“Geographic Arbitrage – A Trend with Momentum”

  Geographic Arbitrage (AKA geo-arbitrage) in its simplest format is when someone takes advantage of differences in cost of living between two geographic locations.  The concept is not something new or groundbreaking, but what is interesting is the amount of momentum this idea is starting to generate. Consider someone who has worked all of their life in New York City, or San Francisco and is approaching retirement.  They have likely enjoyed higher wages and job opportunities while living in these cities but have also dealt with exponential cost of living increases.  Should they continue to live where they always have?  Or would they be happier and more financially secure retiring (or at least spending significant time) in a different part of the state, country, or world? More and more people are realizing the trade-offs for living in major metropolitan areas, and the shift towards a more remote lifestyle brought on by COVID will only accelerate the trend.  In this article we explore some of the most popular ideas around the trend of geo-arbitrage.   Geo-arbitrage Doesn’t Always Require an International Move When most people think of geographic arbitrage, they assume that the person would need to move to a far-flung 2nd or 3rd world country to save significant amounts of money.  While certain international moves do produce some incredible savings, it isn’t always required.  In some cases, the move doesn’t even have to be out of the state you live in to realize sizeable benefits.  Consider this Retire by 45 article which details how an author moved just 10 miles from San Francisco to Oakland and saved an incredible $80,000 per year!  With housing being the #1 expense for most Americans, finding cities within your current state of residence that are more affordable could be a great first step.   You don’t have to wait until Retirement to take Advantage The reality is that more and more jobs are allowing the opportunity for remote work.  Well before the current COVID pandemic, a shift to a decentralized work environment was underway.  The pandemic has simply accelerated this trend.   While historically, most people might not have considered a geographic move plausible during your working career, it is quickly becoming a reality.  Working remotely is one thing, but when you can combine a low cost of living area WITH a high-income job, then you really begin taking advantage.  In a recent article from Fast Company, tech giants such as Facebook, Google, and Coinbase have all announced plans to allow at least some staff to work from anywhere on a permanent basis.  You only have to go check out the Nomad List: “The best places in the world to live, work and play.” Every second, it collects 1,000,000+ data points on 1,000+ cities around the world, from cost of living, temperature to safety. With that data, Nomad List gives you an idea of where it’s best for you to live, work and travel.   Remember, It’s Not Always About the Money While taking advantage of the financial perks of geo-arbitrage is enticing, it’s also important to remember it isn’t always about the money.  Certainly, there have always been cheap places to live around the world.  The key is finding somewhere that not only has a better cost of living, but also provides other amenities that are important to you from a lifestyle perspective.  There is no point taking advantage of the financial benefits, only to be miserable in all other facets of your life.