Investing Close To Home

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The most obvious places to invest abroad are those nearest home—Canada and Mexico. Both have their advantages and disadvantages, but it might make more sense to invest in Canada.

The language is the same as that of the United States, the laws affecting business transactions are roughly similar, and the ethical standards of the country are most similar to ours. Furthermore, Canada does not have a history of devaluation of the currency as against ours as does Mexico, nor has it expropriated American property.

In 1959 the Canadian dollar was quoted at $1.05 and in the summer of 1961 at $.97. The American investor would thus have lost 8 percent of his investment in that period. This was not, however, an actual devaluation. It was simply exchange fluctuation that takes place from day to day—only this time it was extreme.

These are the prevailing rates in Canada as of mid-1961 as set forth by The Royal Bank of Canada through its American office at 68 William Street, New York 5, N.Y.:

Canadian Chartered Banks: Canadian Fund Deposits - On Savings Accounts 2.75 percent, interest payable half yearly on minimum quarterly balance.

Fixed Term Deposits - Minimum $100,000, varying rates from 2.75 percent for a minimum of 30 days to 3.5 percent for 364 days.

Canadian Trust Companies: Canadian Fund Deposits - Savings Accounts rates varying from 3 percent to 4 percent, interest payable half yearly on minimum half yearly balance.

Fixed Term Deposits - Minimum $5,000, varying rates from 2.75 percent for a mini mum of 30 days to 4.5 percent from 3 to 5 years.

Canadian Finance Companies: Short Term Notes - Minimum $5,000 rates varying from 2.75 percent for a minimum of 30 days to 3.5 percent for 364 days.

Mid-Term Notes - Minimum $5,000, rates varying from 5 percent to 5.75 percent for terms from 1963 to 1967.

Among brokerage firms handling first and second mortgages is the Dean Realties Company, 423 Mayor Street, Montreal 2, Canada. In the spring of 1961 they were quoting rates on residential first mortgages of 11.2 percent and on second mortgages of 19.5 percent. Occasionally commercial properties were covered by such mortgages. Funds are placed in trust by the investor with a notary who disburses to the property owner once the deed of loan has been properly executed.

In Mexico mortgages are not the best investment for non-Mexicans because of a number of complications and red tape. Industrial and commercial loans sometimes yield 10 percent or even 11 percent, but they have to be administered locally, and there is another form of investment peculiar to Mexico which is much more convenient for non-Mexican investors. There are a number of financial institutions, which pay very high rates and are relatively safe for Americans to invest in.

These are mortgage banks, which are very similar to our building and loan associations, although principal deposited is not guaranteed, as is the investment in the American building and loan associations. These mortgage banks are called financieras and are subject to regulation under law by the National Banking Commission and the Bank of Mexico.

Starting your foreign portfolio with investments close to home will allow you to keep a close eye on your money. Before investing in any venture, however, it is vital to ensure they represent a valid entity. Be wary of scams and make sure to invest in trusted institutions with good reputations -- it can keep you from being burned.

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