# Mexican taxes for expat permanent residents



## Cuenca Expat (May 9, 2018)

We currently live in Ecuador and are looking at moving to Mexico soon. We have substantial amounts invested in CD's here and are trying to structure maturities on these to allow moving some of the funds to Mexico when we move. 

Several questions arise:

1. What is the interest rate (ballpark figures) paid by trusted institutions on a one-year CD for $500,000 MXN?

2. Figuring an estimated 6.5% on $400K (US) yields roughly $500K MXN in interest earned annually. From information available online, it appears that the tax rate for annual Mexican sourced interest income of $500,000 MXN is 30%. Does this sound right? And are there any applicable offsets to income that can be claimed?

Thanks for any helpful advice!


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## TundraGreen (Jul 15, 2010)

I don't know what the return is on Mexican securities. Is there a reason you want to move investments to Mexico. I have been here for 11 years and keep my investments in the US. I have a young Mexican friend who has started investing and he does all his trading in US markets.


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## Cuenca Expat (May 9, 2018)

TundraGreen said:


> I don't know what the return is on Mexican securities. Is there a reason you want to move investments to Mexico. I have been here for 11 years and keep my investments in the US. I have a young Mexican friend who has started investing and he does all his trading in US markets.


At this time I prefer to keep the majority of my savings diversified and out of the US. I don't like the increased risk in stocks and prefer CDs or commercial paper. 

But thanks for your reply.


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## chicois8 (Aug 8, 2009)

Welcome to the board, here is some information on CD's from the Bank of Mexico...Hope this helps.

Securities market, interest rates, Banco de México


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## Cuenca Expat (May 9, 2018)

chicois8 said:


> Welcome to the board, here is some information on CD's from the Bank of Mexico...Hope this helps...(link snipped)


Thanks Chicois8. This is very helpful as well as encouraging. Now if I can just get more information about tax liabilities...


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## garciajose (Sep 4, 2018)

Thanks for the info Chicois8


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## Cuenca Expat (May 9, 2018)

*No other opinions or comments?*



chicois8 said:


> Welcome to the board, here is some information on CD's from the Bank of Mexico...Hope this helps.
> 
> [link snipped]
> 
> I'm a little surprised that there has only been one reply that only provided a link to interbank and government securities rates determined by Banco de Mexico. Nothing about other investment vehicles available in Mexico nor about the tax consequences thereof. Am I to interpret this that expats generally don't invest funds in financial instruments in Mexico?


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## chicois8 (Aug 8, 2009)

I remember December 31st. 1992, the peso was 3000 x $1USD, many folks made lots of money collecting interest from banks, the next morning Mexico announced a devaluation of the peso nocking three zeros thus making the Nuevo Peso equal 3 x $1 USD, Happy New Year 1993...
Could you imagine say you have $10,000 pesos in the bank and overnight it is worth $10 Nuevo Pesos? lots of folks lost lots of money, one reason I would never even open a bank account in Mexico much less put money into an account. So in the last 25 years the peso has been pretty stable but it has devalued from 3 to present days 19- 20...What will this new government do???????


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## TundraGreen (Jul 15, 2010)

chicois8 said:


> I remember December 31st. 1992, the peso was 3000 x $1USD, many folks made lots of money collecting interest from banks, the next morning Mexico announced a devaluation of the peso nocking three zeros thus making the Nuevo Peso equal 3 x $1 USD, Happy New Year 1993...
> Could you imagine say you have $10,000 pesos in the bank and overnight it is worth $10 Nuevo Pesos? lots of folks lost lots of money, one reason I would never even open a bank account in Mexico much less put money into an account. So in the last 25 years the peso has been pretty stable but it has devalued from 3 to present days 19- 20...What will this new government do???????


When they switched from the "peso" to the "new peso" did they exchange any cash or bank holdings in -old- pesos for -new- pesos at a rate of 1000 to 1 or was it a straight exchange?


