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Marotta Freedom Investing

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#2 Understand foreign freedom investing

We’ve been writing about foreign freedom investing as long as I’ve been writing the “Marotta On Money” column. My very first column was co-authored with my father and entitled “Will the U.S. go the way of Japan?” in 2002. The Enron meltdown was fresh in everyone’s mind. At that time our conclusion was no, because “In the US we allow companies to go bankrupt when they cannot succeed in business.” My how times have changed! Since that article the United States passed the Sarbanes-Oxley act which budens publically traded companies with regulatory costs of three Enrons every year.

While our investment strategy has always been looking for the fertile soil of economic freedom in a global economy, our first published study was in 2004 in a two part series: “Invest in Countries with Economic Freedom” and “Let Freedom Ka-Ching“.

Since then, each year we have written about specific countries as well as periodically doing a more comprehensive analysis of countries with high economic freedoma and low debt and deficit.

I recommend the following articles as being among the most significant recently:

  • Foreign Freedom Investing 2008 (2008-06-13): You can both diversify for safety and boost your returns by adding international investments to your portfolio. In the past year, international stocks performed 2.5% better than U.S. stocks. And developed countries with the most economic freedom returned an additional 4.4% more than the international index.
  • Avoid the “Ring-of-Fire” Countries (2010-05-24): A few months ago Bill Gross, co-founder of PIMCO and the country’s most prominent bond expert, singled out those countries heaping significant deficits on their mountain of debt and called them “The Ring of Fire.” We recommend that you reduce your investments in these countries.
  • Continue to Avoid the ‘Ring of Fire’ Countries (2011-06-13): A year ago I wrote the column “Avoid the ‘Ring-of-Fire’ Countries” that suggested readers should underweight investments in countries with a high debt and deficit and low economic freedom. That recommendation has proven brilliant. Given the dangers of worldwide sovereign debt, this may be one time when investors should continue to tilt foreign and toward specific countries.

You can also watch this YouTube Video on foreign freedom investing.

#3 Browse the site for wealth management ideas

Comprehensive wealth management is based on the idea that small changes in our finances can have large effects over long periods of time. These changes can make the difference in achieving our life goals. The site is filled with wealth management ideas, but if I had to recommend just one, I would recommend moving your wealth where it will never be subject to tax again in the article, “Roth Segregation Accounts“. Alternately, watch the videos on Roth Segregation accounts at Roth Segregation Part 1: IRA Tax Law and Roth Segregation Part 2: Implementation.

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Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.