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Nilesh, a Non-Resident Indian (NRI) client, called to seek counsel on the advisability of applying for investment-based citizenship in the United States (US). He is a software professional in his mid-thirties who works for a global consultancy firm in the West Asia.
Thanks to his high income and judicious investments, Nilesh is well-positioned to meet goals such as buying a house, his daughter’s higher education, and his own retirement. For some time now, Nilesh has been planning to migrate and settle permanently in a country that offers a congenial lifestyle for his family.
A methodical person, he created a framework for making the choice. His parameters include an English-speaking country, a secure environment, good educational and health facilities, scope for his skill sets, and a tolerable time frame for getting citizenship. However, he had begun to get frustrated at the long waiting periods in each of the shortlisted countries. Hence his call on the advisability of investment-based citizenship in the US meaning he would get citizenship by making specific investments in that country.
“I can invest the money earmarked for purchasing my home and buy it when I get the invested amount back after five years,” he said.
However, Nilesh harboured many reservations. At 80 per cent of his net worth, the investment was substantial. Also, the projects he had been shown appeared risky and he could even lose his capital. He was also being asked to pay substantial non-refundable fees to consultants who would assist with the application process and help identify suitable projects that qualified for the programme.
Originating in Africa, humans migrated to the remotest corners of the earth to find food, and to avoid deadly predators, domination by other human species and dramatic climatic changes. One scientific theory says that unforced migration is motivated by curiosity and boredom, which is often called wanderlust. This is credited to a variation in the human DNA (DRD4-7R), now dubbed the “wanderlust gene”. Present in about 20 per cent of the population, it impacts dopamine levels, increasing the person’s tolerance for risk-taking, including exploring new territories. Nilesh had already exhibited his “wanderlust” by the way he had risen from his small-town origins to build a successful professional life in the West Asia.
His query called for careful consideration since our expertise did not extend to this domain. It was imperative to ensure that Nilesh’s propensity for risk-taking did not jeopardise his finances. At the same time, we did not want him to lose a good opportunity due to overcaution.
Some preliminary research and consultations with a couple of knowledgeable individuals convinced me this was indeed a risky proposition. EB-5 regulations require that the investor’s capital needs to be “at risk”. No guarantees can be offered to the investor regarding return on capital or return of capital. Investors can potentially lose the entire amount invested. A further cause for concern was the significant referral fees offered by consultants to us, a red flag for any advisor who prioritises his client’s welfare.
Our considered counsel to Nilesh was that citizenship through investment seemed inadvisable, given the high stakes and the significant risk of loss of capital. We suggested he proceed only if he was prepared to regard the invested amount as an expenditure rather than an investment.
Truth be told, the option of committing one’s life savings to a venture with an uncertain outcome is not viable for many, except perhaps the ultra-wealthy, for whom such an investment is small change, and who wish to migrate to more welcoming shores for tax or regulatory reasons, or, in some cases, to escape the long arm of the law.
Since Nilesh did not belong to that tribe, he chose to avoid the investment-based route and decided to focus on the normal immigration route based on qualifications and skills. It’s a longer process but carries much lower risk. Best of luck to him.
The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; X: @harshroongta
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
(A slightly different version of this column first appeared in the Business Standard on November 20, 2023)