LAKESIDE
LIVING |
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If you are thinking about living at Lakeside or you have recently arrived
and are still settling in, there are some basic facts you should know,
particularly about health, the law, your personal safety, and finances. Once you have these taken care
of, you can concentrate on what brought you here: enjoying yourself.
The following paragraphs cover the basics. The observations of
a chartered financial planner from California are
given at the end of this section. The Legal
section of this web site provides more information on Mexican
law, courtesy of Ajijic Legal Services.
Since so many retirees from
Canada and the US live here, there is an infrastructure catering to their
needs. You can buy almost anything here that you want, many shops and
restaurants have English-speaking employees, and there is a wide variety
of clubs and organizations for expatriates. However, there are a number
of factors that you should be aware of in order to make your stay as trouble
free and enjoyable as possible. Detailed information is available at the
Information Desk at LCS, from 10 am to 2 pm Monday through Saturday. A
Mexican lawyer answers legal questions on the Patio at LCS from 10:30
am to 11:30 am on Mondays, Tuesdays and Thursdays.
The following are summaries of more
detailed info found in Legal
Matters. There are four
immigration status options, FMT, FM-3, FM-2 and Inmigrado. FMT is a
temporary tourist visa, good for from three to six months. Renewing it
requires a trip to the border. It is recommended only for initial trips to
Mexico to determine if you might want to settle here. FM-3 is good
for five years, renewable yearly. It allows you to bring in one motor
vehicle and one shipment of household goods. The FM-3 has a minimum income
requirement of $1000 dollars per month for an individual and $500 dollars
per month for a dependent. These income requirements are cut in half for
those who own their home in Mexico. There is no limitation on how much time
can be spent outside Mexico, as with the FM-2. FM-3 holders may drive
foreign-plated cars. If the FM-3 is obtained outside Mexico it MUST be
activated upon arrival. FM-2
is good for five years, renewable yearly. It allows importation of
one motor vehicle and a household goods shipment. It is intended for those
who are considering permanent residence in Mexico. Minimum monthly income is
1300 US dollars or equivalent, and 650 dollars per dependent. These are cut
in half for those owning their own home in Mexico.
Holders of an FM-2 cannot leave Mexico for more than three months a
year. Holders of an FM-2 may legally drive foreign-plated cars. After
holding FM-2 status for five years, you may apply for Inmigrado status. Inmigrado gives
all the privileges of a Mexican citizen except voting or holding political
office. For example, an Inmigrado may hold a job without getting permission
from the Mexican government as is required for FM-2 and FM-3. Inmigrado
status may be applied for after having FM-2 status for five years.
Inmigrados may not legally drive foreign-plated cars. No fees are required
after initial granting of Inmigrado since there is no renewal. You may import
one car duty-free and drive it in Mexico as long as your FM-2 or FM-3 is
valid. A Mexican or someone in Inmigrado status may not drive a foreign-plated car. Mexican wills
are good in the US or Canada, and American/Canadian wills are good in
Mexico, but only after being probated in the country of origin. This can
result in a considerable delay in disposing of property. If you have
significant property in Mexico, including household goods, you should have a
Mexican will made. Disposition of your house depends on how it is held, by
direct ownership or by a trust (fideicomiso). Generally, houses held by
direct deed go first to the surviving spouse or if no surviving spouse it is
evenly divided among the children. A trust allows more flexible disposition
but involves a substantial yearly payment to the holder of the trust. Check
with your realtor and/or lawyer for the details. Buying a house
usually means paying for it in full at closing. There are almost no
mortgages in Mexico; however, there is the possibility of financing under
very limited circumstances. Employees often
come with the house, if you are buying one that has been lived in. The new
owner incurs legal obligations if he/she keeps the existing maid or
gardener. The result may be a substantial payment, according to Mexican law,
if later on you want to let the employee go. Post Life
Planning is a program available at LCS to assist you to legally specify how you
want your remains disposed of e.g., by cremation or burial. Having this specified in
writing can make things much easier for your survivors. Tips Get maps of the
