Ray Dalio’s “smart rabbit always has three holes” idea can be applied to global tax planning, asset protection and international structuring. The basic principle is to avoid relying on one country, one bank, one residence right or one legal structure, especially for wealthy individuals whose risks may be concentrated in a single jurisdiction.
The goal is not simply to have three options, but to have options that are not too closely correlated with each other. Three highly connected countries may not provide meaningful diversification. For example, Canada, the United States and the United Kingdom are separate countries, but many of their risks may overlap. The same can apply to France, Spain and Italy.
A stronger setup focuses on non-correlated backup options across several areas:
- banking;
- residency;
- citizenship;
- legal and wealth structures.
Banking diversification
Banking is described as one of the easiest first steps because a person does not need to leave their home country to hold money elsewhere.
The key point is that money does not have to be kept where the person lives. Funds can be spread across several jurisdictions, but not all jurisdictions are considered suitable.
The transcript warns against banking in many countries because of quality, access or correlation issues. It specifically says banking in Africa should generally be avoided and that most Latin American banking is not attractive, although there may be limited exceptions.
A useful banking jurisdiction should ideally be:
- high quality;
- accessible to foreigners;
- relatively non-correlated with the person’s home country;
- suitable for the type of account needed.
The jurisdictions mentioned as worth considering include:
- Switzerland;
- Singapore;
- United States;
- UAE;
- Korea;
- Hong Kong;
- Jersey;
- Guernsey;
- Isle of Man;
- Cayman Islands.
Liechtenstein is mentioned as similar to Switzerland in some ways, but with possible concerns because it is blacklisted by some places. LGT Bank is described as a decent but expensive bank, while the possible consequences of using Liechtenstein depend on the investor’s situation.
A person’s own citizenship or background can also affect the banking map. For example, a Japanese person may consider Japan, and an Australian may consider Australia.
No jurisdiction is risk-free. Hong Kong may be relatively non-correlated with the United States, but it has its own challenges. Korea may raise concerns for some people because of exposure to chaebols. The point is not to eliminate risk entirely, but to combine low-risk, less-correlated jurisdictions so that the overall structure is more resilient.
Residency does not have to match banking
Backup residency is treated as a separate layer from banking.
The transcript argues that multiple residencies became more important after COVID-era restrictions, when some people could not freely leave or enter countries unless they had a legal right to reside somewhere else.
A person’s residence base does not need to be the same place where they hold their money. For example, someone may live in Thailand but bank in Singapore. This is described as a common structure because Singapore may offer stronger banking while Thailand, Malaysia or the Philippines may be more practical residence bases.
For backup residence planning, the transcript says there are roughly 25 common places people may consider. The best option depends on personal circumstances, lifestyle, maintenance requirements and how often the person plans to spend time there.
If a person intends to spend part of the year in the backup country, the residence option should support that lifestyle. If not, the residence should be easy to maintain.
Citizenship as insurance
Citizenship is harder to obtain than banking or residency, but it is described as an important insurance layer for wealthy individuals.
The transcript argues that a wealthy person, especially someone with a net worth in the tens of millions, should strongly consider a second citizenship because the cost may be small relative to overall wealth.
There is no single best citizenship strategy. The right route depends on the person’s nationality, goals, budget, family background, risk concerns and desired travel or residence rights.
Legal structures should be insulated
Legal and wealth structures are treated as another major layer.
The transcript stresses the importance of avoiding “cross-contamination” between structures. This means separate structures should not be unnecessarily connected with each other through banking, trustees, flows of funds or legal dependencies.
A problem cited in the transcript involved people with Caribbean trusts whose trustees later stopped working with them because of banking-related issues. The concern was that different parts of the structure were too connected, creating problems across the setup.
The preferred approach is to isolate structures into separate units. For example, if a person has money and a structure in Singapore, that unit should deal mainly with Singapore. If something goes wrong in one structure, the others should be insulated.
This does not contradict using a different country for residency. The distinction is between where a person lives and how the flow of funds and legal structures are organized.
Corporate and trust planning risks
Corporate and trust structures are complex and should be designed around the person’s tax residence, asset protection needs, inheritance planning and banking access.
Issues to consider include:
- controlled foreign company rules in the country of residence;
- management and control rules;
- tax treatment of companies and trusts;
- asset protection;
- inheritance and succession planning;
- wealth management;
- banking access and compliance.
A good trust is described as a custom document that may be around 50 pages and tailored to the individual situation.
Because of this complexity, legal structures should not be copied generically. The right structure depends on the person’s residence, citizenship, assets, family situation, business interests and long-term plans.
How many layers are enough?
The “three holes” idea does not mean every person needs three of everything.
For many people, one foreign backup may be enough: a home country setup plus one external banking or legal structure.
As wealth grows, three structures may become more appropriate. More than three can be useful in some cases, but it may become excessive if the cost, complexity and administration outweigh the benefit.
The same logic applies across the main categories:
- keep banking diversified across strong, accessible jurisdictions;
- hold more than one residence option where practical;
- consider second citizenship as insurance;
- use legal structures that are separate and insulated from each other.
The broader principle is to build resilience through non-correlated options rather than simply accumulating countries, accounts or entities. Diversification only works when the backup options are meaningfully independent from the risks affecting the primary jurisdiction.
