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WHERE CAN YOU AFFORD TO RETIRE TAX FREE?           WHY ARE SO MANY OF THE MIDDLE CLASS LEAVING THE US & EUROPE?

Our August 2003 Newsletter:
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Dominican Republic Currency Exchange Rates, Banking.  Panama news and notes.   Can you take an IRA account offshore?
John Schroder - Author of The Ascot Advisory News Letter Bulletin and Numerous Expatriate  Articles
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INSIDE THIS ISSUE:  Due to the large number of letters we have received recently, this issue is mostly just that, letters from readers.  However, on the same topic, I would like to extend gratitude to all the people that do write, but also extend an apology as well since unfortunately we cannot always answer all or reprint all in our bulletin.  Regardless, the interest shown by all who write is appreciated just the same.
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Dominican Republic Investments: Exchange rates with respect to the US Dollar and Dominican Pesos have pulled back from 35 pesos to one US Dollar to about 31 and have rebounded once again to about 34.  Again, much of this is due to the removal of pesos from circulation by the Central Bank (contraction of the money supply) and is also due to speculation as to the possible effects of any influx of US Dollars into the country from IMF loans, government bond proceeds, etc. 
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The Appleton Capital Management, Dublin – Ireland, has recently announced a new capital guaranteed product similar to what was offered about one year ago.  Just as before, the client’s capital is guaranteed and the projected interest rate or return is very attractive in comparison to the current interest rates for similar investments found in the US or Europe at the moment (the investment can be denominated in either US Dollars or Euros).  The investment is not available to US citizens directly, but is available to accounts owned or titled under an IBC, Panama Foundation, etc.  In addition, our agreement with Appleton is that our clients may invest on 100% no-load basis (normal up front sales charges or loads are waived for our clients).  For more information contact Mr. Jeremy O’Friel via email as follows:
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PANAMA NOTES:  Many clients have contacted us about banking in Panama and the idea of establishing a Panama Foundation.  In this regard, we continue to suggest a Panama Foundation for those clients where appropriate (as an alternative to a Trust from a common law jurisdiction).  However, many people have reported difficulty in establishing bank accounts is Panama as many of the local banks there will not accept an account whereby the account signatory is a US Citizen (or in the least not a Panamanian Resident).  Some firms may offer to assist with a bank account in Panama, but just make sure that the bank in question is A. a fully licensed bank in Panama (not a back-office for a bank from Moldavia, for example, or some such place) and B. that you, the client, are in fact the only signatory on the account.  To this end, one solution we have found for our clients is an asset management account with one of the local full service brokers in Panama (offering debit cards and managed futures as well).  In addition, many of our clients have found banking relationships in other jurisdictions that have worked out well also, so keep in mind that a number of banking solutions do exist.
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READERS WRITE IN:
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Dear Mr. Schroder - I have read your articles on escapeartist.com and the back issues of your advisory emails.  May I inquire as to your approach to offshore IRA accounts?  I would like to take my IRA offshore ($85K) and do not need complex arrangements to guard against asset protection.  I am unlikely to be sued by creditors, as my circumstances are modest.  I have a proposal from another firm after attending a seminar program. Startup costs are high to ensure this asset protection, which is relevant to many investors.  I would like to provide prudent security for my funds with reasonable costs and account appreciation.  As you might suspect, I do not have total faith in the US government and suspect they will restrict, control and curtail IRA accounts as the economic deficits continue and federal agencies become desperate for revenue.  May I have your suggestions?
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EDITORS REPLY:  To tell the truth, there was a very simple way to cash out of IRA and other kinds of retirement plan accounts by transferring them to a non US based (offshore) retirement annuity (offered from a non US insurance company) many years ago.  However, the nice folks at the IRS got wise to it and closed the loophole quickly, requiring that such transfers only be made to qualified and registered (US registered of course) retirement plans.  Also, they did away with the ability to ask for a full redemption with the understanding you could roll those funds into another plan tax-free, providing you did so within a short period of time.  That no longer exists anymore either and if you do ask for a redemption (made payable to yourself) all plan administrators are required to with-hold at least 20% (which becomes a direct remittance to the IRS).  So, things have become a bit stricter and more complicated.  I am not sure about what you were told at the seminar or what kind of complicated arrangement was suggested, but in the least such plans are quite costly to set up, and probably only make sense if you are speaking about much higher sums of money.  In your case, I would say you have two choices.  One is of course to leave the funds where they are and plan on tapping into it when you are retired (or when it might be better tax-wise for you to do so).  The other option is really to redeem the account, give up 20% (which you will have no choice as it will be deducted automatically), and then move or invest the funds where you wish.
