INVESTMENT: A bigger bang in a safe environment
By a financial correspondent
With world financial systems in turmoil and banks ranking lower in some people’s opinions than lawyers and politicians, investors looking for a secure yet profitable return on their savings are having a hard time.
It’s why in Panama many professionals and retirees have turned to credit unions, known locally as cooperatives whose investment plans can be accessed by expats seeking a safe fixed income.
They have also found that the cooperatives are more user friendly than banks which demand extensive documentation, and opening an account can be like training for a never ending marathon.
For retirees who are seeking a safe fixed income investment, they are proving to be especially attractive.
Credit Unions have existed in Panama for the past 70 years and just as in the U.S. and Canada, they function as cooperatives for savings
They operate on behalf of employees of various industries and government agencies and are licensed and registered by the government with a tax free status, dating back to 1997
There are over 150 credit unions in Panama, some of them over 50 years old and the larger ones have as many as 100,000 members, each member paying a monthly minimum deposit towards the credit union’s capital, generally from $5 to $10, so there is constant programmed growth. As they are tax free, non-profit organizations, all profits are paid back in the form of interest to depositors and the Credit unions are able to pay higher interest rates to their depositors than those doled out by the banks.
According to professionals in the financial sector, credit unions are considered to be more secure and less risky than banks for several reasons. One is that credit unions are limited to lending up to a maximum of four times the amount of their capital, while banks can lend up to ten times their capital so credit unions have less exposure to lower economic cycles or high debt obligations.
Credit unions are also regulated in the type of loans that can be offered. They are largely limited to loans for consumer items and the majority of loans are under $10,000. Borrowers are usually required to make their monthly payments through payroll deductions. In addition, collateral guarantees and multiple loan co-signers often are required.
Banks on the other hand are generally more exposed to economic cycles, due to large high-risk commercial loans, international currency movements and global interest rate changes.
These variables have led many banks into deep financial problems. Some have collapsed, and the effects are still causing major problems in Europe and around the world.
There has never been a credit union failure in Panama. A few banks have failed in Panama in the past although not in recent years. There has never been a Credit Union failure.
So how can a foreign resident take take advantage of the available high interest rates? One way is through Offshore CD Network Inc. which represents a major Panama Credit Union that offering Certificates of Deposits with interest rates ranging from 4.5% to 8.5%.
If you want to know more, check it out at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . He will reply in English.
