You might want to consider putting some of your portfolio to work in Colombia. Not only is investing abroad a lucrative idea, but taking a closer look at some of the countries that are showing new growth could be highly beneficial. Colombia is one of those countries.
Colombia’s economy has grown over recent years to be the 32nd largest in the world. GDP is at $385 billion, and per capita it’s grown to be about $8,000 USD. It’s been solid for the better part of this decade, and the major industries are oil, coffee, and, of course, tourism. Here are some of your choices for investing abroad in Colombia:
The Bancolombia is the largest bank in Central America and it operates all over the region. Shares trade on the NYSE and yield 3.8 percent.
Then, there’s the Carton de Colombia. This company is Colombia’s largest maker of boxes and packaging materials. This company was listed by Bloomberg as having a P/E ratio of 5.4 and a dividend yield of 6.85 percent. The trade value ratio is low at only 0.43, but this business is still a solid, low risk investment.
Let’s not forget that Colombia’s infrastructure is growing rapidly right now as well. The Fourth Generation road infrastructure program is the largest program of that type in all of Latin America. It operates by building on over 7,000 miles of pavement, concrete, rebar, and steel for building all of the roads Colombia could need over the next 10 years. However, it’s difficult to get involved in the Colombian market without making use of ETFs.
There are two Colombian ETFs. The first is the Global X MSCI Colombia ETF. Bancolombia is the largest holding with 18 percent of assets. The next largest is Grupo de Inversiones Suramericana with just over 9 percent of assets. Third is Ecopetrol with 6.6 percent of assets. It has 25 different holdings and charges a management ratio of 0.61 percent.
The second ETF is the iShares MSCI Colombia Capped ETF. It’s much smaller than the Global X ETF mentioned above, trading only 600 shares per day, on average. With a total of 30 holdings, Bancolombia comes out at the top again. It is the largest with 12.5 percent of assets, then comes Grupo de Inversiones Suramericana with 8.9 percent, and Inversiones Argos SA with 5.5 percent of assets. The management expense ratio is the same for this ETF, at 0.61 percent.
Colombia Real Estate
With the steadily growing economy, it can only be expected that the real estate market is also thriving for investment in Colombia. There’s also an influx of expat retirees that tend to invest in Cartagena or Medellin. Foreign investors can find help in determining real estate options in which to invest in by contacting Medellin real estate agent or a Cartagena real estate agent. They can help investors choose from condos, houses, vacation homes, rental properties, and commercial properties.
Choose your property investment and complete a purchase agreement to move forward with the process of buying real estate in Colombia. The agreement will allow the seller to transfer rights to the property, which then must be registered with the Public Instruments Registry Office. While you’re there, you can also complete the title acquisition. There won’t be any additional tax, legal, or financial burdens if you’re following the real estate and land planning regulations. If you choose to work with the Colombian real estate agents to make this investment, it can set you up with a management company to maintain your properties, which should also be helpful when making the decision to invest abroad in Colombian real estate.
While in its growing stage, Colombia is encouraging investment in some of its sectors. Those are currently: agribusiness, manufacturing, and services. If you choose agribusiness, you will have the opportunity to invest in biofuels, beef, dairy, horticulture, cocoa, and aquaculture. If you choose manufacturing, you can invest in automotive, cosmetics, building materials, metalworking, fashion, and plastics. Finally, if you choose the services sector, you can invest in software, outsourcing, private equity, hotel infrastructure, shared service centers, oil and gas, and energy.
Start Your Own Business
Always a great way to invest abroad, you could also choose to start your own business in Colombia. There’s an income tax rate of 15 percent, but no custom value-added tax or duty taxes. You can make an exemption for materials, inputs, and finished goods. You can even get income tax deductions and exemptions, depending on the nature of your company. Colombia is known to be one of the most pro-business countries in the world, so if entrepreneurship is your passion, this may be the best investment type for you.
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