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## Cuenca Expat (May 9, 2018)

chicois8 said:


> I remember December 31st. 1992, the peso was 3000 x $1USD, many folks made lots of money collecting interest from banks, the next morning Mexico announced a devaluation of the peso nocking three zeros thus making the Nuevo Peso equal 3 x $1 USD, Happy New Year 1993...
> Could you imagine say you have $10,000 pesos in the bank and overnight it is worth $10 Nuevo Pesos? lots of folks lost lots of money, one reason I would never even open a bank account in Mexico much less put money into an account. So in the last 25 years the peso has been pretty stable but it has devalued from 3 to present days 19- 20...What will this new government do???????


Very true. Similar crash happened here in Ecuador in 2000. But do you really have that much more confidence in the US dollar? Really?

One of the reasons (among many) that I left the US was the way the financial crisis of 2008-2009 was handled...or should I more correctly say mishandled? 

I spent a number of years working for the Concord Coalition, a non-partisan organization dedicated to intergenerational governmental fiscal responsibility. I vividly recall a presentation that Concord's founder, Peter G. Peterson (look him up if you're not familiar with his bona fides), made to a small group of financial muckety-mucks--one of whom was Warren Buffett--in Kansas City in the mid 1990's. Peterson flatly told them that the day would come in the US when we would meet a similar fate as you have recounted that Mexico did in 1993. His words are still etched firmly in my mind: "You simply can not finance the unfinanceable," he said. This from a Wall Street tycoon who made mega-billions in finance.

The national debt at that time was less than $5 trillion. It's now more than quadrupled since then at more than $21 trillion. 

When do you think it will become unfinanceable?


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## kcowan (Jul 24, 2010)

Thus is why most middle class Mexicans keep their money invested in real property rather than banks.


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## Meritorious-MasoMenos (Apr 17, 2014)

Cuenca Expat said:


> Very true. Similar crash happened here in Ecuador in 2000. But do you really have that much more confidence in the US dollar? Really?
> 
> One of the reasons (among many) that I left the US was the way the financial crisis of 2008-2009 was handled...or should I more correctly say mishandled?
> 
> ...


I think you should do a lot more research on the U.S. markets if your memory only goes back to 2008.

The modern U.S. stock market goes back to the end of the Civil War. Since then, the market has produced average annual returns of 5%-7%. It has been the single greatest generator of wealth, and the most stable, in the history of the world. People who left their money in the market after the 2008 downturn (with the smart ones investing monthly a set amount in what's called "dollar cost averaging") tripled their money on what was left in and even more on continued buying.

Take a look at this chart from 2008 crash to see how much you missed out on:
https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years

<a href='https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years'>Dow Jones - 10 Year Daily Chart</a>

I hope you can stop yourself weeping. You have $400,000 now after fleeing U.S. market in 2008? You would've had $2 million if you left it in. The 2009-2018 period was I think the strongest bull market in history. Of course it will go down, but again, smart investors stay in and keep putting more money in. Please do research. 

Most downturns last no more than 18 months. The only time investors really got burned is if they invested all at once at the very time of the market right before the 1929 crash. People who bought without credit during the 1920s did well within five years. Back then, you could buy stocks on credit. I don't know, just putting 5-10% down. Those people were all wiped out.

You should read books on investing, especially in low cost, no fees index funds. 

The U.S. is simply the largest and most stable market in the world and has been since the Civil War, when U.S. industry overtook the UK. If you study history, you'll even learn that at time of American Revolution, the colonies were already more prosperous than the UK.

You should educate yourself. First, the EU and UK, China and Japan are all facing very uncertain times over the next decade. Second, all those except China, are like the U.S. a nation of laws.

Despite flowery constitutions, the executive in Mexico can pretty much do what they want. Previous poster mentioned the Mexico 1990s economic crisis. I was a reporter here in the 1980s, when Mexico City went from one of the most expensive cities in the world (with peso artificially propped up) to one of the cheapest when peso collapsed overnight. The president by decree nationalized all banks and confiscated all U.S. dollar accounts in them, handing out pesos at about 10% of what a dollar brought the day before.

