A quick Google search for “high interest savings accounts” reveals a fairly depressing array of accounts offering just under 1% on avg.
We know of more than a few places in the world where you can do better, much better, than that.
Adam Richardson here…
Hearing about the successes of our readers, members and friends is always a thrill. So last week when we heard from a friend (we had the pleasure of first meeting at last years Paraguay event) who is set to see annual returns running about 1,900% better than the avg domestic high interest savings account…well, we were pretty pleased.
The timing was right too as we are now that much more enthusiastic about re-visiting Paraguay and in the process, helping to create more stories like this.
With more on that, here is Peter Macfarlane.
How To Get 18% R.O.I. Securely In Paraguay.
While last week I wrote about the big picture of why I like Paraguay as an investment play, this week I will reveal to you a way you can get great returns on your savings easily, conservatively and fast. It’s not a “get rich quick scheme” but actually a way to get a great return on investment. Sounds impossible? Allow me to explain…
It seems like at Q Wealth we are on a Latin American roll this year.
It wasn’t intended that way, but I’m seeing a lot of good and undervalued opportunities coming out of that region at the moment. When it comes to frontier investing, I’ve come to the conclusion that Asia has been overhyped – witness the bubble that was Mongolia, and the even bigger bubble that is China.
I’m planning several Latam excursions over the next few months: countries on my radar in particular are Mexico, Honduras and Argentina.
All three are countries with their fair share of troubles, but there are good, sound business opportunities in these countries that are under-valued or even passed over because of bad publicity. Honduras has almost turned into one big free trade zone and has some interesting residence, passport and even banking opportunities. In Argentina now there are some very interesting speculative “quick profit” arbitrage opportunities.
I’ll also be spending some time in Brazil. However, Brazil is at the opposite end of the spectrum.
I won’t be scouting investments for Q Wealth readers there as I did there five or ten years ago – those who invested in Brazil based on our advice back then, should definitely cash out now and move their money across the border to Paraguay. The main reason for my trip is to help Brazilian clients invest in the rest of the world, with my friends from the Brazilian offshore finance blog Sociedade Internacional.
Anyhow, I digress! First up on my LatAm agenda is still Paraguay.
For those of you who don’t know, we held an informal get-together of Q Wealth readers last year in the Paraguayan capital Asuncion. My piece last week on Paraguay: The Business-Friendly Tax Haven You Never Hear About prompted several readers to write in, including a very pleasant expat American couple who attended our event there last year and subsequently rented a house in Paraguay.
They wrote about their success in following up on just one of the investment ideas that was mooted at the meeting: investing in credit unions, known in Spanish as cooperativos. Here’s a slightly edited (mainly for privacy of the people involved) version:
“You can invest into the cooperatives with only a cedula. To get a cedula, you must be a resident of Paraguay – a relatively easy process. However, no passport is required and it doesn’t matter what your citizenship is. At least for now. That’s expected to change, but change takes many years in Paraguay. For now it appears we are safe for the next ten years.
There were some hoops to jump through but eventually we figured out how to obtain the required documents: basically a utility and an Interpol background check. Sounds scary but it isn’t really – it’s a piece of paper that’s issued to anybody on demand by the police for a nominal fee. Most difficult was working our way through the language barrier, as most of the employees of the government and the cooperatives don’t speak English.
We did some research and found the cooperatives online. They are rated A, AA and AAA. We were amazed to learn that there are nearly 1500 cooperatives! We talked around quite a bit to get the local scoop on the best liked and top rated cooperatives, visited 11 of them and opened up accounts in the 5 we liked best.
OK, it took some time and there was work involved, but ya! They really are paying 17% interest on the low end and 20% on the high end. Our average will be 18%. That’s not including the potential currency appreciation of course!
Cooperatives are NOT regulated by the central bank. And of course they are not FATCA compliant and it’s unlikely they will be for a very long time yet! They are not on the US radar at all because the investors are nearly all Paraguayan citizens.
Besides your cedula, you must have a utility bill or a certificate of residence signed by two witnesses, but the latter is easy to arrange, even if you are staying in a hotel. Then you show your cedula and get past the language barrier. Voila! We are so happy we are doing this ourselves and it was worth the time spent.
By the time I retire in 8 years my nest-egg will have nearly tripled and I will be living on interest alone. Unbelievable!!!
The cooperatives are extremely safe and charge only minimal fees. We looked at the fixed interest instruments on the Paraguayan stock market too, but there the fees are higher so the yield is only 14 – 16%. Not bad I guess, considering you can do that as a foreign resident or even with a trust or offshore company. But not as good as the co-operatives. The higher yield offered by the cooperatives easily paid for the cost of obtaining residency for us both.
Some of the numbers from the stock market are a bit misleading. There are no 20% plus returns. Too much to get into here but we spent an entire day learning about that too!
Finally we heard about one more good local investment group. They will accept investments with a cedula and will not report anything. They expect to be FATCA compliant in about five years, but by then we’ll have our passports…!!!”
Of course, everything comes with some risk attached.
These investments in Paraguayan credit unions are in Paraguayan local currency –the guarani (PYG). I’ve said before that national currencies are somehow comparable to shares in national economies – they should go up and down with the prospects of the economy.
My firmly-held view is that the dollar will tank, due to the US fundamentals – while the Paraguayan guarani should increase in value because of Paraguay’s potential. But – caveat emptor – I may be wrong!!!
We’ll certainly be discussing these credit unions in more depth – along with specific ‘how to’ information on investing with them – at this year’s informal Q Wealth Paraguay gathering, scheduled for May: details here.
We will also be exchanging ideas about residence, citizenship and investment opportunities in other Latam countries, and I’m planning myself to give a short introductory presentation about the opportunities I see on my travels in the region outside Paraguay. There will be plenty of time to chat about these opportunities at length, perhaps over a good cut of Paraguayan beef with a bottle of Chilean or Argentinian wine!
One more thing I would like to stress, for those of you who have never been to one of our events but are thinking of attending for the first time, is that we don’t do sales pitches. Our gatherings have been called “meetings of the minds” – because of the opportunity to share ideas with like minded people.
You can be rest assured you are not going to be pitched on the latest sure-fire investment in coffee, teak or some exotic plant you’ve never heard of that cures cancer. I feel obliged to make this point, because some events run by our ‘competitors’ are really like that. I like to think that Q Wealth members are more intelligent investors!
Should you have any questions about attending our meeting in May, please first take a look at the Q Wealth Events website, and then talk to Fredrick or Aubrey on our front desk who will be able to assist you.
We are looking forward to seeing you in Paraguay!