the topography of their emotional life really? Well, not really, but the feeling that we have a plan can sometimes be just as powerful as the strategies in the plan themselves. And so having a plan is, as it turns out, important.
Richard Taylor:
[00:50:59 – 00:51:05] I do want to talk, though, about the golden Visa and how an American can do this without following afoul of the PFIC rules.
John McNertney:
[00:51:05 – 00:53:04] So the real thing with investing in the Golden Visa that you need to be aware of is just like all other investments, investments in Europe, it’s got to be properly documented for the US tax authorities. And so if you don’t ask your asset manager, whatever Golden Visa you do about this, then you could get really screwed up. And so the way that you can get screwed up is you can invest in a fund that doesn’t have its PFIC documents, its qualified electing fund in place, and then if you don’t pay attention to it, just like those folks you mentioned mentioned, they have a PFIC in their life. And if they’re not disclosing that, then the US can charge some very heavy penalties from a tax standpoint. And that can take what was like a 7% rate of return down to like 2% per year. And if you carry that through for several years, you’ve just cost yourself maybe hundreds of thousands of dollars in opportunity loss and penalties. So that’s not great, not great at all. And you can’t do it in an IRA as easily as you might like to a lot of people that aren’t massively affluent and they’ve got retirement accounts, props to them for trying to be creative. But you got to be super careful about how you do this. I had a guy come to me two weeks ago and he had a $550,000 beneficiary IRA and he’s like, can I just use this to do it? I’ve heard that I can use a self directed ira. And sorry, if you’re listening to this, this a guy in la. And I said, man, that sounds hard. And he said, okay, but why? And I said, because this is a beneficiary ira, right? So you’re taking distributions. So like you have to take them. And if you put that into an illiquid investment, I just don’t love the idea of you going to the fund manager and telling them you need to change the registration from one to another US like brokerage account, like every year. Just the logistics of that alone give me, you know, they give me a rash.
Richard Taylor:
[00:53:04 – 00:53:09] Doing it in IRA sounds to me like something you just don’t want to. You don’t want to poke that bear.
John McNertney:
[00:53:09 – 00:53:41] Yeah, you could. I’ve seen some people pull it off, right? I have, I have. It’s just to tell everybody because like a lot of Golden Visa folks have approached me and asked me if I’d like to sort of do a collaborative marketing around this. And I’m like, I don’t think that’s a fiduciary thing to tell people to do that, because if they accidentally screw that up, then they could actually have a deemed distribution for the whole thing. Meaning, like your IRA has just now been fully distributed and you’re like 50 and you’re going to get penalized and charged back taxes on the whole day.
Richard Taylor:
[00:53:41 – 00:53:50] And you think about the sort of profile person who wants to do this is the person who hasn’t probably that’s one of their main assets. And you’ve just like kamikaze it.
John McNertney:
[00:53:50 – 00:53:52] Yeah. They can least afford it. It.
Richard Taylor:
[00:53:52 – 00:53:53] Yeah.
John McNertney:
[00:53:53 – 00:53:54] To make that.
Richard Taylor:
[00:53:54 – 00:54:16] So it sounds like your message is the same as evs, which is, look, the. The golden visa is very, very doable for Americans. As long as you go in with your eyes wide open and getting good advice and all your ducks in a row, then it’s totally doable. It’s not doable if you, if you just flogged it. You don’t really know what you’re getting. And you don’t. You don’t make the election, you don’t make the. You don’t do the reporting. And then you can get yourself into real trouble. But other than that, it’s, it’s. It’s totally an option.
John McNertney:
[00:54:17 – 00:54:42] It’s totally an option. It’s a great option. Like, if you’re a doctor in Manhattan and you got to keep this job going for two more years so you can get your pension, like, honestly, it’s amazing. But if you’re moving here anyways and you would have qualified under a standard immigration visa and you’re just choosing the golden visa because it sounds like it might step you to the front of some line, you’ll be massively disappointed because sometimes the line’s worse. Yeah.
Richard Taylor:
[00:54:42 – 00:54:51] So you’re saying first option would be, presumably, do I qualify by like, European descent or something? Right. Do I have a Portuguese resident or.
John McNertney:
[00:54:52 – 00:54:55] No, those people usually know that they qualify.
Richard Taylor:
[00:54:55 – 00:55:06] That’s gonna be the easiest though, isn’t it? And then after that, you want to see if you get one of the regular residence visas, first of all. And then, and only then, it’s a golden visa, really. You want to be looking at that.
