Paul Terhorst was a successful guy, by all conventional metrics. He worked for the prestigious accounting firm, Peat Marwick, and was making $125,000 per year… in 1984! This is the equivalent of earning $357,070 today.
Despite this, Terhorst wasn’t happy.
His job was stressful, and much of his salary went to high cost of living expenses like mortgage payments and car insurance.
Crunching the numbers one night, Terhorst realized that both he and his wife could live lavishly in Buenos Aires, Argentina with just a $100,000 net worth.
In Buenos Aires, a nice restaurant cost $5 per person. And a taxi ride cost $1.
By moving to Argentina, Terhorst cut his essential cost of living expenses (housing, food, transportation) from 53% down to 16%. And the craziest part? All the extra money he had leftover allowed him to reinvest his savings, ultimately growing his net worth more.
And eventually turning Terhorst into a bona fide millionaire.
Of course, 1984 was almost 40 years ago. And many strategies Terhorst used are obsolete today.
But, Terhorst’s general idea of living the good life without a million-dollar net worth is alive and well. And I’ll explain how you can still achieve financial freedom without an exorbitant salary or 7-figure bank account.
Even now, in 2023, you can live comfortably with off a $100,000 – $200,000 portfolio of high yield investments.
Case in point, here’s a rental home I found on Airbnb:
You can live on a beach in Vietnam for less than $3,600 per year!
That’s peanuts. And one of two smart investments could more than cover your rent, indefinitely.
So, without further ado, here are several ideas on where you can invest for high yields that will cover your cost of living and allow you to kick-back and relax somewhere tropical.
What Not To Buy
I have a friend who I’d honestly describe as a crypto genius.
This friend got really into DeFi (loaning out various crypto currencies at incredibly high yields) and was, at one point, making tens of thousands of dollars per day.
Sounds awesome, right?
Well, here’s the issue.
Most of the coins this friend was earning interest off of were worthless. And illiquid, too.
When my friend went to cash out their seven-figures in DeFi alt coins, they ended up with less than $30,000 in U.S. currency.
I bring this up, because crypto DeFi platforms, junk bonds, and unsustainably high yield dividend stocks are all bad investments. Same with speculating on tiny biotech firms or tech start-ups. If you’re investing for dependable income, you want nothing but stable (and somewhat boring) companies.
Businesses that will continue to make a profit and reward their shareholders.
T-Bills And High Yield Savings Accounts
Right now, you can enjoy high yields without even investing in the stock market.
U.S. Treasury Bills are yielding 4.9%. And many savings accounts are paying 3 – 4% per year.
While these rates won’t last forever, they are a good source of passive income. Especially if you’re harnessing the power of geoarbitrage.
If you want high yield without much risk, savings accounts and T-Bills are two excellent options.
Oil, Chemicals, And Commodities
If you’ve ever read a Market Wizards book, you’ll know that commodities typically do well during times of high inflation. This means oil producers and mining companies go up, while other businesses struggle.
Examples of these businesses include: Rio Tinto (which currently yields a 7.73% dividend and trades at a PE ratio of just 7.60), Chevron (with a 3.77% dividend yield and 11.12 PE ratio), and LyondellBasell (paying a 5.15% dividend with a PE of 9.63).
These are all commodity type businesses. And each is offering high yields, at a below-market price.
Real Estate
There are a lot of bad real estate deals out there. As well as overleveraged real estate investment trusts.
However, the sector still has plenty of high yield gems that should weather the storm just fine.
Realty Income is a great example of this. The company owns hundreds of properties that it leases out to well-known retailers like Walgreens, Walmart, and Target.
On top of this, Realty Income pays monthly dividends.
Something that’s great for income investors looking to live off their cash flow.
The stock currently offers a starting dividend yield of 4.86%. Making it an interesting high yield opportunity for anyone who wants to own real estate, without the burden of personally managing properties.
Enjoy High Yields From Banking
Have you ever heard of The Bank of N.T. Butterfield & Son Limited?
Despite the goofy name, this is a real company. In fact, it’s a Caribbean bank that provides financial services to offshore clients.
High net worth individuals have kept their money with Butterfield & Son since 1784.
Despite this, bank shares have sold-off recently. And Butterfield stock is now yielding 7.28%, with a PE ratio of 5.02.
Conclusion
You don’t need millions of dollars in the bank to start enjoying life.
Paul Terhorst retired before he was 35, and still became a millionaire.
And you can harness the power of high yielding assets to do something similar. Thanks to inflation, even savings accounts and T-Bills can fund your overseas retirement. Not to mention real stock market investments in profitable, dividend-paying companies.
Stress-free living in a warm weather country costs a lot less than you might think.
You you may already have enough to retire early.
You just haven’t realized it yet.
Quick disclaimer: This article is not financial advice and intended for entertainment purposes only. Always do your own research and / or consult with a licensed financial professional.