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54 & FIRED in Costa Rica for 16 years
Old 07-25-2011, 05:24 PM   #1
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54 & FIRED in Costa Rica for 16 years

Hello. Wife and I are early retired since 1995 and live in Costa Rica. Our retirement portfolio consists of five equity ETFs, two offshore bond funds, and a MMF. We own a nice home that's free and clear of any debts and makes up about 20% of our total net worth.

Our children will go to college in Costa Rica because it's either free or very inexpensive for CR citizens. One of our kids would like to go to the USA for college. I told him he must get at least 80% of ALL his costs covered by a scholarship. If not, he goes to college in Costa Rica.

AA: 60/30/10

15% Lg USA
15% Lg non-USA
10% Emerg Mks
10% Sm USA
10% Sm non-USA

30% bond funds
10% MMF

Our total portfolio expenses are about 1% of assets. ER=0.42%. NRA taxes=0.28%. And estimated hidden costs (internal commissions, spreads, and impact costs)=0.3% Thus, our net AWR is 3% which is what we live on.

Since we are US NRAs, we pay a 30% NRA tax on dividends and interest payments. Using BND would cost us 1.1% of assets (ER=0.11% and NRA taxes=0.99%. Thus, it is cheaper for us to use offshore bond funds where we don't have to pay the US NRA tax.

Using a US discount broker, this is the cheapest we can go as far as portfolio expenses are concerned.

We are looking into getting into Vanguard (non-US) offshore funds. For this, we would need to form an IBC in either Bermuda or the Cayman Islands. If we can do this, our portfolio costs would go down about 0.34% because US NRA taxes would be eliminated. Also, the relatively expensive ERs of the bond funds would go down by us using Vanguard's offshore indexed bond fund. Another benefit of investing thru non-US Vanguard is that our concerns of horrible inheritance taxes for US NRAs would be eliminated.

Any questions or comments are welcome.
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Old 07-25-2011, 05:32 PM   #2
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Originally Posted by galeno View Post

Any questions or comments are welcome.
Wow, more than 8 1/2 years since your last post. Welcome back.
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Old 07-25-2011, 06:35 PM   #3
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I have a non related to finance question about Costa Rica.

How long did it take you to get used to the grocery stores? We vacationed in CR for about 2 weeks and were surprised by the produce section (or lack thereof) in most of the stores. In the USA there is such a vast selection of fresh produce, but everything in CR was wilted except the pineapple...which was indeed very fresh and good. The meat section was also nothing compared to USA. This could be because rice and beans makes up a major portion of most meals (it seemed).

Our experience could be because we stayed in several small villages, but it was like this near Arenal too. It was more than made up by the fact that we were sitting in natural hot springs at night with a drink in hand watching the very active volcano above us spew lava fireworks.

I want to go back!
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Old 07-25-2011, 06:56 PM   #4
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We are Costa Ricans. We had to get used to US grocery stores <grin>. Most Costa Ricans buy their fruits and vegetables at farmers' markets. Fruits and vegetables are very fresh and very cheap in CR. For meat, go to the butcher's shop.
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Old 07-25-2011, 07:12 PM   #5
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We are Costa Ricans. We had to get used to US grocery stores <grin>. Most Costa Ricans buy their fruits and vegetables at farmers' markets. Fruits and vegetables are very fresh and very cheap in CR. For meat, go to the butcher's shop.
Ahhh...probably we did not go to the right locations then. Typical Americans

One of my favorite things there was the coffee...damn fine coffee (for all of you twin peaks fans who get the reference).
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Old 07-25-2011, 08:18 PM   #6
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Galeno, welcome back. I used to enjoy your posts on TMF, and wondered what you were up to. If I ever decide to leave the US, CR is pretty much my first choice, and a lot of that is due to reading many of your comments about life there. We're planning to visit in the next year or so, as part of my plan to convince DW. Good to hear from you again.
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Old 07-26-2011, 09:52 AM   #7
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Hi harley. Basically I'm just enjoying my early retirement. I travel a lot. With the wife and without as we still have teenagers in school.

Costa Rica has become quite expensive. That's because so many people are bringing in US dollars and the country is flooded with them. It's also becoming more violent as it is a drug transshipment place and the drugs get stuck here.

Still, the weather's great and the Costa Rican people are wonderful. Foreigners from the US and Europe still come here in droves and many want to stay. The Chinese are also making their presence felt. They built us a really nice soccer stadium. They are now going to build us a "Chinatown" in San Jose.
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Old 07-26-2011, 01:57 PM   #8
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Nice going Galena. FIRED at 38? Well done.
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Old 07-27-2011, 09:00 PM   #9
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Welcome back, Galeno!

Your original withdrawal strategy was an inspiration to me and I promote it at every opportunity. I ain't there yet, but I think about it all the time. I may wind up doing things a little differently, but not sure yet.

Cheers,

Ed
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