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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MexMustachian on April 03, 2015, 03:33:12 PM

Title: How to invest in Mexico???
Post by: MexMustachian on April 03, 2015, 03:33:12 PM
So.... Im not quite there yet but withing the next 6 months ill start saving around 30% of my income to start. Its not much actualy somewhere around 3000 mexican pesos or 202.5 usd a month, hey be nice thats our economy atm and everybody starts somewhere. How should i proceed? It will be minimum that amount month after month and occationaly an adittional 20,000-30,000 pesos more 1 time a  year. Any tips?
Title: Re: How to invest in Mexico???
Post by: MexMustachian on April 03, 2015, 08:46:29 PM
Title: Re: How to invest in Mexico???
Post by: iamlindoro on April 03, 2015, 09:31:06 PM
We're sort of already covering this in your other thread, so I'm not sure of the need for a second one.  In short, you have a lot of options.  Let me explain the philosophy generally used here (but you ultimately need to invest in what *you* feel comfortable with):

1) Invest in index funds.  When you buy a share of the fund, you buy a tiny fraction of everything in that index.  So when I buy a US stock market index fund, One share is made up of a teensy, tiny fraction of a share of every company in that index.  This is good because it means the failure of one or even many companies will never result in your investment being worthless.  It also means (for better or worse) that your investment results will match the performance of that index.  Commonly on MMM, people have portfolios of a very limited number of funds:  A total stock market fund, a total bond market fund, and an international fund.  This is NOT the only way to invest.  It is just a popular one in this community.

2) For those funds you buy, find the lowest expense ratio option available to you.  Every fund has some cost associated with investing in it, usually expressed as a percentage or fraction of a percentage.  In the US, for the funds mentioned above, we might pay .05-.20% on our funds annually as an expense.  Some awful funds have expense ratios of several or more percent.  This is bad, this money is going to a bank or fund manager, and not to you.

So, how is this relevant to you in Mexico?  If you wanted to follow a MMM-like approach, you have a couple of options.  You could invest as someone in the US would, with US market funds, through a Mexican brokerage.  Numerous Vanguard funds are cross-listed on the Mexican Bolsa.  If you feel the growth prospects of the US are better than Mexico for your investing life, then this might be a better way to go.  OR, you could take this same logic and apply it to your own country.  You could buy a Mexico stock index fund, a Mexico bond index fund, and an international fund.  If it were me, and this is not investing advice, I would probably stick with my US funds even if I lived in Mexico.  This is just because the US market has a long and reliable track record, and investing primarily in the US is part of my investment policy.  I do believe there is huge potential for growth in Mexico- But I see it as a more volatile choice, and something more likely over the long term than the short term (my 7-8 year accumulation phase).

There is a popular approach to investing called the "Couch Potato Portfolio."  It is very similar to what I describe above.  A clever person has taken the approach and adapted it for Canada, and turned that into a relatively successful and monetized blog for Canadian investors:

Nobody that I can see has done so so far for Mexico.  If you are following me, yes, I'm suggesting that there's an opportunity here if you believe in these concepts and once you develop some more knowledge.

Again, ultimately you need to educate yourself about your options, determine (and write out!) your investment policy, and then act on that policy.  When you have doubts, refer back to your investment policy.  If it needs changing, then change it.  If, however, you're just having jitters, then stay the course.

My advice, and that's all it is, from reading your other thread is that you should avoid trendy investments, and investments with a short track record, such as peer to peer lending.  I believe you should avoid annuities.  The preceding is just one person's opinion.  If I had to summarize all of the above:  Keep it simple.  Keep it cheap.  Use index funds.
Title: Re: How to invest in Mexico???
Post by: MexMustachian on April 03, 2015, 10:45:14 PM
Greatly appreciated insight. I really am just a noob at all this and i think it will be months maybe a couple years before i even start with stock, for reasons like, just starting my savings, and little to no knowledge. Ill keep all this in mind and keep researching further im actually looking in to vanguard mexico.. need to study it further...