Mexico and Ecuador must pay very high interest rates not only to pay over inflation rate but for danger of sudden shifts. No one knows what Mexican economy will do when leftist president vowing to use gov't funds to help poor takes power in December. Such policies didn't end well in Brazil and Argentina, much less Nicaragua and Venezuela.

I later went into consulting and we advised the economic ministry of Turkey in the early 2000 when it had inflation rate of about 160% per year. They stabilized it. Again, Turkey has a great constitution, but the current president has managed to destroy the currency again.

But up to you.

You should ask yourself this: why do so many foreign billionaires and millionaires make large investments in the U.S. to much greater extent than any other market?


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## Cuenca Expat (May 9, 2018)

Meritorious-MasoMenos said:


> I think you should do a lot more research on the U.S. markets if your memory only goes back to 2008.
> 
> The modern U.S. stock market goes back to the end of the Civil War. Since then, the market has produced average annual returns of 5%-7%. It has been the single greatest generator of wealth, and the most stable, in the history of the world. People who left their money in the market after the 2008 downturn (with the smart ones investing monthly a set amount in what's called "dollar cost averaging") tripled their money on what was left in and even more on continued buying.
> 
> ...


Thanks for your reply MasoMenos. FWIW, my memory and my knowledge of history go back much further than 2008.

I have no doubt that experts were offering exactly the same type of advice between 1920 and 1929 when the market went from below 1000 to more than 5500 before its infamous crash and burn. If you were a skeptic like me and waited until 1929 to invest--even if you used no leverage--you would have lost your keister and would have had to wait until 1960 to see it return to its 1929 levels. Adjusting for inflation would require you to have waited until the late 1990's after which it crashed and burned again (twice), such that the market finally returned to its 1929 levels (adjusted for inflation) around 2011-2012.

I don't know about you, MasoMenos, but that's not very reassuring to me.

As to why so many foreign billionaires invest in the US, do I really have to tell you? Many countries are fed up with being forced to use the dollar as the world's reserve currency and there are concerted efforts afoot to change that. So you tell me MasoMenos, when does the dollar go the way of the Spanish real, the Dutch guilder or the British pound sterling? When does the arrogant, corpulent, drowning-in-debt eagle fall off its perch?

As for my need to read and to educate myself, I'll put my research library of thousands of books on US and world history up against that of just about anyone else.

After 2008 and a decade of quantitative easing (printing free money to recapitalize too-big-to-fail banks), do you really trust the powers that be to do the right thing? 

Really?


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## Cuenca Expat (May 9, 2018)

*Financial education*



Meritorious-MasoMenos said:


> (snipped) Mexico and Ecuador must pay very high interest rates not only to pay over inflation rate but for danger of sudden shifts.


You should educate yourself. Check out the inflation rate in Ecuador: https://tradingeconomics.com/ecuador/inflation-cpi

I came to Ecuador in 2013. Since then the inflation rate has been extremely low (peaked at about 4% a couple of years ago and is now actually in a very mild deflationary cycle). When I first arrived, commercial paper was paying 9.5%.

Since I have been here, Ecuador's debt to GDP has grown from about 18% to 32%.

US debt to GDP is 105%.

Which country do you think has the most "danger of sudden shifts?"


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## AlanMexicali (Jun 1, 2011)

" I later went into consulting and we advised the economic ministry of Turkey in the early 2000 when it had inflation rate of about 160% per year. They stabilized it. Again, Turkey has a great constitution, but the current president has managed to destroy the currency again. 

https://tradingeconomics.com/turkey/inflation-cpi

"Turkey Inflation Rate
The Turkish consumer price inflation rose to 17.90 percent year-on-year in August 2018 from 15.85 percent in the previous month, and below market expectations of 21.50 percent. Still, inflation remained well above the central bank's target of 5 percent and hit the highest level since December 2003 as the lira slumped to fresh record lows amid a currency crisis. Inflation Rate in Turkey averaged 35.09 percent from 1965 until 2018, reaching an all time high of 138.71 percent in May of 1980 and a record low of -4.01 percent in June of 1968. "

I saw your typo. 160 % should be about 60 to 70 % in the chart in that time frame.


