Serving the Quantitative Finance Community

 
Spedka
Topic Author
Posts: 1
Joined: April 23rd, 2018, 1:47 pm

Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 1:57 pm

I'm sorry if this is not the correct place to post this, but I'm in need of some help.

I recently graduated from university here in Mexico. I found a decent entry-level job (for Mexican standards) where I'm getting paid $15,000 MX pesos (around $900 USD) per month.


I live at home, have no student debts and have very low expenses, so I save most of my earnings and have no short or medium term need for this money. I currently have the equivalent of $4,000 USD in savings and it's adding up each month.

I want to safeguard my money from currency volatility. The Mexican Peso has lost around 50% of its value in the last 10 years with no indication of this trend stopping, in fact, it'll probably get worse in the next few weeks as Mexican elections are coming up and the front-runner is not considered to be business friendly at all.

As you can see, holding Mexican pesos is akin to losing money, which is why I need to find a way to turn my savings into U.S. Dollars and ideally have them paying interest in some manner.

My idea was to open a bank account with an online bank service like Chime or Simple that don’t charge nearly any fees. I'd deposit my money into this account as US Dollars, and then I'd make use of the savings account they provide to transfer most of my money there and earn some interest at the very least.

The problem is I can't apply to any of these online services since I'm not a US citizen (At least I'm not aware of one made available outside the US). And I'm not even sure this is a good option.

I'm mostly at a loss as to which options I, as a Mexican citizen, have to safeguard and invest my money in US Dollars and if there are options, what my best bet would be. As you can tell, I'm a complete novice regarding all things investing. The only thing I'm sure about is that I do not want to hold MEX pesos.

I'll be massively grateful for any direction.
 
User avatar
ppauper
Posts: 11729
Joined: November 15th, 2001, 1:29 pm

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 2:06 pm

I know some of the US banks close to either the Mexican or Canadian borders do let Mexicans or Canadians have accounts
 
User avatar
tags
Posts: 3159
Joined: February 21st, 2010, 12:58 pm

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 2:11 pm

My idea was to open a bank account with an online bank service like Chime or Simple that don’t charge nearly any fees.
It looks like a bold statement to me. I mean how do transferring MXN to that USD account actually cost all included (fees, rates, administration, ...)?

Mexican elections and risks associated with NAFTA, I agree.  For what forecasts are worth, HSBC sees USDMXN at 19.50 from 3Q18 onwards. 
 
User avatar
outrun
Posts: 4573
Joined: January 1st, 1970, 12:00 am

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 2:52 pm

You can open an account at interactive brokers. then either deposit to a USD account or trade USD/MXN products.
 
User avatar
Cuchulainn
Posts: 20203
Joined: July 16th, 2004, 7:38 am
Location: 20, 000

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 3:21 pm

I want to safeguard my money from currency volatility. 

Currency swap? But the amount is small fry. 
It will just cost you money. Keep your money in Mexico.
 
User avatar
Alan
Posts: 2957
Joined: December 19th, 2001, 4:01 am
Location: California
Contact:

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 5:53 pm

You can open an account at interactive brokers. then either deposit to a USD account or trade USD/MXN products.
I second this advice. I have not used IB, but they have been around for a while and It looks from here that if you are 25 or under, you can open an IB account as a  non-US resident with the equivalent of USD 3000 or less. It is very important that you make sure that wherever you open your USD-based account, the firm is covered by SIPC (That means if the firm fails, your money is protected). Then, once your account is open, you could buy some US Treasury bills or notes, which will protect your principal (in USD terms, of course, and assuming you hold these securities to their maturities).  

p.s. Of course, make sure that there are not any recurring fees or charges that would eat away at your principal. For example, you might tolerate a yearly fee that would consume your annual interest income, but not anything beyond that.
 
User avatar
Cuchulainn
Posts: 20203
Joined: July 16th, 2004, 7:38 am
Location: 20, 000

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 7:49 pm

You can open an account at interactive brokers. then either deposit to a USD account or trade USD/MXN products.
I second this advice. I have not used IB, but they have been around for a while and It looks from here that if you are 25 or under, you can open an IB account as a  non-US resident with the equivalent of USD 3000 or less. It is very important that you make sure that wherever you open your USD-based account, the firm is covered by SIPC (That means if the firm fails, your money is protected). Then, once your account is open, you could buy some US Treasury bills or notes, which will protect your principal (in USD terms, of course, and assuming you hold these securities to their maturities).  

p.s. Of course, make sure that there are not any recurring fees or charges that would eat away at your principal. For example, you might tolerate a yearly fee that would consume your annual interest income, but not anything beyond that.
Personally, I would not do this for a number of reasons 1) American system has all that paperwork, 2) Trump comes up with law to tax Mexican accounts in US. Not worth the hassle. And each state taxes shares differently and it's a hassle to get your money. etc. etc.
 
User avatar
bearish
Posts: 5180
Joined: February 3rd, 2011, 2:19 pm

Re: Recent grad looking to safeguard his earnings and invest (MEX)

April 23rd, 2018, 11:04 pm

Have you (OP) looked into establishing a USD account at a local Mexican bank? A bit of internet search suggests that this is a thing, but most of the English language advice is squarely directed at ex-pats. Maybe worth checking out.