area. These are available at the bookstore in Bugambilias Plaza (where
Torito´s grocery store is located). You can also get maps at the LCS
Information Desk. Get phone
cards. The pay phones in Mexico do not take coins. Phone cards are available at
the shops on the Ajijic Plaza. Carry copies of
your FM-3 or FM-2 and your drivers license in your car if foreign-plated. Join the Lake
Chapala Society and take advantage of the services and activities
and local discounts. Use cleaning
solutions which contain bug repellent for mopping floors. One brand is
Repelente. Another is Ajax Expel. Keep copies of
Emergency Numbers by all your phones Some
approximations of metric to British measurements: A meter is
slightly more than a yard A kilometer is
six-tenths of a mile A kilogram is
slightly over two pounds. If you want about a pound of something ask for
“Un medio kilo,” which is 1.1 pounds. To convert
Celsius to Fahrenheit approximately, multiply by two and add thirty. E.g.,
20 Celsius is about 70 Fahrenheit (precisely, it is 68 F) A hectare is
two and a half acres A square meter
is about 11 square feet
The major bills
are property tax, water, electric and telephone. You may also need to pay
for your Internet service and for cable or satellite TV service. Property tax is
paid at the Chapala City Hall, at Madero #202. This bill is much lower than
property taxes in the US or Canada, typically running from 300 to 1500 pesos
(equivalent to 30 to 150 US dollars). There is a discount for paying early,
in January or February. It must be paid yearly. The water bill
is paid yearly. The bill is due in January, with a discount for
paying early. The yearly bill is calculated based on size of property,
number of bathrooms, whether there is a pool or not, and other factors. It
is not based on metered usage. Typical bills run from 1000 to 3000 pesos per
year. If you are renting be sure you know whether water cost is included in
the rent. Electric bills may be paid on-line if you have an account with Banamex, Bancomer, Banorte, Santander, Serfin or Inbursa: go to http://www.cfe.gob.mx. Click on English in the upper right-hand corner, then follow the directions. The telephone
bill is paid at the Telmex office on the Carretera #113 in Ajijic. The total
cost is based on a set monthly fee, local calls over 100, long-distance
within Mexico, and international long distance calls. There are three
supermarkets frequented by expatriates: El Torito in Bugambilias
Plaza in Ajijic, Superlake in San Antonio (south side of the carretera
just east of the Chapala bypass intersection), and Soriana in Chapala just north of the Pemex Station. Superlake carries an extensive
selection of the brand names expatriates are used to, including Oriental
foods. El Torito is less well stocked but less expensive. Soriana's selection is quite extensive. For staples, El Surtidor, (south side of the carretera west of the
Colon signal in Ajijic, has good prices. The most
popular butcher shop is Tony’s, next to Superlake. La Despensa on the
carretera in Ajijic has good beef cuts. Puritan Poultry at Hidalgo #101 in
Riberas del Pilar has high quality chicken. El Torito has a meat section in
the store. Outdoor markets
called tianguis are colorful, have a wide range of products, and can offer
good prices. The Ajijic tianguis is held on Wednesday beside Bugambilias
Plaza. The Chapala tianguis is the largest in the area and is held on
Monday, on Madero across from the Pemex station (north end of town) and has
better prices than the Ajijic tianguis. The Jocotepec tianguis is held on
Thursday and has excellent produce. To reach it, continue through Jocotepec
after arriving on the carretera, after turning left at the Plaza take the
first right on Ramon Corona, and you will come to the tianguis in a few
blocks. Many residents
make a trip to Sam’s, Wal*Mart or Costco in Guadalajara for nonperishable
items, and stock up on basics like paper towels, toilet paper, canned and
packaged goods, etc. Eggs are
cheaper by the kilo than by the dozen. For example, a kilo of brown eggs
(red eggs or huevos rojos in Spanish) is 12 pesos per kilo, and gives you
about 15 eggs. A dozen eggs are 14 pesos, but come in fancy packaging. Liquor is about
the same price at the local liquor stores at Lakeside as it is in the
megamarts in Guadalajara. But look for specials in both places.
Some brand name wines, beers, and liquors cannot be obtained in Mexico or
require costly special-ordering. We are
fortunate in having many English-language sources of information. This
section summarizes some of the major sources, but there are numerous others,
particularly clubs and organizations with focused interests such as bird
watching and fishing. The Lake
Chapala Society Directory is given free to members upon publication each spring.
