Paraguay V Argentina, Lifestyle And Taxes

[steveinbsas]

No Argentine is going to do any kind of investment for a 2% per year when the bank, the stocks or the bonds are paying a lot more. For example, the lebacs pays 22%.

https://igdigital.co...n-su-atractivo/

Plus the inflation is 30/40 percent in usd.

Tres Picos used the figure of 2% when referring to ROI (Return On Investment) in the second sentence of this post:

Well, 2% on assets per year is a complete killer. My figure of 40k/year comes from a reasonable albeit conservative 2% ROI on a 2M portfolio (including real estate, stocks, metals, etc.).

In the first sentence he was referring to the bienes personales tax which another member erroneously posted was 2%.

The other member corrected the typo but not before Tres Picos calculated that a bienes personales tax of 2% on his investments of $2 million USD would wipe out a big chunk ($40,000 USD) he was hoping to live on.in Argentina.

Since Tres Picos is only getting a 2% ROI and Argentine banks are paying so much more than 2% and the dollar is almost stagnant, a reasonable alternative might be to convert dollars that will eventually be spent in Argentina to pesos and invest those pesos in Argentina at the much greater ROI .

 

[Rich One]

Tres Picos used the figure of 2% when referring to ROI (Return On Investment) in the second sentence of this post:




In the first sentence he was referring to the bienes personales tax which another member erroneously posted was 2%.

The other member corrected the typo but not before Tres Picos calculated that a bienes personales tax of 2% on his investments of $2 million USD would wipe out a big chunk ($40,000 USD) he was hoping to live on.in Argentina.

Since Tres Picos is only getting a 2% ROI and Argentine banks are paying so much more than 2% and the dollar is almost stagnant, a reasonable alternative might be to convert dollars that will eventually be spent in Argentina to pesos and invest those pesos in Argentina at the much greater ROI .

Such as LEBACS that pay 22 %

 

[MorganF]

Tres Picos,

The pattern of his thread seems to be the following: you thinking you can live in BA on a certain budget because you've read on the interwebs that those are accurate budgets. Then everyone on the thread comes down on you, saying that your numbers are not realistic. But then you seem to not reading that because, you adjust the numbers by a tweak here, a tweak there -- and the cycle repeats itself. I would argue: it makes more sense to trust the experience of people on the ground than the numbers in newspapers.

Mathematically, I would argue that there is a huge standard deviation in everything in Argentina. So -- fictional example -- maybe the average restaurant in Argentina costs $x pesos for dinner, and that means that (remember the middle class is relatively small compared to that of a first world country although still big compared to much of LatAm) in the rich parts of the city, a dinner hypothetically will be $5x and in the poorer parts it will be $0.5x and these together average out to $x. So to hit your numbers, you need to live in a really really really cheap area, which puts you squarely into third world poverty land. And are you suuuuure you would want to choose to live like that? I'm sure my housekeeper pays a fraction of what I do when I go out, but I can tell you stories about how she lives...

Therefore: one of the reasons why everyone is arguing that it is hard for you to hit these numbers is because everyone is assuming you don't want to live in Villa 31 even if on paper, "wow - so cheap there - and you're right by Retiro and Recoleta!"

Conclusion: most people look at averages. But we also need to look at standard deviations as well, to get a more reasonable understanding of the distribution curve. Of course we could map the curve more granularly: maybe it's not a normal distribution but a Poisson distribution with a thick tail etc etc -- but who actually wants to create a complex and potentially accurate model when instead we could suffer from diarrhea of the mouth posting online

Morgan

 

[Tres Picos]

Basic basic no imported prods. no filet mignon , shopping on discount days, using credit card discounts, saving coupons, 2x1 days... jejej no ice cream $ 18,000 pesos per month a rough guess. Lots of staples and Carbos, No huge steaks or barbies, Lots of tuna fish casseroles and potatoes au gratin, Risotto milanese. Bread Pudding .

Unless you go to the Central Market 15 kmts away

Okay, 18k is what I have. Certainly shopping would be done at the central market. I just used the supermarket figures as a rough guide.

 

[Tres Picos]

Tres Picos,

The pattern of his thread seems to be the following: you thinking you can live in BA on a certain budget because you've read on the interwebs that those are accurate budgets. Then everyone on the thread comes down on you, saying that your numbers are not realistic. But then you seem to not reading that because, you adjust the numbers by a tweak here, a tweak there -- and the cycle repeats itself. I would argue: it makes more sense to trust the experience of people on the ground than the numbers in newspapers.

Mathematically, I would argue that there is a huge standard deviation in everything in Argentina. So -- fictional example -- maybe the average restaurant in Argentina costs $x pesos for dinner, and that means that (remember the middle class is relatively small compared to that of a first world country although still big compared to much of LatAm) in the rich parts of the city, a dinner hypothetically will be $5x and in the poorer parts it will be $0.5x and these together average out to $x. So to hit your numbers, you need to live in a really really really cheap area, which puts you squarely into third world poverty land. And are you suuuuure you would want to choose to live like that? I'm sure my housekeeper pays a fraction of what I do when I go out, but I can tell you stories about how she lives...

Therefore: one of the reasons why everyone is arguing that it is hard for you to hit these numbers is because everyone is assuming you don't want to live in Villa 31 even if on paper, "wow - so cheap there - and you're right by Retiro and Recoleta!"

Conclusion: most people look at averages. But we also need to look at standard deviations as well, to get a more reasonable understanding of the distribution curve. Of course we could map the curve more granularly: maybe it's not a normal distribution but a Poisson distribution with a thick tail etc etc -- but who actually wants to create a complex and potentially accurate model when instead we could suffer from diarrhea of the mouth posting online

Morgan

Well, I didn't just tweak it. I don't see anyone arguing. My original numbers were tentative, I got feedback, updated, and now they're about right.

