Legally Investing in Mexico

Published May 17th, 2022

There are many forms of investing in Mexico that can be beneficial, in terms of not only having your savings working for you but also having your finances more accessible.

We have talked about investing in “tangible properties” or real property in Mexico with retirement funds, pension resources, and self-directed IRAs in previous articles; today, let’s talk about federally insured “pagarés” bonds.

The word “pagaré” in Spanish means literally “I will pay.” To understand a pagaré, it’s important to know that checks in Mexico are payable upon presentation—regardless of whether they are post-dated or not.

A pagaré then is a type of check that emphasizes the date it can be cashed. These then, are official post-dated checks.

When we discuss a pagaré in terms of a fiduciary investment, it’s understood that we purchase a “bank instrument” or bond at a given price and that the bank will pay a predetermined interest rate on this bond for a predetermined amount of time.

For example, if we were to purchase a pagaré for 28 days at 7.00% annualized interest for any amount ranging from US$100 upwards, the bank at the maturity of the bond would deposit “cash” the bond back to us and take care of all the taxes as well as pay the appropriate interest owed.

This can and is an extremely safe way to have your resources working for you even when you are not “using” them. Typical bonds in Mexico can be purchased for minimal amounts at higher than U.S. interest rates for terms of as little as 28 days and up to 90 days, 6 months, or 1 year. Interest rates tend to go up with the term of maturity extension.

For example, the Mexico 10-year bond yield was 9.11% on Tuesday, May 3, 2022, according to over-the-counter interbank yield quotes for this government bond maturity.

The U.S. dollar has been the reference currency in all countries since the end of World War II. It is currently the most traded currency daily, the most used in the tourism industry, and even the most used in financial operations. However, as happens with other currencies, handling dollars in cash becomes very complicated, especially when crossing borders, going through customs, or just walking down the street with cash, not to mention the security issue.

For this reason, having a bank account is important for all of us, because it allows us to have our money in a safe place and thereby avoid the negative effects of all kinds of incidents that may occur.

Depositing money in the bank prevents people from being exposed to various risks that result in total or partial loss of the money, such as the occurrence of fires, floods, and robberies, among others.

Just like any Mexican citizen, foreigners who wish to open a bank account in Mexico must present a series of documents to identify themselves and prove a series of essential requirements such as having a residence visa, whether temporary, permanent, or tourist. Therefore, having a bank account either in pesos or dollars will be of great help to manage your money inside and outside the country, while having the support of doing it in the currency that can offer you more security at a global level.

Foreign currency accounts have become very popular among individuals as well as in the business world, providing the possibility for transferring and depositing money by companies or individuals who need to commercialize goods or services in other currencies.

To apply for a bank account, you need to submit an application for opening a bank account with the following documents:

• – Valid passport
• – Immigration form (permanent, temporary, or tourist)
• – Two proofs of address not older than 3 months. They can be proof of payment for electricity or water bills, among other documents that the bank institution may require.

All banks in Mexico offer the ability to open an account according to your needs or for the benefits that they provide, allowing our guest community the facility and opening so that you can have a bank account in any and all of the banking institutions of your preference.

Remember, the security of your financial well-being is very important inside or outside the country.