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Another Reader Writes:
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John - If real estate is stable in the DR, and interest rates are so high, why not invest in hard money mortgage loans?    Then if there's a default, you get a property worth more than your loan.  These DR banks, commercial paper, mutual funds are too scary.   You don't know what these people are going to do with your money, and if there's a default, what recourse do you have to collect?  I can get 11 to 12% on a private loan backed by real estate in AZ, at 59% loan to value, which is quite secure.
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EDITORS REPLY:  You have somewhat of a valid point, although I think one cannot paint all non-US banks or investment firms with the same tinted brush, and I would not suggest you do so.  However, loans backed by real estate or another hard-asset is a way to secure your investment to be sure.  Although, for the life of me, I cannot imagine why anyone in Arizona would pay 12% interest when they could get a home equity loans these days for about 5%, on-line no less (OH NO – lost another loan to Ditech).  Of course, if we are talking about borrowers (the people willing to borrow money at 12%) with some other kinds of very serious credit or other problems, then that is of itself - another kind of risk.  In any event, the idea is sound, but there are two things you must consider:  First, while interest rates for US Dollar loans could go as high as 15% (as being not unusual), the only entities interested in borrowing dollars are commercial enterprises (businesses and companies looking for dollars to pay for imports).  As such, these are short-term loans and commercial paper in US Dollars fills this void pretty much.  So, your market for someone or a company willing to borrow US dollars is very limited and most people (and businesses) earn income in Pesos, not Dollars, and have no need or desire for US Dollar loans (although home mortgages for Dominican Real Estate in US Dollars for Dominicans or others living in the US might be an interesting idea).
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If you are interested in investing with Pesos, or I should say loaning money in Pesos, with some sort of real estate as collateral, then that is another matter altogether.  Loans in the Dominican Republic, be they for car purchases or homes (mortgages), can carry rates up to 42% in Pesos at the moment, and Dominicans pay it (although I cannot fathom how).  However, of course you then have the currency exchange factor should your intent be to convert back to US Dollars later on.
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Another Reader Writes:
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Hi John - I think it important to report that while visiting the D.R. recently we were told by some expats that it was not safe.  These people have been living in the D.R. for several years and say that you need to hire security guards on a monthly basis and that even they could not be trusted.  Now I sure wouldn't want to move to the D.R. and have to live in a gated subdivision with it's inherent problems for individualistic conservative self sufficient families.  I don't live that way in the U. S. I mind my own business, home school; make my own job and worship god as I please.  P.S. You may not be aware that there are laws in the works in the D.R. for a social security system.
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EDITORS REPLY:  Well, I can only tell you that the above has not been my experience, but just like anywhere else, you must use some common sense with anything that you do (which certainly is applicable to having employees as well).  I have not found the country to be dangerous, on the contrary, and most of our clients have written in about positive experiences, so I honestly do not know what to say.  It may be sufficient enough to conclude the Dominican Republic is a not a country for you, for whatever reasons, and that is fine.  However, keep in mind that people are basically the same the world over.  You could hire someone to guard or take card of your home in California also, only to find out that the guy took off with all your furniture and the plumbing too.  So, the same due diligence and common sense you would use in California, should be applied anywhere else.  The comment reported to you is not a national trend and not something isolated to the Dominican Republic.
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On the Social Security issue, this is not new news (see our previous news bulletins).  In any event, many people seem to have come to the conclusion that they do not want it (no one told them about all the additional taxes they have to pay, which they are now coming to understand is the hidden catch), and they realize politicians have sold them a bill of goods.  In addition, the country really is not ready for it, either economically or organizationally.  Heck, the US and most of the wealthier European Countries cannot manage their own Social Security programs (as such programs are insolvent or will be very quickly at the rate they are going).  So, if all the so-called wealthy and modern nations cannot handle a welfare state system, economically speaking, how can a developing country do it?  This is also something many Dominicans are coming to understand as well (aside from the ability to handle, or not handle, the insane bureaucracy that goes with it).
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Another Reader Writes:
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Dear Sirs:  Is it at all possible to simply get a Passport without going the entire Citizenship route?  I cannot believe it but my US Passport renewal was DENIED because they say I owe back child support money. However untrue, that is not the point. What business does the Big Brother called the US State Department have nosing around in my private affairs?  That is scary.  I am effectively trapped in the United States - a political prisoner.