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## Meritorious-MasoMenos (Apr 17, 2014)

Cuenca Expat said:


> Thanks for your reply MasoMenos. FWIW, my memory and my knowledge of history go back much further than 2008.
> 
> I have no doubt that experts were offering exactly the same type of advice between 1920 and 1929 when the market went from below 1000 to more than 5500 before its infamous crash and burn. If you were a skeptic like me and waited until 1929 to invest--even if you used no leverage--you would have lost your keister and would have had to wait until 1960 to see it return to its 1929 levels. Adjusting for inflation would require you to have waited until the late 1990's after which it crashed and burned again (twice), such that the market finally returned to its 1929 levels (adjusted for inflation) around 2011-2012.
> 
> ...


As I said, up to you. There have been thousands of academic studies of the U.S. stock market. By economists not involved in the market. They all conclude without exception that the U.S. stock market has been the greatest, longest-lived and most stable wealth generator in history.

It would be fun to challenge you to history quizzes. I'd win hands down.

You identified your problem perfectly. You are exactly the type of person who would have only invested at the top of the market. If you had been a consistent investor in throughout the 1920s, paying 100% for your stock, none on margin, you would've been in great shape with buy and hold:

"The best 5-year return in the US stock market began in May 1932—in the midst of the Great Depression. The next best 5-year period began in July 1982, when the US economy was in one of its worst recessions."
https://www.fidelity.com/viewpoints/retirement/why-you-need-stocks

I'll quote the same mutual fund statement rather than waste time. It does not matter where you look. You'll find the same. It's incredible to me that you claim to know history but are ignorant of the academic studies that 100% conclude a buy and hold strategy is the wisest investment strategy.

"1. Stocks have offered the most potential for growth
US stocks have consistently earned more than investment-grade bonds over the long term, despite regular ups and downs in the market. Take a look at what $100 would be worth over the history of the stock market (S&P began tracking performance in 1926). During this time, stocks returned an average of 10.01% annually, bonds 5.17%, and short-term investments 3.32%, before inflation. Of course, it wasn't a constant straight line up for that whole time, but this shows that stocks have historically offered more potential for growth over the long term. That's why investing in stocks, stock mutual funds, or ETFs, is important when saving for retirement or other far-off goals."

https://www.fidelity.com/bin-public...oints/PF/3reasons_for_stocks_2018_chart_1.jpg

https://www.fidelity.com/bin-public...oints/PF/3reasons_for_stocks_2018_chart_2.jpg

From your comments, you're letting your political beliefs get in the way of cold hard numbers. But neither here nor there about your original query tax rates in Mexico.


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## Cuenca Expat (May 9, 2018)

Meritorious-MasoMenos said:


> As I said, up to you. There have been thousands of academic studies of the U.S. stock market. By economists not involved in the market. They all conclude without exception that the U.S. stock market has been the greatest, longest-lived and most stable wealth generator in history.
> 
> It would be fun to challenge you to history quizzes. I'd win hands down.
> 
> ...


You wrote: "It would be fun to challenge you to history quizzes. I'd win hands down."

I'll take that bet any day. Much safer bet than the stock market. Just let me know when you're ready.

FWIW, I started investing in the stock market in the early 70's and took the advice of some well-respected brokers at Merrill Lynch to whom I had been referred by some very successful elders. Foolishly, I was focused on my young family and my profession early in my career and didn't do my homework.

I lost my a$$. 

At that point I decided that the best place for my investments was in my own businesses, which turned out to be the best decision and which *WAY* outperformed the stock market. My net worth prior to 2008 was in solid 8-figures. For me to have switched horses at that point and jumped into the stock market would have been complete insanity.

I contend that to suggest jumping in now would be even more looney tunes. But--as you say--that's up to you.


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## Cuenca Expat (May 9, 2018)

Meritorious-MasoMenos said:


> From your comments, you're letting your political beliefs get in the way of cold hard numbers.


