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I'm 32 years old and just got married 1 year ago (hopefully won't be having children at least in the next 3 years).

In the last years I got to save some money, which goes up to the total amount of 250k USD. We currently live in a small apartment downtown (Guayaquil, Ecuador) and I really need to make a decision on that money.

A) buy a terrain and start building a family house / buy a house

B) invest

I already have very strong points in favor of A, because the terrain i'm currently looking for is on a high valued zone, and in a few years I will be needing a bigger place to live. Still, I'm thinking that -correctly invested- that money could generate a higher wealth.

Do you have any advice on where / how should I invest my money?

Thanks for your advice!

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    Would you need all the money for the house/land, or could you spend some on a house and invest the rest? – BrenBarn Jun 3 '14 at 17:58
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    A site suggests the average monthly income in Equador is $350, is this close to reality? $250K is a significant sum in a low cost area, and not so much in cities where rents are $2000 for a studio. – JTP - Apologise to Monica Jun 3 '14 at 18:04
  • @JoeTaxpayer: I was wondering the same. $250k may be enough to just put in the bank and live off for the rest of your days :-) – BrenBarn Jun 3 '14 at 18:05
  • @JoeTaxpayer Well, $350 is the minumum wage, I work in the tech industry and have my own small company, so the income is luckily higher than that ;) – Andres SK Jun 3 '14 at 18:16
  • @BrenBarn the cost of the terrain is 190k USD. That would leave me around 60k USD for starting the construction and having money for the next months (credit card expenses, etc). The construction would be aproximately 150k USD, but I don't need that amount right now, because it takes over a year to construct and buy the materials. – Andres SK Jun 3 '14 at 18:17
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Considering the historical political instability of your nation, real property may have higher risk than normal. In times of political strife, real estate plummets, precisely when the money's needed. At worst, the property may be seized by the next government.

Also, keeping the money within the country is even more risky because bank accounts are normally looted by either the entering gov't or exiting one.

The safest long run strategy with the most potential for your family is to get the money out into various stable nations with good history of protecting foreign investors such as Switzerland, the United States, and Hong Kong.

Once out, the highest expected return can be expected from internationally diversified equities; however, it should be known that the value will be very variant year to year.

  • Ecuador has a 5% tax when transfering money outside of the country. That would be 12,500 USD if I decided to move 100% of my savings. – Andres SK Jun 3 '14 at 21:53
  • Any finance institutions you could recommend for investments? – Andres SK Jun 3 '14 at 21:54
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    There may be ways to avoid that 5% tax. Even so, that's less than a year's worth of decent returns - could easily be worth it in the long run. – corsiKa Jun 3 '14 at 22:34
  • Consider #bitcoin, when transferring money. Educate yourself on risks involved. – vi.su. Jun 5 '14 at 6:28
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    @vi.su. Note that one of those risks is a fraud conviction for tax evasion. – Lilienthal Jan 8 '15 at 22:36
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Find a good financial advisor that is willing to teach you and not just interested in making a commission on your net worth. Talk to them and talk some more. Go slow and don't make impulsive buying decisions.

If you don't understand it then don't buy it.

Think long term - how do I turn this 250K into 2.5M?

Congrats on the savings!

  • i do have some small investments in Friends Provident portfolio. I also had a bad experience with US Pension Trust a few years ago, though. What I'm trying to find are new investment opportunities in this site ;) I don't know any good financial advisors in my zone. – Andres SK Jun 3 '14 at 18:31
  • "Think long term - how do I turn this 250K into 2.5M?" that's where I need some guidance. Any ideas on good investments? – Andres SK Jun 4 '14 at 3:20
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    I tend to invest and do my own research. I'm more conservative in my approach so I'm looking at Mutual Funds mostly and finding good growth ones with solid track records. But if you have the cash to buy real estate that could be a good long term investment as well. Gotta do your research and go slow though! – Valien Jun 4 '14 at 18:49
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You're off to a great start.

Here are the steps I would take:

1.) Pay off any high-interest debt.

2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises.

3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments, I would hesitate to put such a large percentage of your wealth in to real estate.

4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically.

5.) Invest in your business and yourself even more.

As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc.,

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A good answer to the question really depends on where you want to live, ultimately. Where you want to live pretty much dictates your investment priorities.

If you want to invest in "terrain" so you can build a house next to all the "cool," people in Guayaquil that should be your first priority. Your new wife may have an opinion on that matter, you should consult her. In real life, most people are less concerned about their absolute level of wealth than with "keeping up" with their friends, or other reference group. If you don't buy the "terrain," the danger is that in five years, it may go up three, four, five times and be out of your reach, even if your other investments do well on the absolute standard.

While it's fairly easy to invest the equivalent of $250K in Ecuadorian land, it's hard to invest that much in Ecuadorian stocks. If you want to buy stocks with that kind of money, it will be U.S., European, or maybe other Latin American, e.g., Brazilian stocks. That kind of asset allocation would tell me that you are thinking of leaving your country at some point.

If you're "undecided," a sensible allocation might be 50-50.

But in any event, first decide how you want to live your life, then adopt the investment strategy that best supports that life.

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