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EDITORS REPLY:  Welcome to the great welfare society, whereby the government offers to take care of everything for you  (social security, medical care insurance, etc., etc.) but the price to be paid is complete control over your life.  Your story is not new and you certainly are not alone.  It is very easy these days in the good ole USA for an ex-spouse to file a complaint and get your name black listed for alimony, child support, etc., (regardless of the validity) or to get the same result for back income taxes (the IRS has made mistakes on more than one occasion, but of course they will never admit it), or because you are labeled a terrorist, etc.  As a result, you will not get your driving license renewed or your passport, etc. – which is why having a second passport or second citizenship helps (never mind having one for political reasons as well).  There are a few countries, and very few I might add, that do offer economic or instant citizenship programs, but you do certainly need a current and valid passport in order to apply.  Having a second citizenship or passport is like having an insurance policy - it only helps after the fact when you have a problem (hard to buy home fire insurance after your house has burned down).  I wish I could offer more positive news, but you are currently prohibited from traveling where you wish, at least with a passport, or without one as the case may be.  The only good news is that there are quite a few places in the Caribbean (plus Mexico and Canada) whereby you can travel on your birth certificate and other photo ID, should you wish to do so.
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Another Reader Writes:
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Hi - I read an article attributed to you that read:  First and foremost, I think it important to get your financial house in order.  That is to say, get the money matters, such as banking and investments straightened out first.  Many clients have chosen the Dominican Republic because bank account interest is 100% locally tax-free and because interest rates for US dollar deposits do tend to be higher than other places, including current interest rates in Panama.  So, if one consideration is to have the ability to live off of your savings, the DR might be a good place to look at, even if you decide to live elsewhere.  US Dollar Bank time deposits (CD's) pay up to 10% at the moment, and if you are going to live in the country, then deposits paying up to 22% in Dominican Pesos might be worthwhile as well.  Stated more clearly, while it is almost impossible to live off the current interest earned in US bank accounts (which is also taxed) at the moment, it is very possible to do so in the Dominican Republic.  How much do you need?  That really depends upon what kind of lifestyle you want, but it is safe to say you can pay your monthly rent, monthly utility bills and cover things like grocery shopping on the equivalent of US$ 1,200 to $1,500 per month.  If you happen to have more than this amount coming in (as interest from your investments) then ever better.  As a very practical example, many clients are earning the equivalent of US$ 1,800 from peso-based investments (US$ 100,000) and are covering their monthly living expenses with that.  Is this an accurate assumption?  Do we have to put all our money into a DR bank? I have been told they are not as secure as US / Western banks?
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EDITORS REPLY:  Yes, I did indeed write the above and YES, it is still true today.  However, I have said many times before, it is not a sensible idea to put ALL of your money into Pesos, and certainly it is not sensible to put all your investments into one country either.  So, while it all depends upon how much you have, my advice is to invest just enough in pesos to generate a comfortable monthly income in order to cover your monthly living expenses (the fact that local bank account interest in the DR is tax-free is an added bonus).  Although, the real attraction with the DR is that you can realistically live off your monthly bank account interest when you are getting 24% or so (in pesos) or 10% (in US Dollars).  In this regard, you can live very well from the interest on US$100,000 and perhaps invest the balance elsewhere (perhaps invest some money in Europe, etc.).
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Another Reader Writes:
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Dear Sir - First, a thank you for the info you sent via e-mail.  It is received with great interest.  Since the devaluation of the DP, (28 to the $) at my last count, you mention a scramble to acquire US$ at above the official rate. Is this legal in the DR? If so, are there many people taking advantage of this situation, and in your estimation, how long do you think this situation will last?
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EDITORS REPLY:  Anytime the local currency devalues, people will always look to try and safeguard their money, and one way to do that is to move funds into a stronger currency.  So, this is nothing new and in fact many Americans that I know of had moved out of US Dollars and into Euros a while back as well (to escape the US Dollar if it devalued against the Euro, which it did).  This then is a normal occurrence everywhere in the world and it is not a mad dash, but rather an orderly movement in the capital markets.  What is in store for the future in regards to stability of the exchange rates?  Well, this can be the difficult thing to predict, but certainly the Peso has actually strengthened against the US Dollar recently, but this is somewhat artificial and also politically motivated (the central bank authorized a contraction of the money supply to get this kind of result).  The long-term trend has been devaluation, although at an orderly rate of about 5% per year (historically).  There is a very legal exchange rate system, which allows for both the central bank official exchange, and the private market as well.  Obviously, the private market is almost always higher (capitalism at work) and quicker to react to changes in the market than the Central Bank.  The trading range probably will vary between 30 and 35 in the near term, although the Peso always strengthens versus the Dollar in December because the country is always flooded with Dollars at Christmas time.
