Geographic arbitrage is a term coined by the FIRE movement (Financial Independence, Retire Early). FIRE advocates combine investments and a typically high-paying job to achieve the dream of retiring by the time they hit their early 40s or even late 30s. One of their core tactics is to take advantage of local costs of living around the country and even the world to maintain the lowest cost of living possible, thereby stretching out their money and making early retirement possible.
This isn’t a new insight. Americans routinely look for lower costs of living. What geographic arbitrage adds is the idea of taking that model to the extreme. Where moving from the city to the suburbs can let you upgraded from a one-bedroom apartment to a house, moving from New York City to Naxos, Greece, can let you rewrite your financial future.
Here’s how it works.