Don’t Make This Common Residency Mistake

Recently, a colleague shared a sad story about a couple who’d been living abroad for years.

They visited Vietnam 15 years ago and instantly fell in love. They decided to move there full time.

Now as anyone who’s spent time there knows, Vietnam doesn’t offer long-term visas other than for investors. But for many years, westerners have spent long spells there by doing a “visa run”—popping across the border to Cambodia every 90 days and coming back in for a new tourist visa.

This was quietly accepted by the Vietnamese government. The couple in question spent 13 years in the country this way. They rented a home, furnished it, made close friends—they were even godparents to a Vietnamese kid—and cut most ties to the U.S.

They thought their future was tied to their new home in Vietnam.

Then came the pandemic. The Vietnamese government shut down the borders and ordered all foreigners not eligible for long term residency to leave within 14 days. The couple were devastated but had no choice but to comply.

That sad story got me thinking about my role at International Living… to help people think about diversifying themselves globally. A big part of that is to cut through the dross and tell the real story.

You won’t get that if you Google “advantages of a second passport” (or, these days, ask ChatGPT). Instead, you’ll get a standard set of benefits that don’t apply to most people.

They’ll start with visa-free travel (as if that were the most important thing). Then comes a list of factors of interest to wealthy businesspeople—stuff about taxes, company formation, investment opportunities and so on. They’ll note a second passport gives you a Plan B if things go wrong at home (with which I wholeheartedly agree).

But one thing is rarely mentioned: a second passport gives you the legal right to remain in a foreign country forever.

I think people tend to disregard this huge benefit for two reasons.

First, the second passport “industry” is geared towards high-net-worth folks. The assumption is that they only care about wealth. Having a second passport lets them diversify their wealth to another jurisdiction, and maybe save on their taxes. The attitude seems to be, “what else could a person want?”

Second, most people suffer from “continuity bias.” That’s the tendency to assume the future will be like the recent past. Most Americans who’ve found a home abroad stay there on some type of residence permit. They assume that will always be available.

For example, when we ran a survey about second passports, a common response was “I don’t need one, I already have a residence permit where my foreign property is.” But if you have gone so far as to acquire property in another country, why wouldn’t you want to become a citizen?

Continuity bias means people just don’t think about the possibility that their current residency status might go away. That’s because most have never experienced a sudden mass change in citizenship rights. They might recall the mad dash to get out of Hong Kong before the Chinese took over in 1999, but that’s about it.

But history is replete with disruptions to people’s right to remain in places they knew and loved. It happened after both World Wars. It happened in 1923 after a war between Greece and Turkey. It happened again in 1947 when India and Pakistan split. In the 70s, Uganda kicked out over 100,000 residents of Asian descent. And people were pushed all over the Balkans after the breakup of Yugoslavia in the 1990s.

I know, it’s easy to say, “it can’t happen here.” But then, few of us really expected a global pandemic like COVID, did we? How many people saw the subprime financial crisis coming?

Consider a speculative example. Earlier this year, the Portuguese government dropped residential property purchase as a way to get a Golden Visa. Fortunately, existing residency rights were grandfathered in.

But imagine another financial crisis puts extreme pressure on Portuguese politicians. To appease angry citizens, they cancel residency visas for non-citizens. Imagine how those expellees will feel, realizing they could have got a Portuguese passport after five years of legal residency but didn’t?

Our world has entered an era of rapid—and unpredictable—change. There’s a land war raging in Europe. Senior U.S. military officials predict the U.S. may be at war with China by 2025. Many countries in the developing world are starting to turn against the U.S.

Above all, the process of globalization that’s shaped our world for the last generation—including countries granting long-term residence rights to foreigners—is disintegrating before our eyes.

The fact is that some of the most popular destinations for American expats offer exceptionally fast routes to nationalization. Portugal is only five years. So is Mexico, Ecuador, Belize, and France. Canada and Uruguay can be as short as three. Argentina and the Dominican Republic are only two years.

If you could become a citizen of a country you’ve come to love and didn’t, wouldn’t you regret it if you had to leave?

So, take it from me, someone who got a South African passport to protect my own roots in this beloved country: if you love what the world offers… and have found a place that you call home… protect that by getting yourself a second passport—before history turns you into a sad statistic, too.

Ted-Bauman-2-1-150x150.png

Ted Baumann is International Living’s Chief Global Diversification Expert. He's traveled to nearly 90 countries and is a dual citizen of the United States and South Africa. Ted has been published in international research journals, as well as in media outlets such as Barrons, Forbes, and Cheddar. Learn more about Ted Baumann here.

Is it Legal to Have a Second Passport?

Why More Americans Are Getting Second Passports

5 Best Caribbean Islands to Live On… and 2 to Avoid