It contains members’ names, addresses, phone numbers and e-mail addresses,
as well as business ads and yellow pages, emergency numbers, addresses and
phone numbers of consulates in Guadalajara, and more. The LCS also publishes
a monthly Newsletter containing a summary of upcoming LCS activities and events,
as well as medical news. The LCS Newsletter is available at LCS, on-line on this website, as well as in the free El Ojo del Lago magazine. There are two
English-language newspapers available locally: The Guadalajara Colony
Reporter comes out weekly, Friday afternoons, and has comprehensive coverage
of what is happening at Lakeside. The Miami Herald is more nationally and
internationally oriented and comes out daily. The Reporter costs eleven pesos,
and the Herald thirteen pesos at stores here. The Herald offers home
delivery in much of Lakeside. Both publications are available at
supermarkets, bookstores and magazine shops. There are two
free English-language monthly magazines: El Ojo del Lago and the Lake
Chapala Review. Both contain articles on Mexican culture and history, local
activities, etc. The Ojo appears on the first of the month, and contains a complete publication of the LCS Newsletter; the Review appears on
the fifteenth, and contains a column featuring LCS news. There are
limited local sources for books. The bookstore in Bugambilias Plaza has a
good selection of travel books and some of general interest. Sanborns, one
block south of the Cathedral in Central Guadalajara, has a moderately
extensive selection of books in English. Sandis on Tepeyac # 71B in the
Colonia Chapalita area of Guadalajara has a good selection and will order
books for you. Their phone is
(333) 121-0863 and e-mail address is sandibooks@sandibooks.com.
You can order books over the Internet and have them delivered here. A popular site is Amazon.com,
but there are many others; including Powells.com;
try bookspot.com for
more info. Shipping cost is about 9 dollars for one book, 11 dollars for
two. Some web sites
are: Chapala.com
is maintained by El Ojo del Lago magazine and Chapala Realty. It has
numerous articles from the magazine and provides detailed maps of Lakeside towns Magnificent
Mexico is an interesting site maintained by Mildred Boyd. It outlines
the history and anthropological side of Mexico. Mexconnect.com
gives a good overview of Mexico, in a monthly e-zine. Subscription is $30
USD per year, home page and some info has free access Mexico-insights.com
provides insights into living at Lakeside, monthly, written by two
knowledgeable residents. Cost is $39.95 USD per year. You can view a
complimentary copy before buying. Go2mexico.com
is a travel site for major tourist destinations in Mexico. Good info on golf
courses. Good books on
Mexico and the Chapala area are. Mexico´s
Lake Chapala and Ajijic, Second Edition, by Teresa A. Kendrick. This book is for sale at LCS on the patio. The Peoples
Guide to Mexico by Carl Franz. A comprehensive guide to customs,
courtesy, food, health and more from a somewhat roughing-it-at-minimum-cost
perspective
Western Mexico
– A Travelers Treasury, by Tony Burton Bulletin boards
can be the best source for home sales and rentals, miscellaneous items for
sale, upcoming events, yard sales, etc. They can be found at the
Lake Chapala Society, local supermarkets and post offices. Telephone
is a Telmex monopoly in this area. It is usually reliable but
expensive for long-distance international calls. Consider
getting a callback service or using voice-over-internet. You can get
information on callback services by calling Roland at 766-0149, Nancy
at 766-3040, or Vivianne at 766-0054. Callback charges are in the 20
cents per minute range, from Mexico to the US or Canada. You
can also call from your computer to phones in other countries.
Information on voice over the Internet is available at iConnectHere.com,
dialpad.com and
at Net2phone.
