Choosing The Best Country To Live: Stability As A Key Factor

As I discussed in a recent podcast episode, wealthy Americans are leaving the U.S. in droves. But why is that? 

The U.S., often called the land of opportunity, is not what it used to be. Currently, it looks like a politically and economically unstable country. The same goes for other major Western countries like Canada, the UK and much of Europe. 

Many of my clients are either retirees or soon-to-be retirees and are indeed unhappy with the direction their countries are taking.

Their neighbourhoods are not the same anymore, crime is rising, and they don’t get good value for their money. All these events are pushing them to vote with their feet and establish themselves somewhere else—or at the very least, set up a Plan-B if things go south even more. 

This mass exodus highlights the importance of two factors: political and economic stability. While certain countries are in a downward spiral, others offer their residents a safe haven to live and prosper—more freedom, if you will. 

In this article, we will explore why these two factors are critical when choosing a new place to call home and, most importantly, examples of countries that offer political and economic stability.

Somalia is a prime example of political instability, characterized by systemic corruption, a lack of functional rule of law, and ongoing conflicts, driving many of its citizens to seek a better life elsewhere

POLITICAL STABILITY

There are as many definitions of political stability as there are people in the world: everyone will conceive this concept differently. 

To illustrate this, we could first think of what political stability is not. A country where corruption is pervasive, the rule of law is weak, and there’s frequent social unrest will hardly be regarded as a politically stable country. Think of countries like Venezuela, Somalia or Syria; many of their citizens escape elsewhere to build a better life. 

On the other hand, political stability is characterized by clear laws, strong institutions and a peaceful social environment. Laws and contracts are enforced, and people mostly focus on their own matters without intruding on other people’s lives (the fundamental non-aggression principle of libertarianism).

This stability is conducive to increased personal safety, economic growth and high quality of life—all of which are essential when seeking a new residence or Plan-B destination. Below are the key features of political stability:

• Clear and Enforced Laws: The legal system is transparent and consistent, with well-documented laws and straightforward procedures for enforcement. Expats and residents know that the rules won’t change overnight, and everyone is subject to the same legal standards. 

• Flexible Educational Options: A stable legal environment typically respects multiple educational choices, such as homeschooling, unschooling or international schooling. For those considering alternative educational options, the Expat International School is an excellent resource to explore.

• Predictability in Governance: Stable governments tend to implement policies that avoid drastic changes and destabilize the economy. For expats, this means they can plan for the long term, whether buying property, starting a business or investing in local opportunities—all without worrying about sudden policy shifts that could jeopardize their plans. 

• Private Property: The rights of businesses and individuals are protected by law. This includes property rights and other important aspects such as personal freedoms and contractual agreements. In a politically stable country, expats can feel more secure as the risk of expropriation or arbitrary government actions is low. This security helps with wealth protection because your assets and investments will likely be safe from government overreach. 

• Low Levels of Corruption: Politically stable countries often have little to no corruption, fostering an environment of fairness and transparency. This helps residents and businesses thrive without needing bribery or overly complex bureaucratic hurdles.

• Strong Diplomatic Relations: Politically stable countries usually maintain strong and healthy diplomatic relations with other nations. This is especially important for expats, as it can simplify processes such as obtaining visas and handling legal matters. 

Panama shines with political stability, protecting property rights, fostering investment, and simplifying visas for expats

EXAMPLES OF POLITICALLY STABLE COUNTRIES

All these characteristics are essential ingredients for the next section: economic stability. Political stability creates the conditions in which doing business, saving, and investing can happen seamlessly. Now, let’s check examples of politically stable countries: 

• Uruguay: Also known as “the Switzerland of the Americas,” this South American country protects individual rights and offers a secure setting for expats and investors. As my friend Juan Fischer wisely points out, Uruguay is far from arms and drug trafficking routes, adding to the tranquillity you may experience here. 

• Panama: With its strategic location, Panama is a prominent trade and banking hub. The country has a well-established legal system that encourages foreign investment while respecting property rights and contracts. Also, its friendly diplomatic relations with other countries make it easy for expats to get visas.

• Chile: Chile has a stable political environment and has long supported free-market policies to attract investors and entrepreneurs. The transparent regulatory framework and low corruption levels give expats peace of mind when doing business and going about their lives. Chile also has friendly diplomatic relations with multiple countries, so much so that its passport is the strongest in Latin America.

• Andorra: Situated in the Pyrenees between Spain and France, Andorra is renowned for its political stability, making it a secure environment for expats and investors. Its reliable legal framework provides confidence for those seeking a safe place for both personal and financial security. Additionally, Andorra’s modern infrastructure and access to European markets enhance its appeal as a stable and business-friendly destination.