Not political beliefs but rather my education at the School of Hard Knocks as well as a knowledge of history and the inevitable decline of empires, especially those that overextend themselves militarily and/or fiscally. 

I lost my faith in politics and any foolish belief in either of the major political parties many years ago.


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## chicois8 (Aug 8, 2009)

:focus:


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## Cuenca Expat (May 9, 2018)

chicois8 said:


> :focus:


Thank you. I agree.

Still looking for an answer to my initial question in this thread...


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## Orfin (Sep 26, 2016)

New socialist President in Mexico, is a good chance is it is going to mean a serious shift in taxes on rich people. 
In Mexico, rich means anyone who has your kind of money to invest.

But A good chance with Nationalized and well developed petroleum sector, they may not need to raid people with tax hikes. Maybe even Nationalize a few more sectors like the mining sectors that a Cartel of few have started taking over in some regions of Mexico.
Be amazed how much private investments and holdings are drug traffic $$$. 

Have to really think about what is going on now and think in terms of how things unfolded from the past decade up to now. Market is a gamble for those who do not have full control over what they invest in and do not consider all the politics and real world economics behind it, not just crumched numbers and charts, but what is going on at grond level among real people, to cause the ups and downs usually depicted as mere ups andmdowns in the graph.
It is always much more of a story than simple graphs and charts.


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## Orfin (Sep 26, 2016)

If the USA economy/market crashed, USA is where i would want to be.
Cheap mega producers like China may be a good place for money to be during the crash recovery period. 

What happens in a global economy where the US dollar is the main trading currency, is that most countries also begin to collapse economically as their US dollars TEMPORARILY lose people’s confidence or as those dollars become scarce because of the slowing of trade that flows US dollars around.

Their foreign reserves are mainly in dollars and most people on earth prefer to rest their global trade currency in the form of US dollars. 
So their economies begin to destabilze or go down in tandem with USA economy and it becomes a global domino effect.

Only cheap mega producers like China will end up with a chance at a booming economy in that period. Because they offer the cheapest alternatives, which is what all the receeded economies of the world will be looking for with their hurting budgets. 

Mexico is a major producer for its part of the world. Only Brazil Compares in that way these days.
When you try to equate socialist measures failing Venezuela, with the same being due to happen in Mexico with a new socialist president, you have missed the mark on what is really going on.
Venezuela crashed for the same reason all the big oil producing economies crashed in Africa. Venezueala got all the focus because it was the richest and most politically destabilized by it.
The ones in Africa were far less socialist than Venezuela or even USA under staunch anti-socialism republican government in USA. The African countries had state owned oil like Mexico, but they do not do Social security, medicare, unemployment payment, food stamps, WIC, free public housing or any of the many social services USA does. Still they collapsed for the same reason Venezuela did.

Venezuela started manipulating their currency in hard times, to penalize the US dollar in their country and it back-fired seriously and still they only dug in deeper in that curremcy manipualtion direction. 

The real problem was that Venezuela was not a diversified production economy. They made so much oil money that they could afford to buy everythng else they need from other countries and still have enough for massive social services. Also many years of sanctions against Venezuela, made it hard for them to get the input needed to set themselves up with local production capacity on a large enough scale to meet most basic domestic needs. Same with Cuba and sanctions stopping input to help them develop advanced self sufficiency. 

Nigeria west Africa, with so much oil money that they relied more and more on imports, but Nigeria did not do social services like socialist and not even anywhere near USA social services. Even basic public schools hardly done anywhere in Nigeria. But still they collapsed with Venezuela. 
Nigeria has not been as internationally sanctioned against as Venezuela though. 

Both countries simply let their agriculture and everything else come mainly from imports, never enough local product to support the country because imports were cheaper in most cases. Especially with so many poorer neighbor countries eager to sell to them as cheap as China sells. 