Some people find voice over the Internet difficult to understand but
it certainly saves money, running from 4 to 8 cents a minute. Mail: There are
four choices: the Mexican mail system; the LCS courier service; first-class
mail via a mail service; and mail forwarding services, which provide a mail
drop in the US by which you can receive mail here. Mexican mail is
rather slow and can be unreliable. Typically mail sent through the Mexican
postal service arrives at a US or Canadian address in two weeks to one
month, but there are numerous horror stories of four to six month delays. The Lake
Chapala Society offers free courier services for members only, in which
volunteers heading north take a bag of regular-size letters with postage
affixed and drop them in a mailbox after crossing the border. There are
usually one or two volunteers per week. The two
commercial mail services, Mailboxes Etc. and the Packing and Shipping
Center, will courier mail from here to the US for 25 to 30 pesos per
letter, and usually have one trip per week. For getting mail from the US
or Canada, both Mailboxes and the Packing and Shipping service will
provide a US address to which you can have mail sent, and then they ship
it here to your private box at their facilities. This costs about 25 US
dollars per month, or less for multi-month sign-ups. To get more info call
Mailboxes Etc. at 766-0647 or Packing and Shipping Services at 766-0013. Internet: There
are two Internet service providers, Laguna
and Prodigy. For
more information call Laguna at 766-0297 or call Telmex at 01-800-123-2222,
or go to Telmex in person. Prodigy offers dial-up and DSL
high-speed (in limited areas). Laguna offers dial-up and high-speed
wireless (in limited areas). If you want to use the Internet only
occasionally for e-mail there are numerous internet cafes in the area. Most
will help you set up an e-mail address and give you some tutoring on its
use. Lessons, from Beginner to Advanced, are
available at the LCS.
Learn about the next session of classes, offered several times a year. There are also a number of instructors in the area, some of whom advertise
in the Ojo del Lago, Lake Chapala Review or the Guadalajara Reporter. You
can also teach yourself from a self-learning book. Madrigal is a
popular book and available at the bookstore in Bugambilias plaza. Numerous
studies have shown that exercising our minds prevents loss of mental
alertness, as we grow older. A good way is to participate in the activities at LCS. These consist of lecture series, seminars, group discussions, and periodic Neill James Lectures. There are
also Great Books Clubs and regular scrabble and chess sessions. For time
and place, please check the Events Schedule
on this web site. FROM
A RECENTLY ARRIVED CHARTERED FINANCIAL CONSULTANT Some
financial considerations for the Lakeside resident or future resident: 1.
Do I really want to live in a “different” country? 2.
Am I willing to accept “guest” status no matter how long I may
stay in the area? 3.
Am I willing to meet locals half way or more? 4.
Am I moving to Lakeside merely because I read someplace that people
live like kings on social security or government pension? 5.
Have I visited often enough to know something about living on
Lakeside’s terms so that I am not offended if this community turns out not to
be San Diego or Toronto, only on a smaller scale? 6.
Do I know how much it will cost, realistically, to live in the manner
to which I have become accustomed back home? 7.
Do I have enough fixed income to meet my lifestyle expectations? 8.
Will it be necessary to work for income once I settle here?
Am I aware that certain occupations are either formally or informally
“off limits” to non-Mexican citizens? 9.
Will my investment portfolio cover any short fall I may have in fixed
income so that I can continue living my accustomed lifestyle? 10.
Should I rent or purchase a home? 1.
How much stuff should I bring along? Generally speaking, as little as you possibly can.
Remember that even purchased homes may come partially or fully furnished.
If you have trouble deciding how much to bring, consider cost. From
California, it costs about $1.00 US per pound to ship things.
How many items are really worth all the trouble and expense?
Of course, if you keep a residence back home, you can keep all the stuff
you want back there! Just don’t bring much along. A
helpful exercise in cutting down on unnecessary moving inventory is to ask
yourself if you can imagine using the object in question in Ajijic.
Furthermore, have you used the item during the past year back home?
Remember, too, that dress codes are pretty casual here.
Wool suits don’t get used very often, for example. 2.
If you decide you need to hire a moving company, be sure to get a
qualified firm with international experience. Get several quotes—you will be amazed at the price range
you will get. Be sure you
understand exactly what is included in each quote.
Sometimes a higher cost quote includes EVERYTHING needed, including the
required inventory of goods in Spanish. Sometimes
the lower bid does not. Remember
the old truism that if the price sounds too good to be true, it probably is. 3.
Get proper documentation: If
you don’t mind going back home every six months you can get by on a tourist
visa. If you want to stay
indefinitely, consider an FM-3 visa. Check
with your local Mexican consulate back home for the many requirements and
details. It will take several trips
to the consulate in order to get things done properly. DO NOT depend upon what
you have heard here or from anyone who has moved here, even quite recently, even
if they have moved from your area. Each consulate has its own requirements and these
requirements are changing constantly. 4.
