Tag Archives: investment

A Word on Banking in Ecuador


The benefit of Ecuador being a US dollar based economy is that, for the US investor, it eliminates the inherent risks associated with foreign currency exchange fluctuations and it allows us to take full advantage of significantly higher short-term interest rates.

I am still learning about the Ecuadorian banking system and I am not an investment professional; however, if you are considering a long-term stay in Ecuador, there are some clear advantages to short-term (1 year or less) investing there.  Just compare the interest rate on your current savings account or any CD’s you may own.  The rate is probably somewhere close to zero versus 6.0% (on average) for a one year CD in Ecuador.

I have a particular focus on CDs (certificates of deposit) because I like the fact that it is a relatively liquid asset and I know exactly when my money will be available to me, without any withdrawal penalties (however, early withdrawal penalties can be about 2%).  CDs are like temporary savings blocks.  You can invest for a minimum of 30 days to 1 year and you earn interest as a reward for locking up your money with the bank for that amount of time.   The reward, or interest rate, increases with the amount of time you are willing to let the bank(s) in essence “borrow” your funds.

With Ecuadorian bank investments, CDs are a great choice because you can stagger your investment across different periods of time and in varying amounts, based on your comfort level/risk tolerance.  In addition, the minimum investment is low, $1,000 or less.  This flexibility can be a safeguard so that you know, for example, your money will not be tied up at the end of 60 or 180 days.

To understand how to calculate the amount of interest you can earn in a given period, take the following steps:

  1. Determine how much your initial investment will be, for this example let’s say it is $5,000
  2. Determine how long you want the CD in place for, let’s say 30 days at a rate of 3.50% (Banco del Austro as of Jan. 2012).
  3. Multiply your investment amount by the interest and divide by the number of periods in 1 calendar year (30 days = 12, 60 days = 6, 180 days = 2, and 360 days = 1) So,  $5,000*3.50%/12 = $14.58
  4. This means your interest earned at the end of the 30 day period will be $14.58
  5. You can then decide if you want to do another CD or just take your money and do something else.

Two final thoughts

  • The difference between banks and cooperatives is similar to the difference between banks and credit unions in the US.  Both are financial institutions offering similar products, however cooperatives (like credit unions) are governed by a different set of laws and regulatory bodies.  As a result, cooperatives may be perceived as inherently more risky and they therefore offer the highest interest rates on CD investments.
  • The requirements to open a bank account will vary between institutions. Some require only a passport, others require an Ecuadorian resident card and a utility bill.  All require you to open the initial account in person, so get to know your bank and the investment professional you will be working with, because when you are away, they will typically be able to help via phone or email.

For a list of some of the banks and cooperatives available in Cuenca, Ecuador and their respective interest rates, click on the Ecuador Investments page.


Cuenca Day 5 – In the land of Spanish


Interested in starting your own business and pursing dreams of entrepreneurship?  Cuenca may be the place for you.  Unlike the United States, there seems an economic renaissance in Cuenca.  Business seems steady, there are help wanted signs in windows and people seem to be living well. Today’s adventure in the Spanish was all about being the master of your own destiny.

Today was one of those days when we choose to be girly and get our nails done for $1.50 per person. My travel partner was excited since this is an activity we never engage in at home.

Here in Cuenca there are all sorts of businesses, from the extremely affordable to the “almost the same price as home”. That said, after are girly interlude, we were presented with the following proposition (in Spanish) –  “Why not start a new hostel?”

Start a New Hostel/Restaurant/Cafe/Shop!

  • There is a very strong tourist industry here and it keeps getting better as the reviews on Cuenca pile in;
  • North American (ex Mexico) travellers, in particular, tend to feel very comfortable and gravitate toward “American” owned businesses;
  • English speakers like to deal with English-speaking venues;
  • There is a large permanent community of expats that patronize attractive, well-run businesses;
  • Cuenca has visitors year round and profitable pricing for  you may still be affordable pricing for your visitors, relative to their home country.

Are you interested?  Well, these are the points that I was given, not by a real estate agent but by the owner of the property who happens to be one of the first Cuencanos I met here.  Now, to be fair, I have no plans on investing in real estate at this moment; nor do I have plans to become a real estate agent…just for the record.  But, I was curious.  I love seeing traditional architecture and the use of space and like, and he did make some good points.  Also, as the owner of the property, I think he was giddy about showing it to an “Americana/Gringa”.  (Yes folks, just proves the point that it doesn’t matter what color you are, if you are North American (ex Mexican) you’re a gringo…not pejorative, just a fact.)

So if you have ever considered running your own bed and breakfast, hostel, cafe, bar, etc., etc. – here are some pictures of what you can pick up for an asking price of $275,000 (which after negotiations and write downs, could be a bit less).

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Muy interesante! A little Spanish knowledge will get you very very far.

Ecuador has Amazing CD Rates



We are all concerned about extending what we have financially into the future.  If you are starting late or just looking for a higher rate of return, why not consider investing in Ecuador?  This post is inspired by a comment I saw on a blog asking about CD (certificate of deposit) rates in Ecuador.  The response was a bit vague, so I have decided to make it my mission to go into the banks here and get the real deal.

Over the next few days, this post will be updated as I get more information; however, it is all accurate as of the dates given.  All information posted was received first hand  based on me going to the banks and speaking directly to the investment representatives. Next to the posted rates, I am listing the current rates at Chase bank (in the USA) as of the same date (min. deposit is $1,000).  For those that do not understand the numbers, at the end of each bank entry I provide a line that shows what happens if you invest $5,000 over 10 years and $10,000 over 10 years based on the 366 day/1 year rates (assuming the given interest rates are constant).

Please note that as of the date of this post, you are able to open an account in any Ecuadorian bank, as long as your passport and entry stamp are current. In addition, all accounts are held in US dollars. CDs will be found under Inversiones (investments) and the word for interest rates is Tasas.