5 Essential Tips To Know Before Investing in Mexico
Mexico is a country commonly written off as “developing,” but which in fact has seen a stunning amount of economic growth in the past decade. The country currently has the world’s eleventh largest purchasing power parity as a nation, and their economy is strongly linked with that of the U.S., making a sustained investment in Mexico of mutual benefit to both countries. If you are interested in going forward with an investment in a Mexican company, there are many ways to approach this. Here are five key tips to get the most out of your business venture.
1. Exporting is one of their economic staples. Roughly a third of Mexico’s GDP lies in industries, with 80% their exported goods going to the United States. The United States’ increasing demand for Mexican products is a result of the increased price of fuel, making it more expensive to import consumer goods from China, as well as the motivation to improve relations with their neighbor to the south. As such, manufacturing is sure to be a safe and lucrative field for investment, and Mexican workers are both plentiful and industrious.
2. ETFs versus ADRs. The novice investor, or someone looking to take the quick and easy route, should invest via exchange-traded funds (ETFs) that hold a diverse securities portfolio and have the added benefit of existing on the US stock exchange as well. ProShares is a good resource for ETFs of varying length. On the other hand, an American Depository Receipt (ADR) will allow you to track foreign stock without having to go through a foreign brokerage account. If this is the route you want to take, look into Cemex SAB de CV and America Movil SAB de CV, both popular Mexican ADRs.
3. Real Estate. Whether you’re looking to invest in property for retirement, to start a bed and breakfast, or invest for resale potential, Mexico is open and welcoming to foreign buyers, with a diverse landscape of property for you to choose from. Land by the coast is highly valued but more expensive due to its tourism appeal. Before you start this, it would be prudent to hire a Mexican real estate agent and a lawyer to see you through the process.
4. Corruption and crime can make the going tough. While Mexico isn’t anywhere near as dangerous as the media portrays it, the county is in an ongoing drug war. As an investor, this should not affect you so long as you stay away from the northern areas that are close to the border. On the other hand, you may find the Mexican bureaucratic system to be much different from what you’re expecting, namely that corruption and palm-greasing is commonplace, and may be required if you want to get things done in a timely fashion.
5. Knowledge of Spanish is imperative. Don’t enter any business transaction in Mexico without having a firm grasp of the Spanish language. This may take some intense study, as Mexicans speak very quickly and use plenty of slang that may be difficult for a non-native speaker. However, earning their respect and being able to communicate for yourself will be worth the effort. Get started today by sending us an inquiry, or by taking our free online Spanish language level test to see where you place.