Author Topic: Advice for someone from a region with high inflation?  (Read 612 times)

tungu2

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Advice for someone from a region with high inflation?
« on: June 11, 2018, 07:54:47 AM »
Hello everyone,

I live in a middle-income country with high inflation. While I am in a very good position for our region (above average salary, debt-free, had a full ride in college, able-bodied), my prospects of early retirement look bleak.
I am currently saving 60%. Saving more would be possible when I get a scheduled raise next year and/or when my side business takes off. I am frugal and 60 per cent rate is good. I am 29 so I have time to grow savings.

But there are fewer opportunities for investments compared to North America. Mutual funds are available but return reports are far from great. And in some years inflation reaches 10%. I get really discourage because there seems to be no way to save the money. Some people around me tried to invest in real estate but the market crashed (I do not have the money to invest in rental properties anyway). I will get social security after 60, but it's impossible to survive on it now, and it does not look like it's going to be better in 30 years.

Are there any alternative ways to invest that are available from anywhere in the world? Even crazy suggestions are appreciated. Thanks!

Hirondelle

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Re: Advice for someone from a region with high inflation?
« Reply #1 on: June 11, 2018, 08:00:53 AM »
Hi tungu,

Now it depends on where you're from and how investing in your country works, but there are options! I'm from Europe and part of my money is invested in American ETFs in USD. If you have a local broker they can usually invest in foreign funds, however you'd have to check how this exactly works in your country or tell us your area so some others that have knowledge on your area/situation might chime in.

60% is a great savings rate so keep that one going!!

Bracken_Joy

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Re: Advice for someone from a region with high inflation?
« Reply #2 on: June 11, 2018, 08:03:09 AM »
Oh my gosh that's tough, I'm sorry, I think the answers will depend on some legal particulars that we don't know from the post. What is the tax or legality situation of, say, investing abroad, or buying real estate abroad?

As for the more "off the wall" answer, look to Tim Ferriss' advice on geo-arbitrage. He talks about it in the Four Hour Work Week. There's a quote from him: "Fun things happen when you earn dollars, live on pesos, and compensate in rupees"

NathanP

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Re: Advice for someone from a region with high inflation?
« Reply #3 on: June 11, 2018, 08:13:50 AM »
My wife's family is dealing with this same issue in a developing country. It is tough since you don't want to invest too much in dollar/euro based investments as you introduce currency risk into your portfolio. It also can be risky to stay too local as small/developing countries can run into issues (Venezuela, Argentina, Turkey...). How are the savings interest rates in your country?

I would suggest fighting inflation by owning your own home and reducing expenses that are subject to inflation. If you live the MMM lifestyle you are not affected by increases in fuel prices or rent. Food and utility costs can be an issue, but these are likely easier to manage. Healthcare may or may not be an issue for you too.

For investments, I would invest in a global index fund similar to https://investor.vanguard.com/etf/profile/fees/vt . Perhaps you can overweight the region where you are located or where you plan to retire.