John McNertney:
[00:55:06 – 00:55:43] It’s a hyper specific person. It’s the hyper specific person that wants to get that golden visa. And especially. Well, actually, no, the recent changes in the nationality law that are about to be approved. Don’t change the math on this one bit. At five years, you’re going to become a permanent resident. At 10 years, you get your citizenship. No big deal. But yeah, if you’re just going to move to Portugal anyway, then just move here on the standard passive income, the D7, because you only have to earn like €900amonth in passive income to qualify for that one. So no big deal for most Americans.
Richard Taylor:
[00:55:44 – 00:55:51] I think that’s such, I think that’s the key message from this because I think it is the golden visa that gets all the attention because people are selling it.
John McNertney:
[00:55:51 – 00:56:16] I’ve got the golden ticket. We love it. America’s like, oh, can I get a. Oh, it’s golden. You say, I’ll have the golden ticket. Of course everyone else will have the regular tickets, but I’m going to have that one. I mean, that was, I won’t lie to you. Like, I asked that to my, my lawyer when I got here in Vasco. My lawyer is awesome. And he goes, why do you think you need the golden visa?
Richard Taylor:
[00:56:17 – 00:56:18] Oh, that’s so interesting.
John McNertney:
[00:56:19 – 00:56:26] Because, like, you know, if you get a Disneyland, you can get a fast pass for more money. Like, I’m like, am I going to get to the front of the line faster? Let’s talk.
Richard Taylor:
[00:56:27 – 00:56:34] Hey, don’t, don’t, don’t, don’t knock the line Lightning pass. I wouldn’t do Disney without it. But, but, but, but, people, you don’t need a Golden Visa.
John McNertney:
[00:56:34 – 00:57:04] I will tell you. Yes, I’m sorry. Yes, I’m sorry. Just, if you need it, if, if you, if you’re the right person for it, it’s perfect. But for most people, the golden visa is just very expensive. It’s hard to unwind. It’s, it’s not there, there’s not a lot of great investment options, although the, the one that Zev represents is, is excellent. And there are some nice liquid investments that you can purchase and qualify for the Golden Visa, but it’s just not easy. Yeah, it’s not straightforward.
Richard Taylor:
[00:57:04 – 00:57:44] This has been, this has been super interesting. This is kind of what I wanted. I wanted to bring it to life. Like, you know, there’s loads of information out there and I hope people find the technicalities of the technical aspects of my conversation with Zeb super interesting. But you hire, you hire a good advisor and, and, and they will take care of a lot of that for you. And, and, and FYI, people, you should absolutely hire good advisors. DIYing this with your taxes, your immigration. As an American, it’s an act of madness in my opinion. But what this conversation has been much more about bringing this whole thing to life, both as moving here as an expat, which you are, and as A financial advisor to expats. So, you know, I’ve really enjoyed this conversation, John, so thank you.
John McNertney:
[00:57:44 – 00:57:51] Yeah, no problem. If you want to come back, discuss any of this stuff one on one, just let me know. This is the life we live, that we, that we lead.
Richard Taylor:
[00:57:51 – 00:57:52] Where can people find.
John McNertney:
[00:57:53 – 00:58:23] Well, they can find me on my website, just like everybody. We’ve got a digital home online@greenoceanglobal.net and we do webinars all the time. I mean, it’s a great research tool for me because every time I do a webinar, I sort of like really get saturated in the knowledge of what I’m studying. And if you sign up for our webinars that address any of the things that we talked about today, you’ll get the recording too. You. So even if something has passed, sign up, get our recordings and happy to talk to you.
Richard Taylor:
[00:58:23 – 00:58:30] So folks, website, LinkedIn, check them out. Open for business. If you think about moving to Portugal, this is where you go.
John McNertney:
[00:58:32 – 00:58:33] Ciao.
Richard Taylor:
[00:58:34 – 00:59:34] Cheers, John. Bye bye, mate. All right, folks, that’s another episode of Expat wealth under our belts. Thank you for listening. I appreciate it. I appreciate you. If you’re enjoying the show and would like to support the mission which is to help ambitious expats thrive in America and ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review, this stuff really does matter. Please help us get this information to the people who need it, that is to your fellow expats. Just a quick reminder that this show is brought to you by Plan First Wealth. We are a US based financial planner and we wealth manager and we help successful American and international families living across the US to make the most of their opportunity and ultimately to retire happier. If you’d like to know more about how we might be able to help you, you can find us on our website, www.planfirstwealth.com or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next week.
Production