As a Chartered Accountant, I frequently receive inquiries from my clients seeking guidance on where to maximize their savings while minimizing risk. In general, governments are considered the safest institutions to entrust money to, whether through local banks or government bonds. However, it’s important to note that not all local banks with the best interest rates are covered by government protections.
While governments may establish stringent financial regulations for local banks, they do not necessarily guarantee the underwriting of these banks in the event of a collapse. Therefore, it is crucial for individuals to carefully evaluate the specific protections and regulations in place before making financial decisions. By conducting thorough research and seeking professional advice, individuals can make informed choices to safeguard their money and optimize returns.
Money Savings Best Interest Rates By Country
| Country | Interest Rate | Inflation Rates | Net Interest Rate |
| Singapore | 3.39% | 3.7% | 0.31% |
| Australia | 4.35% | 4.1% | 0.25% |
| Euro Area | 4.5% | 2.8% | 1.7% |
| Canada | 5% | 3.4% | 1.6% |
| United Kingdom | 5.25% | 4.0% | 1.25% |
| United States | 5.5% | 3.1% | 2.40% |
| South Africa | 8.25% | 5.1% | 3.15% |
| Brazil | 11.25% | 4.51% | 6.74% |
| Mexico | 11.25% | 4.88% | 6.37% |
In the table above interest rates represent the actual government-set interest rates, however, this may vary from what you may get at a local bank. When considering interest rates, it is important to consider the inflation rate of that country.
What is inflation?
Inflation refers to the gradual and general rise in prices of goods and services. This results in the decreasing power of a unit of currency. Essentially, your money’s value slowly diminishes. Consequently, it is crucial to consider interest rates in conjunction with inflation. Inflation has an impact on a country’s exchange rates, causing its currency to depreciate against others. So, even if you may be earning a higher interest rate, the decrease in currency value due to a lower exchange rate can offset the interest rate gain. Therefore, it is essential to assess the net interest rate after accounting for inflation to obtain a true indicator of a country’s interest rate.
Can Foreigners Save Money in Brazil and Mexico
Opening a Savings Account with the Best Interest Rates in Brazil
While technically feasible, opening a bank savings account in Brazil as a foreigner isn’t as straightforward as for residents. Here’s what you need to know:
Most major banks require a valid resident visa (temporary or permanent) valid for at least 12 months. Tourist visas or shorter-term visas generally don’t suffice. Be prepared to present proof of identity (passport, possibly additional ID), address (utility bills, rental agreement), visa, and a Taxpayer Identification Number (CPF). Obtaining a CPF as a foreigner can involve additional paperwork and visits to government offices. In addition, there are limited options as not all banks cater to foreigners, and some might have stricter requirements or higher fees. Major Banks Itaú, Bradesco, Banco do Brasil, or Santander may have procedures for foreigners, but requirements and application processes can vary. Some smaller banks or credit unions might be more flexible. If you already bank with an international bank with operations in Brazil, they might offer simplified solutions for opening an account there.
Opening a Savings Account with the Best Interest Rates in Mexico
Opening a bank savings account in Mexico as a foreigner is generally easier than in Brazil, but still some hurdles to consider:
Requirements for Foreigners:
- Proof of Identity: Passport or valid government-issued ID.
- Proof of Address: Utility bill, rental agreement, or official documents showing your residence in Mexico.
- Visa Documentation: Depends on your status:
- Temporary or Permanent Residents: Residency card.
- Tourists: Tourist visa (FMM) with a stay exceeding 180 days.
- Minimum Deposit: Some banks require a minimum initial deposit, usually around MXN 1,000.
- Tax ID: Not always mandatory, but some banks might request it (RFC for residents, CURP for non-residents).
General Process:
- Research Banks: Compare options like Banorte, BBVA Bancomer, Santander, Scotiabank, and HSBC Mexico. Check their websites for specific requirements and account features.
- Visit a Branch: Most banks require in-person applications. Take all necessary documents.
- Fill Out Forms: Be prepared to fill out application forms in Spanish. Some banks might have English assistance available.
- Activate Account: Once approved, activate your account with required deposits and verifications.
Important Notes:
- Tourist Visa Limitations: With a tourist visa, you might only access basic accounts with limited features and transaction options.
- Spanish Language Barrier: Not all bank staff speak fluent English. Consider having someone help translate if needed.
- Fees: Be aware of potential account maintenance fees and transaction charges. Compare offers across banks.
Overall:
Opening a bank account in Mexico as a foreigner is more accessible than in Brazil, but requirements can vary by bank and visa status. Be prepared to visit branches, complete paperwork, and potentially face language barriers. Research your options, prepare the necessary documents, and be patient during the process.
Other Countries Easier than Mexico and Brazil to Open a Savings Account
While the difficulty of opening a bank account as a foreigner depends on your specific circumstances and desired features, here are some countries generally considered easier than Mexico and Brazil:
Europe:
- Germany: Open accounts remotely with some banks, strong banking system, requires proof of address and residency.
- Portugal: The golden visa program simplifies account opening for visa holders, which requires investment.
- Estonia: E-residency program allows remote account opening, and requires business activities in Estonia.
- Spain: Residency allows easy account opening, tourist options are limited.
Asia:
- Hong Kong: Strong financial center, welcomes foreign clients, requires proof of address and identification.
- Singapore: Open accounts remotely with some banks, requires proof of address and identification.
- Georgia: Easy remote account opening, low minimum deposits, but limited financial infrastructure.
- United Arab Emirates: Flexible options for residents and businesses, require proof of address and identification.
Other:
- Uruguay: The residency program simplifies account opening, and requires investment.
- Panama: Relatively easy for foreigners with tourist visas, but limited account features.
- Belize: Offshore banking options available, require due diligence and compliance.
Important Points:
- These are just general examples, and individual experiences may vary.
- Each country has its regulations and requirements, so thorough research is crucial.
- Consider factors like residency status, minimum deposits, fees, and available features when comparing options.
- Be mindful of the potential tax implications of opening an account abroad.
Government Bonds – Another Way of Saving Money in a Low-Risk Way
When considering government bonds as a safe investment option, it’s important to understand how they work. Individuals or institutions essentially make loans to governments through government bonds. Investors receive interest payments at regular intervals until the bond reaches maturity and the principal amount is repaid. Government entities typically back these interest payments, making them generally considered low-risk compared to other types of investments such as stocks, which typically offer lower interest payments.
One key aspect to consider when investing in government bonds is inflation. While government bonds may offer a fixed interest rate, the actual value of those interest payments may decrease over time if inflation outpaces the rate of return.
Government bonds also come with different maturity dates, ranging from short-term (usually less than 5 years) to long-term (typically 10 years or more). Short-term bonds typically have lower interest rates but are less affected by interest rate changes compared to longer-term bonds. On the other hand, longer-term bonds do offer higher interest rates but are more sensitive to changes in interest rates. It’s important to consider your own financial goals and risk tolerance when choosing between short-term and long-term government bonds.
Learn to Save Money in a Savvy Way with Professional Intelligence®
Just like finding the best interest rates for your savings, in the same way, there are many other strategic and savvy ways of saving money, one of the key ways is to participate in the free Savvy Savings Blueprint offered by The Academy for Professional Intelligence (TAPI)®. As a Chartered Accountant, I teach this, offering you professional and valuable advice for free! This particular focuses on the holistic approach to saving money. Also, delve into additional podcasts and webinars featuring insights from professional intelligence experts. Many people examine budgeting and expense tracking as simple tools, but understanding the causes of spending and how to better control it involves considering our emotional, physical, social, and financial factors, all of which play an integral part in our decision-making process for saving money.
