During our countdown to moving to Ecuador, Hubby and I have discussed a number of different methods of “investing” with regard to our impending residency visa.
Since we are not yet in our 60’s, we are not yet social security age, and we will be existing on our investments: IRA’s, 401K’s that will become IRA’s after our retirement, an annuity (that we started before 401k’s were the “pension” of most employers) and a couple of small (tiny) pensions that we will be able to receive in our mid 60’s. We have calculated that we can live quite nicely on the investment income this “portfolio” will be generating – and even if we dip into some of the principal, we’ll be alright.
Then we have our house, which will be paid off by next summer. We can rent it out (rentals are in demand in our area) or we can sell it (sales prices are not bad, but not where they were a few years ago). Both options will either give us $$ for investment or $$ for income.
We have decided that we do not want to purchase land or a home for at least the first year or 2 that we are living in Ecuador. We don’t want to make a snap purchase, and we aren’t sure yet exactly where we want to be permanently. We want to “test drive” the neighborhood and even the building, first.
For a residency visa, we must show proof of either a monthly income ($900 for one person plus one dependent) or we must invest $25,500 ($25,000 for one person plus $500 for one dependent) in an approved Ecuadorian bank, with a CD deposit for a minimum of 3 years.
CD’s in Ecuador are making fabulous interest, anywhere from 8% to 10.5%, depending on where you invest the cash. Certainly much more attractive than the puny 1 or 2% paid here in Texas. However, in the years that we have been coming to Ecuador, banks have been known to crash, default, go belly up, whatever it was called at the time – but it meant that investors’ money was lost. Ecuador’s government has now “guaranteed” deposits up to $25,000 so I’m feeling a bit better about investments in Ecuador banks, but still. The memory lingers, particularly when you hear stories recently about runs on banks simply because of a “rumor” that may or may not have been true.
Our latest thoughts have run to investing in an immediate annuity. I happen to be an insurance agent, and while I have never sold any of these, I am familiar with how they work. And I could sell it to my hubby myself, thereby keeping the commission in the family. I googled “immediate annuity paying $1000 a month” and was directed to http://www.ImmediateAnnuities.com where I input a few details about hubby….with my desired payout and it gave me many options.
For an investment of $53,440, I can buy a 5 year annuity that will guarantee a payout of $900 per month for 5 years, for a total of $54,000. Or invest $100,559 to receive the same payout of $900 monthly for 10 years. Of course, your investment MAY pay out better, depending on the underlying company’s investments and they type of vehicle you purchase. Don’t forget that I would also get a nice commission on this sale.
Or we can invest in a three year CD that pays out at least 8% annually…$25,500. That’s $2040 per year that the CD will earn in interest, which of course can be withdrawn to be spent.
What to do, what to choose. Anybody want to weigh in on suggestions for us?