Mexico? Yes a huge oil nation and even nationalized state run oil, but Mexico did not suffer as bad as Nigeria nationalized state oil did, not as bad as Venezuela nationalized state run oil.
Mexico has so much manufacturing and exporting going on and a very lucrative niche selling to USA. As well as our very own tourist and Mexico expat niche, largest in the world, taking in our foreigner dollars, euros and pounds. 
Mexico also has so many USA and European factories planted there. And big stuff like automotive production and more. Home Appliances, Mattresses and furniture, and Agriculture in Mexico is huge compared to anywhere in Latin America. Only Brazil compares these days. 
Mexico is flooded with agriculture, so much so it should be cheaper food than it is, but the export of it is so high, that it drives prices up. So places like modest Ecuador ends up with cheaper food. I am in Ecuador right now and will be back in Mexico soon, when the weather cools down. 

Mexico is so tied to USA market and economy that it rises and falls with the USA economy. 
And it may even have a bit of a boost at some point when US economy falls. All depends on if USA turns more to cheaper Mexican products during hard times. 

So when it comes to Economy and market, you aren’t really escaping far from USA by being in Mexico with your investments. 

China has long been trying to make its own global trade/foreign reserve currency, to buffer itself against the next US economy collapse. And that is why the USA crashed oil prices back when the oil price drop started Venezuela’s collapse, along with Nigeria, and other less developed oil rich nations around the world. Obama, via OPEC, crashed oil prices, which made oil easier to buy with the Oil dollars(US dollars) everyone had. It boosted the dollar value for a while, but oil selling nations lost a lot of dollar income. The whole world took a blow to set China and russia back in their bid to rival the US dollar as dominant global currency. 

So China and Russia took a hit in their global currency launch, and no one was interested in their Renminbi currrency at the time when the dollar bought so much more oil. 
It worked to keep the US dollar king of global trade, but collapsed so many oil producing nations and really hurt the ones that did not have strong and diverse productions outside of just petroleum. 
Places that relied more on Oil income to buy imports rather than prodice internally. 
It wasn’t socialism that crashed them, but socialism did enable Venezuela into not considering more in the way of importance of domestically producing their most basic needs. Sanctions against them also made it harder for Venezuela to develop diverse large scale domestic production. 

You cannot escape the US economy anywhere on earth, while the US dollar is the global economy currency the entire world puts their faith in, and a hard faith to break even when US economy collapses. And the US power over global economy to make strategic market manipulatioms that can make or break any other country they decide to make or break. Using things like sanctions, embargos, trade wars and military action. All to manipulate things into what worls best for US interests which do make effort to include and respect friendly nations who will do some bending to US will. Yes i admit USA is a manipualtor of sorts but i don’t know any country that would be any better if in the same situation. Maybe a few social-democratic European nations would be more egalitarian about world commmunity involvement. 

Only way to escape is to leave economy behind, retreat from civilization to a homestead and grow your own agriculture, make your own clothes and everything else. But dire needs will always come up that require trade with someone somewhere, for something, and that will begin the march of economy all over again, all the way around the world and back. Even the exclusive Mennonites now trading as far flung as Canada to Mexico, and very illicit trade while at it. 

Ecuador uses USA dollar as their Primary currency -also used by Panama and El salvador. No longer having the issues of extreme currency devaluations getting so out of hand -they have to reset currency in ways that wipe out people’s liquid cash. 
And the dollar is so big now, anywhere in central and south America, that you have the option to withdraw US dollars from many ATM machines in countries like Peru in south America, or Nicaragua in central America. I spent a year in Nicaragua and know first hand of their deep thirst for dollars. 
Spent 6 months in Peru also and know first hand you can get dollars out of ATMs there. 

The amount of US dollars making Mexico economy, is so huge especially when you count the illicit dollars funneled in from drug trade, there is no way Mexico will not follow the path of USA in any major economic turn. 