Keep in mind that the FM-3 does not entitle you to bring in household
goods duty free in and of itself. You
must also obtain an inventory visa, which when we crossed, was good for only 30
days. It used to be 90 days, but
now, if your goods cannot be shipped within the 30 day window, you may have
trouble getting things through at all. Again, be sure to check with your local consulate. 5.
More on the FM-3: If you
plan to purchase your home, consider going with the FM-3.
First of all, it allows you to apply for the inventory visa, which allows
you to bring in household goods duty free.
Then, should you sell your residence at a profit later on, I have been
told that you can avoid Mexican taxes on the profit if you have FM-3 status and
have owned the house for a minimum period of time.
Check with an experienced realtor for details, but the tax issue could be
significant. 6.
Pets. You can bring pets
in, but they need to have shots, etc. and you must be able to prove that this
has been taken care of. Many people
say they never have had questions about their pets’ health papers, but you
never know. Border officials have
every right to ask for these health papers. 7.
Consider your own health insurance. Are you going to shop for insurance here, or will you go home
for major work? Will you keep up
insurance protection back home, or will you go with private or subsidized
Mexican insurance down here? There
are a lot of plans available in Mexico and the prices range from modest to just
as expensive as in the States. Again,
shop around. There are many plans
available and each insurance office carries a different group of plans.
Each person’s needs vary, so keep looking if you don’t at first find
what you want. One consideration to
keep in mind if you plan to travel a lot outside of Mexico:
many plans pay only emergency costs if you are outside the country.
You can get an international coverage plan that pays all fees, regardless
of the country you may be in. These
plans cost about double the emergency only type, but you may feel international
coverage to be worth the cost. 8.
Dental insurance. Individual plans are hard to come by in the States, and I
don’t know of any available in Mexico.
Since dental services cost considerably less than in the States,
consider setting up a self insurance fund to pay for these services. 9.
Credit/debit cards. Double
check and/or apply for and have in hand your credit/debit cards before you
take up an extended residence in Mexico.
Couples should find out if each person has the same account number on
theVisa or Mastercard, or, whether each is separate.
American Express gives each person a separate account number.
This is important should you misplace or lose a card.
Should one person lose an American Express card, the spouse’s card
remains valid and can be used because each person has a separate number.
With Mastercard and Visa, you often have one account number per
couple. Thus, if one card is lost, both cards are inactivated when
you report the loss. Finally,
it is very difficult to have credit cards mailed to Mexico. You may have to provide a physical address for the cards to
be delivered to and use a service, such as Fed Ex. If this is the process, you must be there when the cards
arrive, or else they get sent back and you start all over. 1.
Whether you are renting or whether you have become a homeowner,
your expenses are going to be somewhat different from expected. Start
keeping track of expenses as soon as possible, but keep in mind that this may
not be feasible for the first month or two due to a lot of one time costs, such
as getting connected to telephone lines, the internet, the utilities, etc., etc.
(Interesting point in applying for services or opening a bank account:
you will have to provide a paid utility bill, gas or electric will do,
for the physical address at which you reside.
It doesn’t seem to matter if your name is on the bill or not, but you
will need a copy of a recent bill for your address if you want to move forward
and obtain these services. If
renting, your lease is proof of address. Another
wrinkle: some expenses, such as
insurances, taxes, water bills, and telephone bills could well be on a different
billing cycle than you have been used to. Some items are paid annually, others semi annually, some
every two months, yet others are monthly. You
will need extra cash to pay the larger lump sum items, so be prepared.
(Some of these items will require a generous number of pesos!) 2.
Using checks or credit/debit cards in Mexico Checks
are readily acceptable, but some businesses want only pesos, while others would
just as soon have US dollars. If
you use your credit or debit cards at Costco or other establishments, be
prepared to pay a 2% surcharge for using the card.
It pays to pay cash in Mexico. A
note about using checks in Mexico. Make
sure there are sufficient “good” funds for the check to clear. Banamex, for example, currently charges 100 pesos for a
returned check. I am using the
phrase “good funds” above quite intentionally.
“Good funds” means that the institution you are writing a check on
recognizes that your funds are spendable. Do
not assume that because it has been several days since your back home financial
institution was asked to send money to Banamex or whoever, that these funds have
arrived, or, if they have arrived, they are now spendable.
