Keeping cash in foreign currencies, buying real estate and investing offshore are some of the ways that Argentines have learned to thrive in spite of a failed economy. Patience has proven to be important during volatile economic times, and has led to strong profits in real estate. See the following article from International Living for more on this.
Argentina is the greatest place on earth for an investor. Not because its finances are such a success. But because they’re such a failure!
If you think you’ve had problems where you live, then talk to an Argentine. Military dictatorship, hyperinflation, government debt default, massive currency devaluation, depressions, confiscation of private pensions—Argentines have seen it all.
So why is it such a good place to be for an investor?
Let me explain…
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All this turmoil has made Argentines some of the most streetwise people in the world when it comes to money—specifically how to keep hold of it through thick and thin. And how to make it when opportunities come along.
Here’s some of the wealth protection lessons I’ve picked up from battle hardened Argentines:
1) A large part of cash savings is kept in notes, not on deposit at the banks. Argentines have learned the hard way to not trust the banks to stay in business. Typically, they keep cash in foreign currencies, not the local pesos. In the past that has meant U.S. dollars. But now even Argentines see the dollar as risky.
2) Buy hard assets—especially real estate. The trick here is to buy things that governments can’t devalue through inflation. If you have, say, $70,000, you might buy an apartment or a plot to build a house on. If you have $2 million, you buy a farm.
3) Keep a chunk of your assets offshore. Wealthy Argentines keep about 80% of their financial investments in accounts outside the country—or “offshore” to use the banking jargon. That money is invested in international currencies, bonds, and stocks.
This is insurance against bad times, pure and simple. Smart people don’t put all their eggs in one basket. Political uncertainty means you might have assets taken from you. Market crashes, direct confiscation, wealth taxes or inflation all have the same end result—less money. You can reduce all those risks by holding money overseas and investing it internationally.
4) Be an opportunist. When there’s a crisis Argentines pile in and buy. I know lots of people who have made fortunes from patiently waiting—sometimes for years—then aggressively investing in real estate or stocks when the markets crash. One friend turned $100,000 into $1.5 million in eight years from two residential property deals.
Another contact made seven times his money (in dollars) on farmland in 10 years. Yet another contact made 150% last year by investing in the Argentine stock market. Importantly, none of them used borrowed money to do it.
The world will stay volatile. And I expect major new crises in the coming months and years. Luckily, we can learn from those battle-hardened Argentines. Keep some of your money overseas, invest globally to reduce your risks at home, and use crises as opportunities to buy good assets cheaply.
This article has been republished from International Living.