Dollar is all they talk about in Africa as well, and i travelled across 5 countries in West Africa including the big oil producers of the area. They all want dollars. The exchange rate and local inflation there is always beneficial to people who hold US dollars instead of local currency that can lose 50% buying power so fast, that their savings accounts are the worst places to plan a future from. 
Not a place i would leave local curency to go unused for any longer than a month or two.
But dollars? I would stock pile dollars as savings there, all day every day.
Even if the US economy collapsed, they would all still turn to the dollar because it is still more stable than their economy and currency and also US economy more able to recover than their economy and currency.
I am still yet to see one of these countires rebound from major currency devaluation, other than when it devalues so absurdly that they end up knocking off a freight train of zeros in a way that shocks the economy and finacially damages a lot of people. 

USA innovations always turns the tide. Leaps and bounds beyond others except maybe a few like Germany and Japan.


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## Cuenca Expat (May 9, 2018)

Orfin said:


> If the USA economy/market crashed, USA is where i would want to be.
> Cheap mega producers like China may be a good place for money to be during the crash recovery period... [snipped]
> 
> ...USA innovations always turns the tide. Leaps and bounds beyond others except maybe a few like Germany and Japan.


Wow! Thank you, Orfin, for a very thoughtful, intelligent, and comprehensive post. 

One of my prime objectives has been to try to diversify my investments and spread risk as much as possible vis-s-vis not only countries and currencies but investment vehicles, laddering, maturity of investments, financial instruments as well as physical assets and real estate, etc., etc. You appear to be saying that it's impossible to diversify out of the dollar no matter where you go or what you do. Not even the Petro-yuan or other dollar alternatives seem to be viable alternatives if I read you correctly. Is that right?

You seem to be well-versed in these matters. If you wanted to diversify your investments and to hedge against dollar collapse, where would you suggest investing? Or are you really saying to just forget it and ride with the dollar no matter what?


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## Cuenca Expat (May 9, 2018)

P.S.--If you're anywhere near Cuenca I would love to meet you.


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## LMtortugas (Aug 23, 2013)

Cuenca Expat said:


> If you wanted to diversify your investments and to hedge against dollar collapse, where would you suggest investing? Or are you really saying to just forget it and ride with the dollar no matter what?


Thinking pragmatically, just how does one invest as a hedge against the collapse of the US$? I have read these exchanges of opinion and heated insults to egos but I’ve yet to read any realistic investment strategy to counter a global depreciating currency and overwhelming inflation?....Bitcoin? real estate? cougarans?


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## Cuenca Expat (May 9, 2018)

LMtortugas said:


> Thinking pragmatically, just how does one invest as a hedge against the collapse of the US$? I have read these exchanges of opinion and heated insults to egos but I’ve yet to read any realistic investment strategy to counter a global depreciating currency and overwhelming inflation?....Bitcoin? real estate? cougarans?


I should have used the word "decline" rather than "collapse." 

If one believes that everything is about to go to heck-in-a-handbasket, then the only hedge is to buy a large farm far removed from large population centers with an abundant water source, stock up on MRE's, heirloom seeds, farm animals, and lots of brass and lead (not gold and silver).

I'm not one of those survivalist types who believes that's going to happen. If it comes down to that, I hope to be taken out under the first mushroom cloud that I fear would inevitably accompany it, especially considering the warmongering spendthrift kakistocratic idiots in DC (in _*both*_ parties). 

Rather, I foresee a slow decline of the dollar much like what has happened to the British pound (see https://www.telegraph.co.uk/money/s...0-year-journey-of-the-pound-against-the-doll/). Hedging against this type of decline--especially like what has happened to the GBP post WW2--would have involved a longer-term strategy gradually weighting more toward dollar-denominated assets and out of the pound. The obvious question then deals with timing and target.

That was the essence of my question to Orfin, i.e., how to hedge against a slow decline punctuated by intermittent sudden drops, not a total rapid collapse. His view seems to be that there is no alternative at this time and he's probably right.

And yes, I agree with you about the ridiculous and regrettable "mine's bigger than yours" exchange. I shouldn't have taken the bait.


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## LMtortugas (Aug 23, 2013)

Cuenca Expat said:


> I should have used the word "decline" rather than "collapse."
> 
> If one believes that everything is about to go to heck-in-a-handbasket, then the only hedge is to buy a large farm far removed from large population centers with an abundant water source, stock up on MRE's, heirloom seeds, farm animals, and lots of brass and lead (not gold and silver).
> 
> ...


