Investment Opportunities

Investment opportunities according to risk

(1) Certificates of Deposit in dollars through a state-run bank pay about
2 percent annually. That amount dropped from over 4 percent because
of the financial crisis in the U.S. Advantage: Your money is insured by
the Costa Rican government and earns tax-free interest.

(2) Real Estate Advantage: If purchased at the right place and in the right
location, you are assured your property will double or triple over the next
10 years. Some beach areas such as the Central and Southern Pacific are
good investments if you look for value and don’t pay overinflated prices.
Real Estate In vestment Trusts are also a good bet. Disadvantages:
Overpaying or purchasing in a bad location can hurt your investment.
See the section in Chapter 3 and this chapter about investing in Costa
Rican real estate.

(3) Certificates of Deposit in colones (local currency) from a government
bank. Advantage: Pay annually and are insured. Disadvantage: If there
is a huge fluctuation, your principal and interest will be worth less than
when you invested.

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

(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 will
not be insured. Several private banks offer these types of investments. It
is best to visit different banks and shop around for the best interest rate.

(6) Starting a Foreign-Based Internet Business. Advantages: You don’t
have to depend on the small local economy. Dependence is on a larger
market. You have a low U.S. tax liability if you use a Costa Rican or
Panamanian corporation. An example of this would be an export or
Internet-based business. Disadvantage: Not doing your homework and
choosing the wrong 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. On average, only three out of 10 foreigners succeed here for
a variety of reasons including a lack of disposable income by the locals.
There is a section in this chapter with details and advice about going into
business in Costa Rica, including success stories and failures.

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

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