For years, investing in dollars has gained ground among Latin Americans. This is mainly because our economies are uncertain and sometimes it is necessary to put money in safer places. Historically, the dollar is that safe haven destination. Today, one of the best alternatives is the American real estate market.
Why diversify your investments?
Diversifying means spreading your resources among several investments. If one doesn’t work, the others lift it. Colloquially it is said: “Do not put all your eggs in the same basket”.
According to economist German Verdugo (2022), a well-diversified portfolio is one that includes several types of assets: real estate, stocks, fixed income, dollars, etc. But also the one that is clear about the duration of the assets and their commercial objective.
The goal of diversification is to decrease the risk of loss. Verdugo also proposes to explore new horizons. That is, if you put your money in only one country, you will be conditioned on what happens there. That’s why investing in dollars with homes in the U.S. makes sense.
Is it worth investing in dollars?
The U.S. financial system is the most robust in the world. The vast majority of countries have their reserves there. That makes the dollar the reference currency and, therefore, the most important.
To invest in dollars, one of the most promising ways is in real estate. Florida, for example, has not stopped growing and, for what it represents, it is one of the places with the greatest real estate potential.
According to the Association of Realtors (2022), housing prices again reached all-time highs. And you don’t see a slowdown. These are some of the advantages of investing in dollars in the real estate sector:
1. Profitability is fast
There are several ways to make real estate profitable in the United States. The classic is to buy and sell in the future. The advantage is that the land is valued quickly, which improves the rents collected. So while you decide to sell, your assets generate competitive rents as more people come to town.
2. The dollar grows against our currencies
According to a Bloomberg study (2022), except for the Uruguayan peso, all Latin American currencies lost ground against the dollar this year. Therefore, investing in dollars means receiving in a strong currency and spending in a weakened one. The profitability, in this case, is higher.
3. Investing in dollars takes advantage of a safe haven asset
When countries feel threatened financially, many turn to the dollar to stabilize. You can do the same. In this sense, you receive rents for your properties in the United States and, in this way, you shield yourself against local uncertainty.
4. Investment policies for foreigners are flexible
The United States wants more foreigners to invest there. Therefore, the vast majority of policies focus on these capitals having better conditions: fewer procedures, cheap credits, less income taxes (in the case of Florida), and so on.
Why invest in dollars with real estate?
There are several ways to invest in dollars. Why is it a good idea to do it through real estate?
Unlike stocks, cryptocurrencies or bonds, real estate has proven to be firm and stable ground in the face of uncertainty. This market represents a vital human need. In addition, volatility is not so aggressive and land appreciates over time thanks to surplus value.
The great advantage for Latin Americans is that they receive periodic rents in a strong currency. In other financial assets, such as stocks, periodic income or dividends depend on board decisions and company results. Therefore, they are not always constant or fixed.
In conclusion, you can diversify and invest in dollars with real estate, in a controlled way and without so much risk. This is achieved by creating a diversified portfolio with the help of an expert in the field. At PFS Realty we know the real estate market in Florida and understand its potential. If that interests you, do not hesitate to write to us.
References:
Association of Realtors (2022). Home prices hit an all-time high in South Florida in May. Infobae. https://www.infobae.com/america/eeuu/2022/06/22/los-precios-de-la-viviendas-llegaron-en-mayo-a-un-maximo-historico-en-el-sur-de-la-florida/
Bloomberg (2022). Ranking of the strongest and weakest currencies in Latin America, according to Bloomberg index. Unprofessional. https://www.iprofesional.com/economia/365216-ranking-de-monedas-mas-fuertes-y-debiles-de-america-latina
Executioner G (2022). Diversifying is more than putting eggs in different baskets: expert. Portfolio. https://www.portafolio.co/negocios/inversion/diversificar-es-mas-que-poner-huevos-en-diferentes-canastas-experto-562024