I certainly would be staying somewhere cheaper. Semi-rural, well out of the city. Anyhow, the primary difference between COL in Villa 31 and a nice area is rent and eating out. Neither are factors for me.

Anyway, I am realizing that despite its attractiveness to me, Argentina might be out of reach due to the high cost of living, insecurity, government intrusiveness (e.g. aduana), and tax system. Also, that horror story on the revoked citizenships indicates its legal system is capricious.

 

[bobsnowpuppy]

I've been reading the past few days as this thread has progressed. What I don't think that OP understands is that 30 to 40% inflation a year will outstrip whatever he earns on his 2 million dollar investment, period. With the current suppression of the value of the dollar to the peso here, you cannot count on recovering in that way.

edit... evidently you've just come to that same conclusion from what you posted just as I hit send

 

[Tres Picos]

Tres Picos used the figure of 2% when referring to ROI (Return On Investment) in the second sentence of this post:




In the first sentence he was referring to the bienes personales tax which another member erroneously posted was 2%.

The other member corrected the typo but not before Tres Picos calculated that a bienes personales tax of 2% on his investments of $2 million USD would wipe out a big chunk ($40,000 USD) he was hoping to live on.in Argentina.

Since Tres Picos is only getting a 2% ROI and Argentine banks are paying so much more than 2% and the dollar is almost stagnant, a reasonable alternative might be to convert dollars that will eventually be spent in Argentina to pesos and invest those pesos in Argentina at the much greater ROI .

My assets are in a host of different currencies and instruments, not USD. Getting more than 2% ROI after taxes and inflation anywhere in the world is tough and it has nothing to do with the currency. LEBCAS is paying 22% because the inflation and risk are so high. There is no free lunch.

Say at the start of 2017 you convert some assets to ARS and invest 10M ARS in these things (banks, stocks, bonds, etc.) that Bajo says you can get ~ 20% return. Inflation is at 18%. End of year you've gained 2M and your portfolio is now around 12M. I don't know how the tax system in Argentina works but if it's like in most countries, they will tax you on imaginary income, i.e. the nominal gains. Say that the income tax rate is 15%. You pay 300k in income taxes and then say another 0.75% for personal bienes of 75k (hopefully they use the valuation at the year beginning rather than the year end). After paying all taxes your portfolio is 11.65M or in inflation adjusted ARS, 9.87M. You've lost 130k ARS, forget about making 200k ARS (2%), and good luck with 400k ARS (4%) which is apparently the ROI I actually need.

Of course the ROI wouldn't be anywhere close to 20%. If so, all kinds of foreign investment would be rushing in since the global ROI is so low. There are currently tons of financial instruments yielding *negative* returns!

 

[Tres Picos]

I've been reading the past few days as this thread has progressed. What I don't think that OP understands is that 30 to 40% inflation a year will outstrip whatever he earns on his 2 million dollar investment, period. With the current suppression of the value of the dollar to the peso here, you cannot count on recovering in that way.

edit... evidently you've just come to that same conclusion from what you posted just as I hit send

AFAIK, inflation increases the COL because salaries tend to lag behind price increases. Currency rates do not lag. If your earnings come not from salary in the local currency but from investments such as stocks and real estate, inflation should be irrelevant.

 

[MorganF]

Tres Picos,

Currency rates certainly do lag, at least in regards to the ARS. This is due to heavy government manipulation of the rates. See the 35+% annual inflation and barely budging USD to ARS rate, over years.

The best reason to live in Argentina is NOT financial; that's probably a shitty reason. (Note: in this, I support the government: if I ran a country, I wouldn't want people moving there merely because it is cheap!!!). Rather, the reason to consider moving to Arg is for a combination of: [a] family reasons (married to a local or have close family relationships with locals) combined with having a love of and respect for the Argie lifestyle and cultural values (Sunday asado, close friendships and family, working to live rather than living to work, etc) combined with [c] an appreciation of what your town of residence in Arg has to offer (ie, if you're a flaneur whose passion is walking around urban cities, BA is one of the best in the world), and combined with [d] having the on-the-street sophistication on how to take everything that's seemingly expensive and make it affordable (the sort of street smarts that are essential here and that you can't get from a forum but only from experience) -- all those taken maybe a good reason to live here. But if you're missing one or more of those reasons.... there may be a more ideal locale for you to choose than Argentina.

Morgan

 

[Tres Picos]

Tres Picos,

Currency rates certainly do lag, at least in regards to the ARS. This is due to heavy government manipulation of the rates. See the 35+% annual inflation and barely budging USD to ARS rate, over years.

The best reason to live in Argentina is NOT financial; that's probably a shitty reason. (Note: in this, I support the government: if I ran a country, I wouldn't want people moving there merely because it is cheap!!!). Rather, the reason to consider moving to Arg is for a combination of: [a] family reasons (married to a local or have close family relationships with locals) combined with having a love of and respect for the Argie lifestyle and cultural values (Sunday asado, close friendships and family, working to live rather than living to work, etc) combined with [c] an appreciation of what your town of residence in Arg has to offer (ie, if you're a flaneur whose passion is walking around urban cities, BA is one of the best in the world), and combined with [d] having the on-the-street sophistication on how to take everything that's seemingly expensive and make it affordable (the sort of street smarts that are essential here and that you can't get from a forum but only from experience) -- all those taken maybe a good reason to live here. But if you're missing one or more of those reasons.... there may be a more ideal locale for you to choose than Argentina.

Morgan

Are you referring to the official rate under Kirchner?

Sorry for not making it clearer, but I would like to move to Argentina for culture, geography, climate, citizenship laws, and more vague ideas about the future. There are other personal, sentimental reasons. Examining COL was necessary as it determines whether it is even feasible.