Each institution, whether back home or in Mexico has its own rules on
this. Even in the States, the only
instantaneous “good funds” are funds that have cleared the Federal Reserve
System. Know your institutions’
rules. Suggestion for
avoiding expensive and embarrassing fees: deduct
the minimum balance you want to keep from the amount you actually show in your
records. That way, as you approach
zero, you will still have sufficient funds to qualify you for the free checking
account or whatever. Usually, there
are benefits to keeping a minimum balance, such as 4000 or 6000 pesos.
If you sign up for such a plan, you will want to continue qualifying;
otherwise take the no particular minimum balance plan and pay the extra fees or
forgo the free checks or whatever benefits that are provided by the higher
required balance plans. 3.
Finding good help, such as a maid and/or gardener.
Oftentimes, your residence will come with an established work force.
These people may come highly recommended and you will simply continue the
relationship. A point to keep in
mind, however, is that if you want to discharge these people, be sure to do so
during the appropriate transition time. This
is usually at a point just prior to your buying the property.
Up to the time of sale, the previous owner is responsible for paying
severance package costs if a worker is let go.
If you agree to take on the existing staff, you could become responsible
for all past and future accrued benefits.
Thus, if the maid had worked for the previous owner for 15 years and you
agreed to take over her services, then fired her a year later—you would get to
pay the benefits package for someone with 16 years worth of benefits.
( A properly vetted transfer of property will avoid any liabilities for
previous benefits due, but you need a good notary and a good realtor to make
sure all benefits have been paid.) 4.
If your property does not come with help already attached, you will
have to ask around for some good people. There
seems to be a good grapevine among the locals, and, if you let it be known that
you are looking, people will begin showing up at your door, saying so and so
sent them because they heard you needed a gardener.
You can then do your checking and decide if this person will do.
You have 30 days as a trial period to see if you are going to get along.
If it takes more than 30 days to make up your mind, you will have then
acquired some obligations and you will have a severance package to deal with. 5.
Christmas bonuses. These
are owed and must be paid in cash at the end of each year.
If you give your gardener your old computer, that is all very well and
good, but it is a gift that DOES NOT count toward the year end bonus.
(A good place to begin your research regarding bonuses, national
holidays, etc., is the LCS Directory.). 1.
Many people retain their bank connections from back home and hit the
local ATMs for immediate cash needs. This
can be expensive convenience. I have heard of people paying fees as high as
$3.50 per ATM draw. If you would
like to eliminate ATM fees, you might want to check
the Amistad plan through California Bank of Commerce in L.A.
The program is designed especially for US people planning to live in, or
already living in, Mexico. The account comes with ATM cards, free checks (which
you can write in either pesos or dollars), and CBC is owned by Citigroup.
Citi also owns Banamex, so you can easily move funds from your bank or
brokerage account to CBC to Banamex. With
a Banamex account you can write checks locally—use judiciously, however, we
get only two free checks per month with our particular account—but only in
pesos. 2.
California Bank of Commerce allows
you to take up to $300 US per day at no cost from most any ATM.
We have used our card at several ATMs locally, and have yet to pay a fee. For
California Bank of Commerce info, you can call the following numbers:
From USA 1-800-222-1234 From Mexico 01-800-111-1234 To
speak to a representative, say “representative” once you get into the
recorded messages. Tell them you
are interested in the Amistad program. 3.
As with other financial institutions, CBC allows you to have Social
Security, pension checks, or any other regular transfers sent directly each
month or quarter or whatever to the CBC account .
You can go online to track when the funds have been transferred.
Then, if you have Banamex, you can e mail deposits from CBC to
Banamex for local use. Otherwise,
if ATM draws are sufficient, you can simply use the ATM network for regular
cash expenses. 4.
Investing
while living in Mexico Hopefully,
you have a trusted financial advisor back home who will look after your
interests. Continue this
relationship if possible. (This should not be a problem if you maintain an
address back home. However,
if you give up your Canadian or US residence entirely, it can be difficult
maintaining this relationship—or at the least it becomes more expensive and
less convenient.) If
anyone knows of brokerage firms or credit card companies domiciled outside
Mexico that will do business
conveniently for FM-3 persons without a US or Canadian residence, let us know.
