USaid, an organization that promotes politically oriented projects that protect “democracy” pledged this week $19.8 million dollars to future plans in Ecuador.
The question that many have is “why”?… Put what you think in the comments below…
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During a meeting in the Mercosur, the executive secretary of the Cepal, Alicia Barcena highlighted the behavior of the Ecuador economy so far this year, increasing by 8.6%.
This doesn’t surprise me personally, Ecuador is a country on the move, most who have been here a few years can see big differences in development in certain areas.
The current government has been great building new roads and bridges which has stimulated national tourism.
Earlier this year when I was in China, I can tell you, many business in China are well aware of this growth rate and honing in on Latin America licking their chops… they know to grow their companies they have to “penetrate” emerging markets like that of Ecuador and South America.
Over the next 5-10 years the real action (and money to be made) will be in the emerging markets (Latin America, Africa, and Southeast Asia)… you don’t have to be the best, if you’re the first.
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According to a survey of 4,231 people all over Ecuador made by the newspaper Telegrafo, approval rates are high for President Correa at an astounding 76%.
I personally have seen a sharp contrast in who follows Correa and who is against him… simply put, the “haves” are against him, and the “have nots” are for him. You know before you even ask the perosn often who they are for. It’s true he has instituted many programs that protect the rights of the working class.
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This week on the Ecuador Insider’s Newsletter I showed you how you can profit investing in the Ecuador Stock Market.
The Ecuador stock market is still in diapers compared to what you may be used to in the States or Europe. But, it is an interesting alternative none the less. But there are many class to teach you more about stock marketing and investments, here is a thorough review. Most families in the States have the financial advisor, invest in IRAs, bonds, mutual funds, and even stocks. In Ecuador, it’s not like that.
Many people in less affluent nations have much fewer investment options than we do in the States, and are often fearful of investing money in things like a stock market.
Instead, they put their money in things like real estate, businesses and even cars, so that, primarily, so they don’t spend it.
But, although most are unaware, there actually is a local stock market that does offer some interesting investment options.
Requirements for investors
Have money. It doesn’t matter if you a foreigner or not, doesn’t matter if you bank in Ecuador or not. You can invest by simply showing your passport in a broker house. You can visit the MBoxWave website for more details on how to trade and make money. Similarly, You can start trading with Axia futures. The Training Programme is that the product of the collective knowledge and knowledge of the Elite Traders of the AXIA Community from round the globe. it’s skills-based and is made on the methodology of developing intraday Futures traders within the biggest markets within the world.
How to get started
First, you need to go to a broker, like the one in the investment department of the Banco Promerica on the corner of Amazonas and Colon in Quito. Walk into the bank and ask for the investing department (Say, “quiero invertir en la bolsa.”).
They can then explain your options and place a buy order for you for the stock of your choice. At the time of research a few months back they charged 1% commission plus a .09% stock exchange fee. The minimums usually start around $1000 but can be negotiated.
The buy order is then manually taken to the stock exchange where someone has to find a seller at the price you are willing to pay per share. For example, if a stock is trading at $4.50 a share, you could place a buy order at $4.30 and see if anyone out there is willing to sell at that price. Your buy (or sell) order will be valid for 5 days, if there are no takers, it gets nullified and you have to place another.
Stocks in Ecuador pay dividends and can also appreciate in sales price, similar to the earning methods of the stocks on the DOW.
Two of the most recognized and successful stocks on the Ecuador market are those of Supermaxi (La Favorita Corp.), and the National Beer Company (Cerveceria) of Ecuador. These companies have very little (to no) real competition in Ecuador, are very liquid with good cash flows, and have proven to pay out good dividends and value to their stock holders over time (anywhere from 5-30% annum more or less).
Also on the exchange are other large Ecuadorian companies, like several local banks, but their stock prices relatively stay flat and are a safer, more stable play.
A great place to see actual stock market prices, trends and stock figures, is the official site (in Spanish) of the market, bolsadequito.com.
Other investment options
Besides investing directly in stocks, there are other options.
One interesting option for some are buying “Obligaciones” or commercial papers on the stock exchange of specific companies who commit to giving you a set return on your investment. These work similar to CDs, and are set for 1,2, or 3 years on average and pay between 5-10% in set increments upon purchase.
My personal favorite is the CDs the local banks sell. You can start by buying one for 30 days at around a 4% annual interest clip. Obviously, with these, the longer you commit your money for, the higher % interest you will receive. Inquire about these options in your local Ecuadorian bank.
One option some don’t recommend is investing in local Ecuador government bonds, because they are paying around a low 3% and are very risky (think of the Ecuador Government like that friend of yours who always asked for money and never paid you back).
Investing in the Ecuador stock market is not for the faint at heart but can be heaps of fun. Buyer beware!
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The income tax system in Ecuador is pretty straightforward, unlike in the USA where Trump is starting to forego releasing his taxes and making it burden on many.
Every March everyone involved in commercial activity pays income tax “impuesto a la renta” based on the previous calendar year.
If you have a tax ID number “RUC” you will be liable for paying taxes, whether you be a sole proprietor or representing a corporation.
In Ecuador, as in the US, they use a sliding scale taxing a percentage of your earnings based on how much you earn.
In 2010, if you earned…
up to $8910…you pay $0 tax
$8910-11350…you pay 5% tax
$11350-14190…you pay $122+ 10% tax
$14190-17030… you pay $406+ 12% tax
$17030-34060… you pay $747+ 15% tax
$34060-51080… you pay $3301+ 20% tax
$51080-68110… you pay $6705+ 25% tax
$68110-90810… you pay $10963+ 30% tax
$90810-and up… you pay $17773+ 35% tax
You can legally deduct housing costs, health costs, clothing costs, food costs, and education costs with the proper, original receipts “facturas”.
If you are an employee, your only tax liability is the table stated above. If you own a business, in addition to the above income tax based off of earnings or profits “impuesto a la renta” you will have to pay an additional sales tax “IVA”, which is 12% of the total gross sales of your business.
Now, for all your business expenses in which you incurred paying sales tax yourself, you can write off that sales tax paid against the sales tax you owe, and pay the difference.
In Ecuador, if your gross sales are over $60000 in 1 year, you are required by law to keep detailed records of your accounting and affiliate yourself with the public organization called the IESS.
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