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Another Reader Writes:
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I read with interest the reader's letter regarding the manner in which Haitians are treated in DR.  While visiting in March I noticed some of this treatment and spoke with several locals on why this was happening. 
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The people I spoke with indicated as you did that the problem (resentment) was there because of the job issue.  Dominicans were losing jobs to illegal Haitians and they didn't like it.  I never heard any words about race. The people I spoke with or spent time with seemed very liberal about racial relations, which is another reason I am considering retirement.  I enjoy your newsletter and share it with friends here in Chicago so they can understand why I fell in love with the DR.
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EDITORS REPLY:  Thank you for writing in. 
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Another Reader Writes:
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Hi John - We have met before and I am one of your regular subscribers. Just curious to know your "thoughts" on Mexico investments like CD's, etc. - Also the status of their reporting to Big Brother.  I lived and trained in Mexico many years ago when things were different, but like all Latin and Central American countries, times do change and not always for the best.  We lost when the PESO devalued ten or fifteen years ago, but it seems to be rather stable in the past few years. I cannot find a resource to tell me what the current interest rate might be on savings and CD's so if you could direct me, I would appreciate it.  I know this is out of your Panama and DR area but curiosity killed a cat. Any comments on real estate investments, and resources to locate same, would also be of interest.  If you say read my lips, I do not cover or offer advice on areas out-side those mentioned I will understand.  Thanks and keep those newsletters coming.
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EDITORS REPLY:  Well, what I know about Mexico is only from what clients tell me who live there.  I have heard that interest rates for Mexican Peso based investments are in the 16% to 18% range.  I also have quite a few expatriate clients that were living in Mexico previously, but for some reason or another have decided to leave.  I would say to try and make contact with the large number of Americans living in the Lake Chapala area in terms of their comments and experiences for a much better reply than I could offer.
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Another Reader Writes:
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We have recently moved permanently to the North Coast of DR and are in the process of building our home.  We have put some of our money in a peso account back in April, but kept a larger portion split between a US account back home and a US account here. We have been getting a lot of advice about selling off our peso account before it devalues further. We are trying to believe that the worst is already over and want to keep our peso account CD.  Are we being foolish?
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EDITORS REPLY:  To truth of the matter is, if you are living in a country that has its own currency, or some currency other than the US Dollar, for sure you must pay for local expenses in that currency (supermarket, electric bill, telephone, etc., etc.)  So, either way, you need pesos in the case of the Dominican Republic.  Is it both wise and practical to try and time the currency exchange rates?  For the average person, I think the answer is no.  The strategy that you have implemented is fine, and as you mentioned, you have some funds invested with a Peso certificate of deposit (which leaves me to believe you are most likely living off the interest).  From what you indicated, the balance of your funds is denominated in US dollars so you are hedged to some extent.  I would not drive myself crazy trying to worry about which way the peso goes if you continue with the strategy you already have in place.  In addition, I am going to imagine with the funds you do have in pesos, that you are earning at least 20% interest (locally tax-free), which is also an impossibility in US Dollars.  One final word about free advice from a guy at a beach bar:  If such a person is a very shrewd investor with marked success in terms of his or her own investments or especially with playing the currency exchange markets (and can prove it), perhaps listen to him.  If he is just a guy that likes to talk, leave it at the beach.  Stated another way, get sound plumbing advice from an experienced plumber – get sound financial advice from someone that has the experience and wisdom with such things as well.  
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Another Reader Writes:
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Hi, How are you, John? You may remember me from previous correspondence and conversation.  I am still planning to return very soon (in fact in May I got an unfurnished apartment in Naco for six months: $430.00 a month for three bedrooms!), but I have a question or two for you about the current situation in the DR, and whether it can be a permanent residence for me. 
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1). In your estimation, how does the current DOP devaluation and the possibility of dollarization in the DR affect the possibility of living in the DR on $100,000.00? Is it still possible, and will it be so for the foreseeable future (say, three to five years)?
