Asset Protection

Wealth Preservation Strategies in the Face of US Capital Flight

  • Author Written by The Nestmann Group
  • Reviewed by Brandon Roe
  • Calendar Updated: June 19, 2025
As Featured on
The Washington Post
Bloomberg Businessweek
abc NEWS
BARRON'S
The New York Times
Forbes

Contents

We’ve spent more than 40 years helping Americans safeguard their wealth. Through market meltdowns, currency crises, and overnight regulation changes – we’ve seen how quickly things can turn.

Today, we’re watching something that usually signals trouble in emerging markets, not developed ones: capital is leaving the United States.

Foreign investors are reducing exposure to the US dollar. And we’re not talking about retail investors or headlines built for clicks. These are central banks and global institutions – the kind that shape entire markets.

This slow capital flight isn’t panic. It’s preparation. And if you have meaningful assets to protect, it’s a trend worth paying attention to.

What Capital Flight Looks Like – and Why It Matters

Capital flight is a simple idea: money is leaving the United States.

Foreign investors – including governments, pension funds, and big institutions – are moving their money elsewhere, because they’re uneasy about where things are headed.

Unease is normal. It usually happens as a result of large policy changes, a new US President, or a significant monetary event (like Trump’s tariffs) – no matter what the predicted outcomes of those things usually are.

Read more: Trump’s Tariffs: What They Mean for the US Dollar and Your Wealth

A bar graph illustrating the percentages of US Treasury bonds, corporate debt, and stock market shares owned by foreign investors.

But this matters to you today because foreign investors own big pieces of our financial system:

  • 30% of US government bonds.

  • 30% of corporate debt.

  • 20% of the stock market.

When those investors begin pulling back, it doesn’t just affect Wall Street. It has real effects across the economy:

  • Borrowing costs go up. With fewer buyers for Treasury bonds, US government interest rates rise – and that often pushes up rates on mortgages, business loans, and credit cards.

  • The dollar weakens, reducing purchasing power for everything from overseas travel to everyday goods.

  • Markets become more volatile, as sudden shifts in foreign capital flows can trigger swings in equities and bonds.

This activity further highlights three important trends we’re seeing now:

Selling US Bonds

Foreign governments are selling their shares of US debt. And while foreign ownership of US debt is still high, strong demand for US Treasury bonds is crucial to US financial health. When demand weakens, the government may have to offer higher interest rates to attract buyers. That increases borrowing costs.

Think of it like this: if fewer people want to lend you money, you have to offer a better deal to convince them. The US government does the same — it raises its interest payments to lenders to keep them interested. But that also means it has to spend more just to borrow money, which adds pressure to the budget the government uses to pay for everything from Social Security to defense and infrastructure.

Dollar Sliding

Since January 2025, the US dollar has dropped in value against other foreign currencies (like the Swiss franc and the euro) by nearly 7%.

Track all markets on TradingView

European Alternatives Are in the Spotlight

Google’s parent company, Alphabet, just raised over €6.7 billion by borrowing money in Europe. Why? It’s cheaper, and lots of investors in Europe want to buy these bonds. Borrowing in euros also helps if the value of the US dollar drops because repaying debt in euros would then cost less in dollar terms, saving the company money.

For investors and companies thinking globally, Europe is becoming a more attractive place to raise money. And that shift says something about where confidence is heading.

Why This Time Feels Different

The dollar has wobbled before. And while it still remains the world’s reserve currency, some deeper shifts are worth noticing:

  • US Debt: According to the most recent official data, the US owed $26.2 trillion more to the world than it owned abroad in Q4 2024. That’s a record.

  • New Payment Systems: China is planning to build its own system for countries to trade without using US dollars.

  • Losing Reserve Status: In 2000, the dollar made up over 70% of world currency reserves. Now it’s around 58%. That’s still a lot – but the direction is clear and concerning.

What’s Your Goal?

Let us know what you’re hoping to accomplish and we’ll give you some options to help you reach that, and how we can help.

Diversification Reason

Select your main reason to diversify your assets.

How Much Tax Paying

Enter the amount of tax you've paid last year in US Dollars.

Biggest Fear

Select your biggest fear which drives you to create Plan B strategy.

Where should we send your report?

Enter your name and email address where we will send your report.

We handle your data according to our Privacy Policy. By entering your email address you grant us permission to send you the report and follow up emails later.

How the US Is Adjusting

When money starts flowing out of a country, governments often try to slow it down.

We’re starting to see that pattern unfold in the United States – not through dramatic bans, but through increasing layers of red tape.

  • Limits on Certain Foreign Investments: The US has blocked some investments in specific Chinese companies, especially in sensitive areas like technology, through something called the Outbound Investment Security Program. National security is important without a doubt. But we’re concerned about the potential that such rules effectively prevent capital from going where investors want to put them – even in cases where the definition of “national security” has been stretched.

