Last year’s pandemic saw a lot of digital nomads and expats get wiped out. A lot of great blogs and YouTube channels are ghost towns, because the owners ran out of money. And that’s completely understandable. If you did any type of business related to travel, your income fell off a cliff. Which is why it’s important to have a back-up plan. And that’s why I’m sharing a simple, “Expat Emergency Fund.”
This fund is different than a traditional savings account, because it pays you 8% interest each year. That’s a thousand times more than anything even the most “generous” bank would offer.
So what is this “Expat Emergency Fund?”
It’s loading up on shares of British American Tobacco stock.
Tobacco companies are some of the best performing businesses in history. And they’re still generating massive free cash flow to this day (despite all the anti-smoking regulations around the world).
I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.
While British American Tobacco faces regulatory issues, the company still turns an enormous profit, and that money is paid out via dividends. If you bought shares of this business right now, at the current price, you would receive an 8.5% yield on cost.
In other words, you’d be earning $8.50 in cash payments for every $100 invested.
It doesn’t take a financial genius to figure out that this is an excellent way to boost your passive income. Owning British American Tobacco stock pays you infinitely more than any savings account or money market fund.
Expat Emergency Fund Benefits
“Cash is trash.” That’s a direct quote from hedge fund titan Ray Dalio, and it’s very apparent that traditional savings accounts are worthless. Inflation and cost-of-living expenses will eat up more of your buying power than whatever pittance of an interest rate you’re offered.
And while Bitcoin and crypto are good hedges against inflation, they’re way too volatile to really be counted as a “safe investment.”
Back in peak pandemic March 2020, when many expats needed cash to get back home or extend their visas, Bitcoin crashed almost 50% and Ethereum tumbled to $90. This type of volatility really defeats the purpose of having an emergency fund in the first place.
British American Tobacco is a stable investment that always trades at a discount, since most funds refuse to buy cigarette companies.
On top of this, the business pays a quarterly dividend of about $0.75. During the US election’s last year, I bought just under $9,000 of this stock and earn about $800 per year in passive income. That’s far more than I would have earned with savings account, and it’s more than enough money to cover a extra month of rent and groceries.
Heck, I just looked up some gorgeous Bangkok condos. Many $1,000 / month properties are now renting for less than $12 per day. So you could even use your emergency fund to upgrade your apartment or cash-in on some cheap real estate.
There’s no income better than passive income. And having funds you can fall back on will help you weather any financial storm, or take advantage of unique “once-in-a-lifetime” opportunities. Cheap, high-yield investments can line your pockets with dividend cash flow. And, you can then redeploy that money when it matters most.
Disclaimer: This article is not financial advice and always do your own research or talk with a trusted investment professional.