I am curious of your game plan; this thread covers a lot of economic rhetoric but little ploy. Your early posts communicate a partiality for stable liquid investments – CDs and commercial paper – but outside Wall Street and presumably the US Treasury. What plausible investment strategy anticipating a steady devaluation of the US$, minus the farm, satisfies your criterion?


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## Cuenca Expat (May 9, 2018)

LMtortugas said:


> I am curious of your game plan; this thread covers a lot of economic rhetoric but little ploy. Your early posts communicate a partiality for stable liquid investments – CDs and commercial paper – but outside Wall Street and presumably the US Treasury. What plausible investment strategy anticipating a steady devaluation of the US$, minus the farm, satisfies your criterion?


That was precisely my question to Orfin. As stated, he apparently feels that hedging against dollar decline is not possible.

Although I certainly have a preference for safety, security and liquidity, I'm not limited to financial instruments alone. Real estate, partnerships in agricultural production of all types, oil/ gas/ mineral partnerships and private placement investments--especially if these are diversified as to location and denomination of currency--are other approaches.


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## oesgwynedd (Nov 15, 2007)

because if the democrats take over the investment funds will be crap again?! i'm looking to pull everything OUT of the USA depending on elections. Will move to offshore if need be or Switzerland.


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## Cuenca Expat (May 9, 2018)

oesgwynedd said:


> because if the democrats take over the investment funds will be crap again?! i'm looking to pull everything OUT of the USA depending on elections. Will move to offshore if need be or Switzerland.


You might do well to read this article from Forbes magazine: https://www.forbes.com/sites/peterl...-is-better-for-the-stock-market/#22c4292e239d (excerpted below)

Have you ever wondered whether the stock market does better when the President of the United States is a Republican or Democrat?

Looking at the table below of total returns for the S&P 500 during presidencies since 1929, it is clear that U.S. stock returns have been much better when a Democrat was the president; however, it would be a mistake to conclude that stock returns were higher because a Democrat held the presidency.

There is no conclusive evidence suggesting the president’s party has any statistically significant impact on U.S. equity market returns (see Campbell and Li 2004). Intuitively this makes sense, because stock returns are influenced by a myriad of factors such as valuations, corporate profits, business cycles, monetary policy, etc. In addition, the increasingly global economy (the S&P 500 generates more than 50% of revenues outside the U.S.) makes the actions of a single government less important.

The stock market is a complex adaptive system in which cause and effect are not easy to link. Market movements, particularly over short periods such as a presidential term (yes, four years is a short-term investment period), are random.​
My personal view vis-à-vis US political parties is a pox on both their houses. *Both* are criminally fiscally irresponsible and--as far as I'm concerned-- are little more than a useless bread-and-circuses sideshow for the masses.

Still hoping to get an answer to my original question re taxes...


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## xolo (May 25, 2014)

chicois8 said:


> I remember December 31st. 1992, the peso was 3000 x $1USD, many folks made lots of money collecting interest from banks, the next morning Mexico announced a devaluation of the peso nocking three zeros thus making the Nuevo Peso equal 3 x $1 USD, Happy New Year 1993...
> Could you imagine say you have $10,000 pesos in the bank and overnight it is worth $10 Nuevo Pesos? lots of folks lost lots of money, one reason I would never even open a bank account in Mexico much less put money into an account. So in the last 25 years the peso has been pretty stable but it has devalued from 3 to present days 19- 20...What will this new government do???????


Maybe I don't understand this post, but the Jan. 1 1993 conversion of Mexican pesos to new pesos was a straight across trade. 1,000 pesos were worth about 33 cents US and then the next day 1 pesos MXN was worth about 33 cents US. That's what I remember anyway from being there. I think, if I read this post correctly, the peso change of knocking three zeros off the currency and the serious inflation Mexico was experiencing at the time have been conflated.


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