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Will the peso continue to fall against the dollar in your estimation (currently about 32 to 1)? If the DR economy dollarizes, will the high interest rates available with peso deposits be lost? Will DR dollarization affect the availability of money such that the current interest rate for dollar deposits will drop?
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I know nothing is guaranteed, but still, the big question is: if these facts of my life were yours: single, 48, totally in retirement mode, have only $95 to 100k to live on after moving and furnishing a place, and had less than half that in the US in an IRA, would emigrating to the DR be something you would currently consider for yourself?
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2). Is the banking introduction you have mentioned before still available? How much did you say you charge for it? Without it, how serious would the problems be that I would have opening personal bank accounts and doing banking in the DR?
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EDITORS REPLY:  In terms of the exchange rates issues, I think I had answered many of your questions in some other reply sections.  However, the idea of whether or not the Dominican Republic would elect to use the US Dollar as its own official currency is an interesting one.  The truth of the matter is that while there certainly might be some advantages to it, such as no currency exchange issues and perhaps lower interest rates, it is also true that many people in the country are against the idea for two reasons.  One of the reasons is patriotic, or the thought that losing one’s own national currency means losing one’s sovereignty to some respect.  In addition, the more tangible issue is economic competitiveness.  Meaning, many business people certainly know that having a national currency weaker than the US Dollar means that Dominican exports are inexpensive and very competitively priced abroad.  Aside from that, in terms of tourism, certainly the Dominican Republic remains to be a bargain for both American and European tourists.  Since local labor costs as well are a fraction of what they might be elsewhere, foreign business has a tremendous incentive to relocate factories and jobs to the country.  So, all in all, while using the US Dollar as a national currency has some advantages, certainly many would prefer to avoid the disadvantages.  Ironically, there was some discussion awhile back about using or pegging the Peso to the Euro, which makes more sense than the US Dollar, both politically and otherwise (more than 75% of tourism still comes from Europe and the same holds true for percentage of non US foreign investment in the country). 
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But, in terms of investments, you are correct in that local interest rates would be lower than what they are if the country was dollarized.  For sure, interest rates for US Dollar deposits are higher than what they are in the US or Panama, they are certainly much lower than the 20 plus percent that is possibly with Peso denominated deposits. So, there are advantages when you have the opportunity to earn say 24% tax-free from your bank certificates of deposit.
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On the question of whether I would consider living in the Dominican Republic or not, or whether or not I would consider suggesting the idea to someone else is a bit of a mute point.  It is a decision I have made for myself and do not regret doing so, especially when I hear some of comments that my Canadian and American clients tell me about the environment in North-America at the moment.  If making such a move is right for you of course all depends upon your personal goals and likes or dislikes.  No country is perfect, but one can still live a somewhat freer life and perhaps a better life economically in the Dominican Republic than you can in the US or Canada, in my own opinion.
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Another Reader Writes:
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I'd like info on buying real estate in Dominican Republic. What are advantages of DR to Panama?
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EDITORS REPLY:  In terms of real estate, I would say that to some extent, real estate can be more of a bargain in the Dominican Republic, but again it all depends on what you want.  Farmland, I would say is priced about the same.  Upper end apartments are about the same, perhaps less expensive in the DR with the currency devaluation.  The most drastic difference I see is with middle class and upper end residential housing, whereby the Dominican Republic is dramatically less expensive.   So, it really depends on what kind of real estate you are looking for.  However, the real answer or difference comes down to a number of other things, such as attributes of the country in terms of location, local economy, leisure activities, etc., etc.  Meaning, I very much like Panama and the Dominican Republic both, however, the DR scored a bit higher for me on certain things that were or are important to me personally (travel time and convenience of travel to Europe, leisure activities, beaches, proximity and abundance of mountains and rural areas around the capital, etc.). 
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Another Reader Responds to a Letter from our Previous Newsletter:
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Hi John - (lol = laughing out loud) - If the guy is going to be critical, he could at least attempt to be honest. I've read every newsletter you've printed for at least three years now, and as a regular reader I have heard you say over and over and over again, to be conservative when investing in a foreign currency. You have said "Do not put all your eggs in one basket". You said, "yes, the DR currency is paying a high yield of interest right now, when investing Dollars in the DR Peso, and the rate of devaluation has been only 5%, but there is no telling what it will be in 2 years or even less".   From reading what you had to say, I felt from you, that if I invested US Dollars in your DR currency, it was more of a shorter term investment and one in which I could lose. And under those circumstances, if I was bound to do it, then do it conservatively and bank just enough to use the free interest gains, to pay the bills. Simple as that.