  • New Ideas in Policy Circles: Some experts and lawmakers are now discussing ways to manage money leaving the US quickly – using capital controls. No new laws have been passed, but the fact that it’s being talked about is a signal to pay attention to.

  • More Complexity for International Plans: You can still invest internationally. But doing it the right way, the first time, takes more time, paperwork, and professional guidance. That’s a legacy of the Foreign Account Tax Compliance Act that went into effect back in 2014; it made overseas investing for US clients much more difficult than in the past; a capital control in practice if not in law.

International investing isn’t off the table. But there are more rules than there used to be.

That’s why smart planning – and good guidance – is more important than ever.

About Those “Capital Controls…”

Whether we’ll ever see official capital controls in the US is still up for debate. But there’s a growing trend of “capital control by paperwork,” involving increasing regulations and reporting requirements that can make international financial transactions more cumbersome.

Instead of saying “no” outright, regulators say “sure, but only if…”

And when more controls are put in place, foreign jurisdictions are less likely to want to work with Americans.

Read more: How to Avoid Capital Controls

So, Is Traditional Diversification Enough?

Proper diversification goes beyond holding a mix of stocks and bonds – because if all those assets are in the same currency, same country, and under the same legal system – it’s not true diversification.

It’s all one system. And when that system comes under stress, everything inside it moves together.

What does that mean for a typical US-based portfolio?

  • If the dollar weakens, your buying power goes down – even if your investments go up on paper.

  • If new rules limit international transfers, your money could be harder to move.

  • If markets freeze or banks face pressure, access to your funds could be delayed.

Read more: Currency Diversification Beyond the US Dollar

International Wealth Preservation Tactics for Americans

In light of all this activity, a few key tactics can make a real difference in your wealth preservation strategy.

The goal isn’t to abandon the US system – it’s simply to build more flexibility into your plan.

Let’s walk through five wealth preservation ideas – the ones we’ve used to protect our client’s assets for over 40 years:

#1. Move Gradually Out of the US Dollar

You don’t need to make big, sudden moves. But shifting part of your portfolio out of the dollar can help reduce risk.

  • Swiss Francs: Known for long-term stability. Switzerland has strong reserves, a history of neutrality, and a conservative financial system.

  • Singapore Dollars: Singapore is Asia’s rising financial hub. It offers solid banking laws and a steady economy. It also happens to be very hard for Americans to invest in directly, but overseas bank accounts not located in Singapore can often hold Singapore dollars.

  • Gold and Silver: Precious metals don’t rely on central banks or government policies. They’ve held value for thousands of years. More on this later.

The key is to diversify slowly and thoughtfully – not all at once. A gradual shift avoids surprises.

#2. Bank Internationally

Offshore banking is still possible for US citizens, but it’s not as simple as opening a checking account online. The right bank and location can offer real advantages if approached the right way.

Here’s what matters most:

  • Trusted Jurisdictions First: We recommend working with high-quality, compliant banking centers such as Switzerland (through asset managers), Austria, or even Canada – but only if you have a valid reason to bank there. Local ties like residency or real estate often help get your foot in the door.

  • Access to Multiple Currencies: Some offshore banks allow you to hold cash in different currencies – often through structured accounts. This can offer a practical hedge if the dollar weakens and can reduce foreign exchange costs when spending or investing abroad.

  • Different Rules, Same Responsibilities: Money held in foreign accounts is still reportable to the IRS through the Foreign Account Tax Compliance Act (FATCA) and Foreign Bank Account Reporting (FBAR) forms.

#3. Offshore Structures

For larger estates, the right legal setup matters.

  • International LLCs: These can limit liability, reduce taxes, and open access to investment options not available in the US.

  • Offshore Trusts: When structured properly, they can help protect assets from lawsuits and build long-term wealth plans. We often recommend Cook Islands and Nevis trusts to our clients, because those jurisdictions are time-tested and court-proven.

  • Private Insurance Tools: Private Placement Life Insurance (PPLI) can grow tax-deferred and offer added protection under foreign law.

Note that these tools must be used carefully. They’re legal, but complex – better created for you by experienced professionals.

Read more: PPLI: Private Placement Life Insurance [Ultimate Guide]

Not too long ago, we helped a client – a surgeon in a high-risk specialty – set up a Cook Islands trust before facing any legal threats.

He wasn’t reacting to a lawsuit. He just wanted peace of mind. The trust gave him confidence that, no matter what happened in the future, his assets were protected.

#4. Own Foreign Real Estate in the Right Places

Foreign real estate can offer more than just potential returns – it’s a way to diversify across borders, support estate planning goals, and even access residency options.