Such an entity, I am finding, is hard to come by. It
is possible to invest directly in Mexican securities, money market accounts,
etc., but remember that this is not the US or Canada.
In the past people have enjoyed extremely high interest rates on money
invested in Mexico only to have devaluations wipe out much of their capital.
I understand that in the past there have also been some “sure thing”
real estate developments that are still standing empty today.
A variation on the “If it sounds to good to be true . . . “ wisdom is
that “If this offer is such a
great deal, why are all these high pressure sales people spending their time
promoting the investment to people like me?”
(This is especially true on offers good only for today.
Surely the savvy salesperson should be taking advantage of the remaining
hours in his day lining up his own purchases!) Caution
is the byword with any non guaranteed investment, but one should be especially
careful investing a significant percentage of one’s capital directly in
Mexican securities or other assets, even if you use legitimate investment
channels. If
you want to invest prudently in Mexico, consider doing it through your brokerage
firm back home. You can buy
specific equities, or, for greater diversification, invest in mutual funds that
focus on Mexican securities. A rule
of thumb for many in the investment business in the US is that 20% of a well
diversified portfolio should be invested outside the US.
If, after examining your portfolio, you have less than 20% invested
globally, then you could put some money into a fund focusing on Mexican
companies. I have no knowledge of
Canadian diversification models, so BE SURE to check with a trusted specialist
in your country’s asset allocation models. Just
as you did back home, re evaluate your portfolio from time to time—certainly
every couple of years. There is
overwhelming evidence that market timing does not work and that the more one
trades, the less likely the chance of success; however, there are long term
trends which can lead a prudent investor to rebalance his/her portfolio.
When high quality bonds, for example, pay 10%, there isn’t a compelling
argument for stocks (which historically have returned about 7% plus dividends in
the US), but when bonds begin losing value, as they have begun doing lately, the
bond holder will have to ask just how long he/she can put up with this.
Consult your financial advisor and make sure that your portfolio reflects
current economic reality and your tolerance for risk. Investment
information resources: If you can
go online, there is a plethora of information available.
It is not data which are lacking, but the knowledge and wisdom to act
upon it prudently that is hard to come by. If
you haven’t tried the internet for such information, some sites include: Most insurance
company and brokerage firms have sites which provide financial information.
Among insurance company sites, Prudential Life is especially good on
high level analyses of market trends and measures of market valuations.
Look under Ed Yardini’s analyses for this kind of thing.
The site has all the usual indexes plus individual equity picks and
pans. My
American Express site is pretty good too, and AXP has some of the lowest
brokerage trading costs around The
catch is that they want a U.S. address to establish accounts and to do business.
AXP brokerage is not prepared to deal with true ex pats.
The American Express card people are very helpful and understanding, but
AXP brokerage is another matter. Among
brokerage houses, Fidelity.com opens the door to various kinds of information
and can serve as a useful balance to information gleaned at other sites. MSN.com
has general news as well as business news.
A useful feature located under MSN/money is a mutual fund rating service.
You have to know the ticker symbols, but you can look them up on MSN too
if you don’t know them. While it
is futile to chase last years “best” funds, if your funds have been rated
below average, and your fund family has no attractive alternatives to funds you
are currently invested in, you might consider a change.
(Beware of short term and/or long term capital gains taxes if you sell
out of non tax qualified funds, however.) Also,
if you have new assets to invest, it makes sense to buy into fund families that
have, over the years—say five years or more—done as well as the overall
market. It may be hard on fund
managers’ egos, (or investor’s egos for that matter) but almost all managers
and funds have, over time, reverted to the norm for the type of investment they
are in. One of the few to beat his
asset class averages for any length of time was Peter Lynch, and he has long
since retired a wealthy man. Warren
Buffet has done pretty well, too, but have you priced Berkshire Hathaway shares
lately? If you have to ask you
can’t afford them. Thus, if you
want to invest in a large company mutual fund that buys firms listed among the S
& P 500, you will get, over time, that asset class’s 7% return IF YOU
REMAIN INVESTED every single day over a period of years.
If you get out, even for a few days at a time, you might as well take CD
rates and save the worry and expense of investing. TIAA/CREF
also has a good site. Although they
serve primarily educators, you won’t go wrong following their advice.
They, too, believe in low cost funds and long term investment strategies. |