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This Place Is More Swiss Than Switzerland

By Stansberry Research Interview Series
Monday, December 10, 2007

Switzerland's private banking has always been famous for two things:
 
  1. Extreme privacy
2. Avoiding taxes
 
There are no capital gains taxes in Switzerland, unless you're buying real estate. Personal estate taxes are generally 7%. And if you're a foreigner retired in Switzerland, you can even choose a lump-sum tax in which you only pay taxes on an amount equal to five times your annual rent.
 
In other words, you don't have to disclose your net worth or income at all.
 
But all of this is changing...
 
In 2004, Switzerland altered its tax structure to crack down on tax evasion from foreign accounts. For the first time in history, Swiss banking imposed a 15% withholding tax on interest income from deposits.
 
A lot of very wealthy people were very, very angry. And funds began to be wired out of Switzerland and halfway across the world to the next private banking hub: Singapore.
 
Singapore now manages $300 billion in private banking assets. Ten years ago, it was only $50 billion.
 
Singapore now accounts for roughly 5% of the world's private banking assets. This doesn't seem like a lot, but consider that Singapore is the 189th smallest country in the world, right after the Federated States of Micronesia.
 
The number of private banks in Singapore more than doubled since 2000. Singapore is now the second largest private banking hub behind Switzerland.
 
Granted, it's a wide margin – Switzerland manages $1.7 trillion – but it's shrinking rapidly. Singapore's private banking sector is expected to grow by 25%-30% a year for the next three years. When you consider the benefits, it's not difficult to see why.
 
Individuals worth $13 million can gain immediate permanent residence in Singapore, provided they invest $3.1 million in the country ($1.25 million can go toward property). Once you're there, you don't have to pay taxes on income earned abroad.
 
If you're a business owner with operations outside the country, you get the benefits of Singapore's education and health care systems – the best in Asia – without paying a dime in taxes.
 
You won't pay taxes on capital gains or dividends either.
 
As you'd expect, the rich are flocking to the country. One of them is investing legend Jim Rogers, who made a fortune managing the Quantum Fund with George Soros before "retiring" in his late 30s.
 
Rogers originally wanted to move to China, but decided the pollution was too awful to put up with. So he relocated to the English-speaking, cleaner, more financially sophisticated Singapore with his family.
 
I have to tell you, I'm starting to be tempted myself.
 
Good trading,
 
Graham




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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%