Here’s how to approach it the right way:

  • Start with Expat-Friendly Destinations: Americans are actively purchasing property in places like the San Jose area and Costa Rica’s west coast, Lagos, Portugal, and Playa del Carmen, Mexico. These areas have strong legal systems, services that cater to foreigners, and stable demand from fellow expats.

  • Own with Structure, Not Just a Deed: Say you’re planning to hedge against all this US dollar risk by buying a property in Costa Rica. You may want to consider a Costa Rican SRL (a type of local LLC) to hold the property, with shares owned by a US LLC. This setup would allow for smooth estate transitions, avoid Costa Rican probate, and integrate with your broader US estate plan.

  • Resource-Backed Locations Offer Stability: Areas near farmland, energy, or natural resource projects – especially those with real demand from locals or industry – tend to hold value even when financial markets shift.

  • Residency and Citizenship Perks: In some countries, real estate ownership can support applications for residency or long-term visas. These programs can unlock easier travel, better tax planning, and banking access – sometimes even without full relocation.

Read more: Investing in Overseas Property for Americans Afraid of US Market Chaos

#5. Hold Gold and Silver

Precious metals continue to be a reliable part of long-term wealth protection. They’re not tied to a single currency, country, or central bank – and they’ve kept their value across centuries.

Here’s how to think about using them today:

  • Real Ownership, No Middleman: When you hold physical gold or silver, there’s no counterparty risk. You’re not relying on a bank, broker, or government to make it good.

  • Global Recognition: Unlike digital dollars or volatile fiat currencies, gold is accepted almost everywhere. It’s not about trading it on the street – it’s about holding something with universal value.

  • Inflation Resilience: Gold has been steadily increasing in value since the US dollar started declining in January 2025 – a reminder that when paper money weakens, metals often hold firm or rise.

Read more: 10 Reasons to Invest in Gold

New Zealand and Switzerland are favored locations for physical gold storage because compliance – from a US client perspective – is relatively straightforward. Singapore makes the list too, though it’s more complicated for Americans. You shouldn’t store gold there without professional guidance.

But the key isn’t to hold everything in one location. Keep some metals inside the US, and some in a trusted international location. That way, if one system faces delays or restrictions, you still have options.

Important Tax Considerations for Americans Diversifying Internationally

An infographic illustrating important offshore investing nuances for Americans.

Offshore doesn’t mean off the radar. As a US citizen, you’re taxed on worldwide income – no matter where your money lives.

But that doesn’t mean international strategies are off the table. They just need to be done the right way.

  • Foreign Tax Credits & Treaties: You can use IRS Form 1116 to claim credit for income-related taxes paid to other countries, avoiding double taxation. Some tax treaties can also provide extra relief – but the details matter.

  • Tax-Deferred Growth Vehicles: Tools like Private Placement Life Insurance (PPLI) allow your investments to grow tax-deferred. These are often used by high-net-worth families because they combine long-term growth with estate planning benefits.

  • International Estate Planning: Using the right ownership structure can reduce estate taxes and help your heirs avoid costly probate across borders.

  • Compliant Structuring: If you have foreign accounts or entities, you may need to file specific forms to the IRS. The penalties for missing these can be steep. We always take a “report if in doubt” approach for our clients – conservative, but safe.

International strategies aren’t loopholes – they’re tools, one of many that should be in your toolbox.

Just make sure you’re working with people who understand the rules – the cost of getting it wrong is not worth the risk.

Read more: International Estate Planning

Protect to Prepare, Not React

The global financial landscape is changing. Not overnight – but with steady signals.

The US dollar remains important. But its role as the world’s financial anchor is gradually shifting. Rising debt levels, policy uncertainty, and changing international relationships are all part of that story.

For families focused on preserving wealth across generations, this is the cue to start planning ahead.

Many of the strategies we’ve recommended for decades – owning foreign real estate, holding assets in different currencies, using trusted international structures – are proving their value in today’s environment.

And the goal isn’t to leave the US behind. It’s to build more flexibility into your financial life. That way, your wealth isn’t dependent on just one system, one policy, or one country.

Thoughtful international planning doesn’t happen in a rush. It takes time, structure, and the right team.

And the best time to begin? Before it becomes urgent. If you’re ready to protect what you’ve worked hard to build against US dollar risk, feel free to get in touch.

Sources:

About The Author

Since 1984, we've helped high net worth American investors, entrepreneurs, and families go offshore. Our formula is simple: full-service programs for global investing, tax reduction, and second residency or citizenship -- so you skip the hard parts and keep the benefits. To learn more about how we can help you, please get in touch.

Need Help?

We have 40+ years experience helping Americans move, live and invest internationally…

BOOK AN INTRO CONSULT

Need Help?

We have 40+ years experience helping Americans move, live and invest internationally…

Book a
Free Consult
As Featured on
The Washington Post
Bloomberg Businessweek
abc NEWS
Barrons
The New York Times
Forbes
International Living