Managing a windfall

[croostmx]

Hi everybody,

I'm reaching out for advice for my specific situation. Any input and recommendations are highly appreciate. I'd also be happy to pay someone for advice, so if somebody has a recommendation for a person or service to hire or speak to that would be great as well.

Background:

I'm a German citizen but have been permanent resident of Panama for over 8 years. I declare my taxes in Panama and pay no taxes in Germany.
I own an eCommerce business with a Wyoming LLC that operates in the US and Canada. The business has a fintech account with Brex (for USD) and Payoneer (for CAD).
Personally, I have a savings account in the US with Truist Bank and a secured credit card with them. I have an ITIN, but my credit score is building up at the moment as I have only had the secured credit card for about 6 weeks.

Exit:
My business is in the process of being acquired by a private equity fund. The proceeds are going to be around 2 Million USD.

Concerns:

• So far, my plan has been to transfer the funds to one of my personal accounts in Panama until I decide where to invest them.
• This week I have spent a lot more time to investigate this and bringing the funds to Panama feels more and more risky. There is no deposit insurance in Panama. Banks are very difficult to deal with. I had incoming and outgoing transfers blocked in the past (most of them have been recovered, but I did have two cases where the funds were lost).
• Also, there is very limited opportunity to invest the money in Panama unless you have deep connections. Outside of real estate or things like fixed term accounts (which are also not insured), I wouldn't know what to do with the money and would likely be sending it back to the US to find my Interactive Brokers account or invest in other things.

Questions:

• Would it make sense to keep the funds in the US and simply receive them on my personal savings account? I could then keep them in a low risk investment (such as a money market fund) until I know what to do with them. And it would be much easier to fund future investments when the funds are already in the US.
• Is there anything I am missing here? I already have a savings account, but I mostly opened it in order to get a secured credit card. I haven't even transferred 5-figures onto it yet. So I'm not sure if I'd raise any red flags with a 7 figure transfer all of a sudden.
• Are there better suited banks in the US that I could use? Truist was the easiest to open with because they require no utility bill verification.

I've been so focused on growing my business in the last 3 years that now I notice I'm completely ignorant to a lot of these things that are very important after having sold.
If anybody can point me in the right direction (be it with advice, links to articles, recommendations for consultants, etc) I'd appreciate it!

Thanks so much in advance!

 

[thomasparra]

Congrats on the sale of your business.

I would put most of it in US short term treasuries so you can generate 100k per year in interests. Use IB for this. You can also invest in stocks depending on your investment strategy.

I would indeed avoid going into the Panama banking system.

But most importantly what’s next for you? Do you envision investing in a new business, a house somewhere, will you stay in Panama? While you figure out those questions I would just get into t bills for risk free and passive income.

 

[jafo]

100k per year in interests

stay in Panama

This is BIG money in Panama! He'll live like a King!

I would indeed avoid going into the Panama banking system.

100% agree with this! No way, I'll put anything more than $20K (split over two different banks) in Panama.

But most importantly what’s next for you?

If it were me, I'd wait for the right "business" pitch! No need to rush into the unknown.

BTW, with "pitch", I mean this:

 

[croostmx]

Thanks so much for the advice @jafo @thomasparra. Yeah, that is mostly what I have been thinking. Because so far I have never held more than $50k in a bank account in Panama and even then I get transfers blocked all the time if they're higher than what I usually receive or send...

The main reason why I need a safe place for the money is because I'm not 100% sure what's next yet. I'll build a new business and maybe acquire one, but that will only take care of 1/4 of the funds. And I don't want to rush anything but rather put it in a safe place, take a step back and once I'm out of the day-to-day operations of the business I'll decide my next moves. One of them being whether or not I stay in Panama longterm.

 

[koohl]

Setup a company where you feel safe and register it as a holding company - i.e. my Holding is in Switzerland and have been around for 8 years! If Switzerland don't fit your needs you could setup an entity in the Cayman Islands.

 

[CyprusLawyer101]

You may first confirm that operation in the US has all taxes settled as well as any taxes that may arise at disposal of the shares/business.

With respect to the funds, you may place them in a private banking account and invest in low risks bonds, until you have a better idea of what to do woth the funds. This way the funds are secured from any potential fail of a bank as they do not sit on their balancesheet.

 

[JohnnyDoe]

Option 1: convert it all in crypto and check again in 5-10 years.
Option 2: build an income generating portfolio and use the dividends to buy crypto.
Option 3: spend the money on yourself: travel, hire a tutor, enroll in an anti-aging program etc.

Or a mix of the 3 above.

 

[jafo]

anti-aging program

I'm glad to see you are doing this. This is a very healthy mindset!

 

[croostmx]

Option 1: convert it all in crypto and check again in 5-10 years.
Option 2: build an income generating portfolio and use the dividends to buy crypto.
Option 3: spend the money on yourself: travel, hire a tutor, enroll in an anti-aging program etc.

Or a mix of the 3 above.

Definitely all 3 are on my list.
But my concern is more around where to move the money first while I decide what to do with it. I can't really tell the PE guys that buy my business to send 2M to my crypto wallet

 

[JohnnyDoe]

I'm glad to see you are doing this. This is a very healthy mindset!

I’m literally writing this while being attached to my IV vitamins/antioxidants cocktail

I can't really tell the PE guys that buy my business to send 2M to my crypto wallet

you could, actually.
Anyway, I guess you are using some escrow? The provider might be able to send to a company that you setup just for the purpose of managing this money.

 

[jkl197]

citi bank in the US is one of the most accessible, but there could be other options.
Use Citi to receive your payment then move 80% of the money (you have to keep 250k at Citi to make them happy) to a brokerage like IBKR or Fidelity, which pay interest on the idle balance through money market funds, current rate around 5%. Same at Tiger Brokers Singapore.
Meanwhile you can watch many videos on youtube about ETFs paying dividends on a monthly basis with yield between 6% and 12% or so, but dont underestimate risks.
I disagree on crypto, too risky, but everybody has different preferences.