ECONOMIC STABILITY

Just as political stability provides a foundation for personal security, economic stability is essential for ensuring financial well-being and long-term prosperity. For expats, economic stability means living in a country where the economy is resilient, inflation is controlled, and the currency is reliable. In other words, you want to make sure that your wealth is protected from excessive taxation, currency devaluation, and other economic risks. Below are the key features of economic stability:

• Resilient Economy: Countries with resilient economies often have a strong industrial base, a robust service sector, and a well-developed infrastructure that aids in sustained economic growth. For expats, this means that their investments are less likely to be affected by sudden economic changes. 

• Low Inflation: Inflation is often referred to as the silent killer of purchasing power, as it slowly erodes the value of your currency. In economically stable countries, inflation is moderate thanks to a series of sound monetary policies. This stability makes living costs more predictable, helping expats and retirees manage their finances and retain the value of their savings. 

• Stable Currency: The strength and stability of a country’s currency are indicative of its economic health. A stable currency means that exchange rates remain relatively consistent, reducing the risk of losing money when converting or transferring funds. For expats, this is particularly important because they often deal with multiple currencies.

• Retiree-Friendliness: Economic stability is particularly important for retirees who seek a peaceful environment where their savings are protected and their lifestyle remains without unexpected changes. 

• Low Taxation and Favourable Tax Policies: Economic stability goes hand in hand with favourable tax policies. Countries with low or no tax rates on income, capital gains, and inheritance, among other things, allow expats to retain more of their wealth. Additionally, clear and predictable tax laws make it easier to plan financially. A strong currency also reflects a country’s overall economic strength, making it safer to invest and hold wealth there.

• Strong Financial Institutions: Economically stable countries have well-regulated and reliable financial institutions, including banks, investment firms, and insurance companies. These institutions are crucial for managing and growing wealth, providing a safe environment for savings and investments. Expats can confidently rely on these institutions for both personal and business banking, ensuring their wealth is protected and accessible when needed.

• Ease of Doing Business: The regulatory environment is open to foreign direct investment and friendly towards entrepreneurship and business. Activities such as opening companies, hiring employees, getting electricity, and enforcing contracts are typically streamlined, allowing expats to save time and money during bureaucratic procedures. 

Switzerland provides stability, a strong currency, and wealth protection, but it also comes with one of the highest costs of living worldwide

EXAMPLES OF ECONOMICALLY STABLE COUNTRIES

In short, an economically stable country will give you peace of mind when navigating finances abroad. Your purchasing power will not decrease overnight, taxes will not eat into your income and savings as much as they do in high-tax jurisdictions, and it is safe to invest thanks to a regulatory framework that benefits investors and entrepreneurs. Examples of such countries include:

• Switzerland: With its strong financial sector and economy, Switzerland is a safe haven for investors. Its low inflation, strong currency and favourable tax policies incentivize wealth creation and protection. Also, the economy is diversified, with strengths in sectors like pharmaceuticals, banking and high-end manufacturing. 

• Panama: Panama’s economic stability is anchored by its strategic location, robust trade facilitated by the Panama Canal, and a diversified economy that spans banking, tourism, real estate, and logistics. The country’s use of the U.S. dollar reduces currency risks, providing financial security for investors and expats. A well-established legal framework safeguards property rights and encourages foreign investment, while the government’s commitment to fiscal responsibility ensures continued stability. Additionally, Panama’s favourable visa programs and strong diplomatic relations make it a prime destination for those seeking a reliable and growth-oriented environment in Latin America.

• Liechtenstein: Known for its strong financial services and stability, Liechtenstein is an appealing destination for wealth preservation and growth. With its close ties to Switzerland and access to the European Economic Area (EEA), Liechtenstein benefits from both economic and political stability. In addition, its banking sector focuses on privacy and wealth management, further enhancing its reputation as a safe and business-friendly destination for investors.

• Singapore: With low unemployment, a strong currency and a business-friendly environment, Singapore has attracted foreign direct investment for decades. Also, its prime location and financial industry make it a hub for logistics, transportation and financial services, further giving expats assurance that their money is in a good place. 

• Luxembourg: Known for its high standard of living and strong financial sector, Luxembourg offers an excellent environment for wealth protection and growth. The well-regulated financial institutions and diversified economy provide expats with an environment that welcomes high-net-worth individuals and investors with open arms. 

Political and economic stability provide the foundation for a secure and predictable environment, safeguarding your future with a resilient economy, low corruption, and opportunities to build a prosperous life abroad

CONCLUSION

Choosing a new country to settle in is probably one of the most relevant decisions you can make in your life. Firstly, political stability ensures that you and your family can live in a secure and predictable environment, free from the threats of corruption, social unrest, and arbitrary government actions. Secondly, economic stability safeguards your financial future, providing a resilient economy, controlled inflation, and a favourable environment for investment and growth. 

With these factors in mind, you can find a country that aligns with your personal goals and offers the opportunities to build a prosperous future abroad. All in all, political and economic stability is the foundation upon which you can confidently build a new life abroad.