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But, that is not really my main point. Nor am I busy trying to defend you, John, as I am just stating the truth as I have interpreted your writings regarding DR banking.  Here's more truth. I imagine the guy who wrote the above is from the US, although he may not be. What I'm going to say is probably true for whatever country he resides in, especially if it's one of the big, non-competitive high-tax countries (I have a feeling I'm close here, lol).  He won't be so smart in a few years. With our problems in the US mounting by the week, no good will come out of what is going on here (there's an ill wind blowing). Our national debt is staggering, it would take some honest hard work to ever repay that. We don't have many honest politicians in the US, and even if do we have any, from what I've seen of my fellow countrymen, they wouldn't vote for him/her anyway. 
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People in this country (USA) vote for gimmicks, tricks, looks, and they do not read between the lines.  Talk about a mindless society. People in this country are being led like chattel into a butcher shop, and don't even question the authorities. Our rights are eroding. We are truly just a number that is sent out to work, (right now we work more than half our days for the Feds, States, and Cities) so we can be tracked and billed so as to keep the governments in plenty of money to just piss off, which is exactly what they have done with it. If we handled our personal finances (the little we have left) the way the Government handles theirs, we would be jailed by the IRS just for being so stupid.  But yet, people like the above still don't get it. To them, this is still the land of the free, and the land of milk and honey.  You saw the American stock market tumble. It's not done by far. You've noticed the recent tech stock rally, that will be over soon, and wasn't much in the first place.  Start watching the housing market in the US. It's going to be the next bubble to burst.  (Banks next?)  Americans are in debt up to their ears. Millions have gotten cheap loans on the equity on their homes and have spent that with nothing to show for it. Millions will be filing for bankruptcy in an effort to get out of debt and to try to stall off foreclosures and various other debtors, including our over zealous government, states and local municipalities, who are, by the way, all broke and scurrying like rats looking for a place to hide. (like the governor of California, lol). These various authorities are broke and even their own jobs are on the line unless they can make their jobs pay, or at least look like it. We are the payee. Look for more and costly tickets. More confiscations, (against our Constitution). Look for higher taxes on everything from car registration to higher water, electric, and gas, including higher gas prices at the pump. Also look for extremely higher food prices, as we are the ones who eventually have to pay for everything that is pricing upwards, such as the gas pump prices.  It won't be long till you can't even sell a house. We have a great big buyers market coming, but the buyers are all spent out. I have no idea how long Greenspan can keep the interest rates low, but I know he can't do it forever. Somewhere along this trail of inefficiency, denial, and bloat, the chicken WILL come home to roost.  Myself, personally, here's how I am dealing with what is to come. (No, I am not living in a cave, lol).
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I am staying with my job. If you have a decent job, keep it, as a lot of people don't, and more will be joining that list. I say sell your house or houses if you can and buy cheap later. Myself, I have have property, but it's paid for, and to me, it feels good knowing I have a place to live providing the government doesn't confiscate it from me. Not that they have a reason to, but read on and you'll see what I'm talking about. The latter (confiscation) is also a good reason to have a good presence in another country, such as the DR., a safe place to go, not to mention the fact that it is a paradise island.  Monetarily wise, the smart one previously mentioned a failed bank in the DR. Just wait till some major banks start to fail in the US. I suppose that will be different, though, to people like him. There will be a legitimate reason when banks fail in our country, like the bank manager was so involved with all his young teller girls, that he didn't take very good care of business, lol.  Banks will fail, here in the US. How can they not, with so many failed investments, such as billions in credit card debt, and failed mortgages? They have been giving credit/money away like it is water. I know, as I personally got involved in this stupidity. (I hate to tell the truth about myself, but I am not perfect either). And what is more, the American people, such as myself have had their hands out taking the money too. These are the kind of investments the banks in this country are involved in. The Government prints the money, the banks distribute it around and it's all coming to a head, sooner or later.  Did anyone ever think of this interesting thought? Has anyone ever noticed the extreme, extreme amount of storage facilities that have been built all over this country (US)?  