Investment Opportunities

According to Risk
(1) Certificates of Deposit in dollars through a state-run bank paying around 6% annually. Advantage: Your money is insured by the Costa Rican government and tax-free interest.

(2) Real Estate - Advantages: If purchased at the right place and in the right location you are assured your property will double or triple over the next ten years. Disadvantages: Overpaying or purchasing in a bad location. See the section in this chapter about investing in Costa Rican real estate.

(3)Certificates of Deposit in colones (local currency) from a government bank. Advantage: Pay around 20% annually and are insured. Disadvantage: Mini-devaluations give you a net annual yield of around 10% at the most. If there is a huge devaluation you will lose a lot of money. This hasn’t happened since 1982. The mini-devaluations exist as a measure to prevent large megadevaluations.

(4) Personal Loans on Secured Property in dollars or colones. Advantage: Can earn up to 3% monthly and hold a note on the property. Disadvantage: If borrower defaults you might have to go to court.

(5) Certificate of Deposit from a private bank in an offshore account. Advantage: You can earn a little more interest than through the state run banks and investment is tax-free. Disadvantage: Your money won’t be insured. Banco Interfin and Scotia along with many others offer these types of investments. It is best to visit several private banks and to shop around for the best interest rate.

(6) Starting a Foreign-Based Business. Advantages: You don’t have to depend on the small local economy. Dependence on a larger market.You have a low U.S. tax liability if you use a Costa Rica Corporation. An example of this would be an export or internet business.

(7) Starting a Local Based Business. Advantages: There are a lot of opportunities for entrepreneurs here. It is highly advisable to have prior experience in the venture you undertake. You should do a thorough feasibility study. Disadvantages: Not understanding the local economy, not doing your homework and thinking that what works abroad will work here. Only three of ten foreigners succeed here. See the section in this chapter for more details about going into business in Costa Rica.

(8) Offshore Mutual Funds. Advantages: All the wonderful benefits of investing offshore with the peace of mind knowing your assests are held safe and secure with a major NewYork Stock Exchange firm. By moving liquid assets offshore you also achieve substantial protection from illegitimate creditors, financial predators and limit you tax liability. Disadvantages: Although mutual funds have more built-in safeguards than regualr stocks, they are still subject to fluctuations in the market.

(9) Private Finance Companies. Advantages: Interest rates up to 35 or 40% annually. Although we rate these companies last in terms of risk, one or two have been around for many years and we have never heard of anyone losing their money. They really have been the best investments along with real estate over the last fifteen years. However, remember the higher the rate of return the larger the risk. Please see the section in this chapter on how these companies work. Disadvantage: If the government went to a dollar economy, which is highly unlikely, these companies could no longer offer this type of investment.