Some Immigrants Maintaining Economic Ties to Their Families
As an immigrant, it can be difficult to completely sever ties to your family, friends and country. Some maintain business relationships and homes as second residences, often as an alternative plan if life in the U.S. doesn’t work out. But it’s not easy. The currency exchange between pesos and dollars can have a significant impact on family finances while maintaining two locations.
The reserve currency of the world is still the U.S. dollar. Yes we’ve printed money, kept interest rates artificially low and rolled up a debt of nearly $20 trillion, but we’re still the world’s economic powerhouse.
The currency exchange between the U.S. and Mexico is currently around 17 pesos to 1 dollar. Sending U.S. dollars back to Mexico has some real purchasing power south of the border. Watch the interview featuring popular bi-lingual speaker and financial consultant Karina Gutierrez where she talks about economic ties to immigrant homelands.
Many who immigrate to the U.S. from Mexico, Central and South America have a desire to maintain some form of economic tie to their homeland. Traditionally, this may have meant owning a share of a business or maintaining a second home in their home country. While this loyalty comes from a good place in the heart, it has been difficult for this approach to be financially successful. It’s hard to manage a business or home remotely, and currency devaluation in Mexico and in most Latin American countries has meant ownership of assets in these areas has been a losing proposition.
As many Latin Americans know, the currencies of Mexico and of South America have not fared well as of late, meaning bank deposits and investments held in their home country have been losing their purchasing power in the U.S. For example, in the last year, the Mexican peso has lost almost 30 percent of its value. Latino investors in the U.S. may have holdings in a portfolio of companies from the major Latin American stock exchanges. In many cases, this portfolio could be designed to emphasize their home country to an even larger degree.
There are instruments available today that are hedged against the losses of currency that have been the order of the day for Latin American countries. This means an investor could own a portfolio of major Latin American companies while greatly reducing the risk their investment would lose value due to currency devaluation. We’re all living in a global market that is continually shrinking where we can actually see a world currency in our lifetime.
Syndicated financial columnist and talk show host Steve Savant interviews popular bi-lingual and financial consultant Karina Gutierrez on Hispanic Culture and Money.
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