Those storages are all filled with booty that Americans are keeping because they have no room in their houses and condos and apartments for all their "things". This is the booty they have bought with the easy credit/money that has almost been slapped into their faces. All the teenagers, kids, and even the gang-bangers are carrying credit cards. (at least the one's that haven't lost them already, lol)  What I have done with my money is I have bought gold. It has gone up maybe about 50.00 dollars an ounce since I bought the majority of it. I could have made more money investing in the tech stock rally such as JDSU, but I feel much safer with the gold. I could lose (doubtful), but if I do lose, I certainly won't lose it all. Then again, I may gain a lot too. That’s possibly doubtful too, although I hope not. I just do not trust the US dollar right now and please don't say I'm a traitor to my country because the truth is that I am probably a better countryman than most. It is the politicians that are the traitors, for trying to scurry around our constitution every chance they get, and eroding our rights to the peace and freedom that this country was founded on.  One major problem I for-see with owning physical gold (I advise you put it in a safe deposit box) - is that this government, like they did under Theodore Roosevelt, could outlaw gold. It may already be outlawed in fact. Under the Patriot Act, if they want your gold, from what I understand, and I am no authority so please forgive me, but all they have to do is say it's (the gold), is terrorist related and they just take it away. Try fighting them and when you are done you will have no gold anyway.   I have tried to take action by doing things like signing up for the ACLU's email action site and emailing all over the place. It may help. I don't know. But I think letters such as this one are good. But the real truth is, I am so busy just trying to work, save and make ends meet, and I don't have the time, or energy to take all this action.  I have resigned myself to just reading/writing on forums such as this, trying to save and make smart business choices, trying to learn website development (fully on my own) in order to develop an Internet presence, trying to save money and pay my bills. Meanwhile I'm hoarding gold and carefully watching the markets, and trying to learn from others, such as from you, John.
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And John, just as soon as I get a break, or if my investments do good, or just any chance I get in this lifetime, I plan to leave here and not look back. This is bull++++, and I have only one life to live.  I pray to God that with what I know and see, that he'll guide me to a more peaceful, slower, and more down to earth environment, if that is at all possible, and in my heart, I believe it is.  Signed: An American with enough vision, to see through the fog
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EDITORS REPLY:  Well, first and foremost, thank you for your letter.  I do think that everyone is entitled to a point of view, even if contrary to my own.  For this reason, I gladly reprint the negative letters along with the positive ones, but I do get many, many more letters like yours than the other kind, so this leads me to believe you are not alone. 
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Another Reader Writes:
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Dear John - After reading your very interesting report about the DR.  I visited that country several times, and was planning to relocate from Florida to the Sousa - Cabaret area in the near future.  I am very concerned with the economy / financial and personal safety issue. I like the performance of your USD fund, but it is starting to look to me like another Venezuela situation – developing.  What will happen to the USD, and the investments there if this continues.  Where is your money invested, and how safe do you consider the fund???  What is your feeling about this situation including personal safety there???  I would appreciate your input, or any information on that matter.  Thanks and best regards.
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EDITORS REPLY:  Well, I should clear up the terminology that you mentioned in terms of the Guardian Investment Group.  I am on the executive management committee and I do represent the group in terms of publicity, but it is not my fund.  There are a number of very talented people that make up the company staff and executive board, so while I would like to take credit for the performance and positive things that have taken place, the truth is I cannot.  However, to answer some questions, the management is very conservative and very concerned about safety of principal.  For this reason, the investment portfolio is about 80% invested into jumbo US Dollar bank certificates of deposit and 20% into US Dollar commercial paper.  In addition, about 70% of the portfolio has additional asset guarantees both from the banks (above and beyond the normal government banking insurance fund) and those companies issuing commercial paper. In this regard, guarantee of principal is of the utmost concern for the clients participating in the US Dollar Cash Reserves (money market) portfolio especially.
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In terms of my own investments, I do participate in both US Dollar and Peso denominated investments in the country.  In addition, as I also suggest to clients, I have funds invested in real estate and elsewhere as well.  I try to put my money where my mouth is, so to speak.
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In terms of personal safety, I have not had any problems, but then again I do not go looking for problems either.  Meaning I do not do anything different than when I lived in New York or elsewhere, and I have never been mugged in New York either.  Maybe I was just lucky, or maybe my lifestyle is such that I have been able to avoid the crooks.  It is hard to say, but I think it is also true that people sometimes loose their head when they go somewhere else (or go on vacation), and fail to use common sense.   Perhaps that is the reason some people have problems, perhaps it is just bad luck.  I honestly do not know, but I can only tell you about my own experiences and those that are reported by clients.
