safe investments in the DR?

[ronks]

I have been reading the DR1 posts for years and have always been interested in how expats have fared investing in CDs or other instruments in the DR. When I first tuned into DR1 in 2003, there had been a huge bank blowout due to corruption, etc. and people lost a lot of money. And this was supposed to be one of the oldest, largest, most reputable banks in the DR. I do not remember the name of the bank or the consequences for the corrupt bank officials or the people who lost their money. However, this left me with the impression that no investment is secure in the DR; that corruption runs so deep that only investing in small amounts is akin to gambling and only to risk what you can afford to lose.

Now we see the implosion of the U.S. economy and insolvent banks going down daily so the security of all banks is thrown into question even in other countries. But since I am considering living in the DR, I want to know about people's experience here. In the cost of living thread there is the mention of ANOECA investment in a U.S. dollar account @ 14%. I know nothing about this bank or investment group, but do expats really invest in these? And if so, to what result? I also realize that people make distinctions between peso accounts and dollar accounts, so what do people think about the viability of both. For example, do people prefer peso investments over dollar investments? And are there Euro investment CDs or accounts?

The bottom line comes down to how much are you willing to risk. If your retirement is dependent on you living off the interest of say $300,000 US investment, then where would you put your money if you wanted to invest in the DR? I should mention that I met one expat by the name of Scott (Escot) who, at the time, was big in investing in the DR and said that he had never lost a penny. But I think he invested in real estate, not in CDs or other intsruments. I am very courious to see what are the experiences of other expats.

 

[Black Dog]

Windeguy is right when he says "don't put all your eggs in one basket" and that stands true in any country in the world!

There are some bargains to be had in real estate right now and you can produce rental income, however that wants very careful consideration because it's not all plain sailing and so, again, it should only ever form part of a portfolio!

 

[ronks]

While I appreciate your investment advice, what I am most interested in are stories from those expats who have invested, not in real estate, but in bank notes like CDs or other instruments in the DR. What banks did you invest with, what returns, preferences of peso, dollar or Euro investments, etc.? There may be an overwhelming amount of evidence that this type of investment in the DR is not worth the risk, good economy or bad. Let me know. Thanks.

 

[Chip]

While I appreciate your investment advice, what I am most interested in are stories from those expats who have invested, not in real estate, but in bank notes like CDs or other instruments in the DR. What banks did you invest with, what returns, preferences of peso, dollar or Euro investments, etc.? There may be an overwhelming amount of evidence that this type of investment in the DR is not worth the risk, good economy or bad. Let me know. Thanks.

Send a pm to SantiagoDR, he knows all about this I believe.

 

[J D Sauser]

First, I think one would be well advised NOT to invest into a third world foreign country BEFORE having a very, but very good extended and in depth ON-SITE personal experience in this country, meaning knowing the daily ins & outs, politics, tricks and traps or the country and having gained a good feel for it's economy and daily news. In other words having lived here, understanding the local language for at least 6 months BEFORE "investing" one tenth of your net worth!

Some countries like these have and do indeed at times seem to be offering good short to medium term investment opportunities. I remember times, when Spain was offering 14% on Peseta savings accounts... and the Peseta even was quite stable just before being locked in with the Euro. Ecuador about 15 years back would pay up to 13% on a 1 year USD CD. Many made serious easy money until the government suddenly surprised everyone freezing all local USD account when they needed hard cash for their "dolarizing" project... ooops, some lost ALL!
Currently the DR is trying to lower interests in general. One bank is just currently offering 9% interest mortgages in DOP! This is almost unseen! One would almost venture to fantasize with the idea that the best "investment" could be to take out a mortgage, since it's likely that the DOP will continue it's slide down, which may, calculating in USD or EUR, cut that 9% in half effectively. On the other hand, local banks do currently not offer attractive rates for foreign currency deposits, especially if one factors in the historically documented risks. Higher "returns" in local DOP can easily be offset by currency fluctuation and rampant inflation. Bank deposits and investments are NOT insured. Most if not all local banks, while regulated as such, are private companies with limited liability. Few banks have government links or are rumored to be owned by the government, which as some would like to believe, would suggest that they would be "insured" or bailed out by the government in case anything would happen.
"Investment" companies like ANOECA or RUSSA [spelling?] are private companies usually owned by shareholders, one person or a (local) family. They are NOT banks and thus not regulated as such and your principal is NOT insured in any way. While many of these companies seem to have developed a good historic record of paying out what is closer to a 10% return, compounded or paid out on a monthly basis, the inherent risks of entrusting a large amount of money to a private limited liability company ought to be kept in mind very clearly.

Real Estate still would seem the investment of choice for most. Yet, many have lost and keep loosing there too. Shady deals or titles, corrupt system including corrupt lawyers capable of siding with your opponent, bad construction qualities and lack of appropriate technology as well as lack of adequate land preparation and infrastructure, over pricing and surprisingly high maintenance costs and condominium fees are just few of the culprits which come to mind and are well documented on this forum thru various and repeating threads.
Again, one of the main keys to a probable success, seems to be extensive ON-SITE experience, TIME (patience).

Really, I think that no one should commit any funds to this or most any foreign country while still being in the "honeymoon" phase with that country and location. Most who did not abide by that seem to have a very low success rate.

... J-D.

 

[J D Sauser]

As to banks, I should have added that Banco Central is the State bank and thus probably the safest bank to entrust fund too. BanReservas is the one bank said to have government ties and also handles some of the gov's tax and fee recollection. Yet, I have not seen a official printed claim that deposits would in anyway be gov. insured, which does not mean there is not.

... J-D.