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However, it also amazes me some of the things that get front page exposure in the US, in terms of negative events from outside of the US, which of course shapes many American perceptions about life abroad as well.  For example, there was something reported about a riot in Santo Domingo whereby a policeman was killed and two people sent me panicked emails about it.  I saw no riots, no rocks, and not even a flying tomato.  On that day especially, I was out running around with a client who was picking up their residency card and Cedula Card, so it was not as if I was holed up all day either.  There may have been a guy throwing rocks somewhere and a policeman could have been killed.  In a city with 4 million people, I do not find that too outrageous.  All in all, I would say that Santo Domingo, which is my primary point of reference, is probably safer than Tampa, Los Angeles, Detroit and a number of other US cities.  In addition, I would say there are no race tensions at all in the Dominican Republic and certainly no drive by shootings either, which many clients have taken note of as well.  No metal detectors at the schools either because young children bringing guns to school is not even a wild thought in anyone’s mind (in the US of course it is a common occurrence).
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On the economic question, it is true that the Dominican Republic did have the fastest growing economy in all of Latin America for some time (about the previous 8 to 10 years).  It is also true that this is not the case at the moment, in part due to a political party currently in power that has raised taxes at the same time the US and Europe went into a major recession.  Not a good idea, and one of the reasons that the leading conservative party presidential candidate is reported to have over 80% of the votes (if the election were held today).
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In the long-term our view does remain positive and like any other country or economy, there are temporary bumps in the road and temporary changes in the political environment as well.  However, people do adjust course and usually go back to a game plan that works, after trying something that does not.
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Another Reader Writes:
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We have chosen the Dominican Republic - Cabarete, for our vacation this December (2 weeks).  I am also looking with interest at the property market, as it still appears to be good value for money.  Why are all or most bungalows/villas/apart/fincas in gated complexes with 24hr security and security blinds at the windows?  Is there a gun culture?  Does it suffer from a drug problem?  Is there that much unrest that it keeps the real estate prices down?  Is it safe/ and is it safe to consider purchasing real estate - not just in Cabarete, but main towns and city alike?  Could we sit in an open top car driving though a major city and encounter no problems?  Are there townships/homesteads to avoid?
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EDITORS REPLY:  You have quite a few questions, but I will attempt to answer all as best I can.  On the issue of gated real estate communities, first and foremost, you are talking about Cabarete – which is of course a tourist area.  The gated communities are then for the most part marketed to tourists or we can say foreigners.  Since a large number of these people buy with the intent of not spending the entire year, but rather come and visit when the cold weather season hits in their own native countries, it stands to reason that security of their home is a prime concern.  Therefore, gated and very secure communities do appeal as a selling point and the reason you see quite a few in the major tourist areas (Punta Cana and La Romana as well).  There is a gun culture to the extent that many, many private citizens do own handguns.  For this reason, a thief is taking a big risk in that he could lose his life trying to steal a few dollars.  Of course, the main difference is, if you shoot a robber in North America, they lock YOU up for violating his civil rights.  In the Dominican Republic, they applaud citizens who happen to kill bad guys and protect themselves (which makes much more sense to me).
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On the subject of drugs, I am sure they exist, but I have never seen or been offered any.  On contrast to this, all the times I have visited Jamaica and Antigua, I was offered all sorts of so-called recreational substances, on the beach, on the street and all hours of the day (one guy actually approached me while walking on the beach 7:00AM in the morning in Antigua, if you can believe it).  No, I would say the difference is that drugs are not tolerated and you will get locked up, tourist or not, if you have them.
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In terms of real estate, the Dominican Republic still remains to be one of the most affordable places in the entire Caribbean.  This has nothing to do with anything other than the fact that Americans are a very small percentage of the tourist population (Americans especially tend to bid up real estate in any area that becomes hot or popular).  With respect to buying real estate anywhere, hire a good attorney and make sure you complete a thorough title search, just as you would do in the US or Canada.  Should you wish to travel around to see the different parts of the country, and I would encourage you to do so, just use common sense and you will not have a problem.  Dominicans are very friendly and accommodating people, especially to tourists.
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This information has been compiled and presented by John Schroder of Ascot Advisory Services, for the benefit of clients and readers. Ascot Advisory Services provides assistance with such matters as offshore company formation, Panama Foundations, offshore banking, and special services in the Dominican Republic regarding residency, free zone applications, etc. For more information:  
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