Invest In Argentina: Strategies For Risk Mitigation

Investing in Argentina has become an increasingly popular topic of discussion since libertarian Javier Milei became President in December 2023. Milei has been removing interventionist policies and is determined to transform Argentina into a market-friendly economy.

Milei's administration has set out a robust economic agenda with a series of key priorities to reshape Argentina's financial landscape. His foremost goals include reducing the country's rampant inflation, balancing the national budget, and reducing public spending.

With these changes, Argentina is presenting investment and trade opportunities, particularly in agriculture, mining, critical minerals, energy, health, infrastructure, information technology, tourism, the knowledge economy, and administrative services.

If you're looking to invest in Argentina, it's important to do your research and understand the different investment options available to you. You can buy individual stocks, invest in an ETF, sign up for an automated investment platform, trade stock CFDs, or use your bank account to open a brokerage account.

When choosing a trading platform, look for one that is regulated by a local financial authority, such as the Central Bank of Argentina (BCRA), to ensure your investments are protected.

It's also important to consider your budget, investment goals, and time horizon. If you're new to investing, you may want to start with a small amount and consider investing in an ETF or using a robo-advisor.

Remember, investing in stocks comes with risks, and you should never invest more than you can afford to lose.

Buy stocks with a credit or debit card

It is possible to buy stocks with a credit or debit card, but this depends on the brokerage platform you use. Some online brokers and trading apps allow card payments for deposits, making it convenient for investors to fund their accounts quickly. However, using a credit card to buy stocks can lead to high-interest debt if not managed carefully. Debit cards are a safer option as they only allow spending the available balance. Always check the fees and terms associated with card transactions, as some platforms might charge higher fees for this payment method.

There are a few ways to use a credit card to buy stocks, but it can be difficult and may not be a good idea. The additional fees you'll pay could start you out in the red. Most brokerage firms won't let you directly fund your account with a credit card to buy and sell stocks. Instead, you'll have to fund your account in other ways, like a bank transfer, check, or wire transfer. There are some creative ways to indirectly use a credit card to buy stock, but the downsides can be tough to justify.

One way to use a credit card to buy stocks is to purchase a gift card for Stockpile, an online brokerage that lets you buy fractional shares. Gift cards are sold in amounts ranging from $1 to $2,000 and can be redeemed for stocks just like cash. However, you'll pay a fee of $0.99 to $2.99, plus an additional 3% debit or credit card fee for each gift card.

Another option is to use a credit card that lets you transfer funds into your checking account. You can then transfer the money to a brokerage account where you can invest it. However, the credit card issuer may charge a balance transfer fee (often 3% or 5%), and the transferred balance will immediately start accruing interest unless the card has an introductory 0% annual percentage rate (APR) offer on balance transfers.

You could also get a cash advance with your credit card, but that's likely a worse option. Cash advance fees are typically around 3% to 5% and cash advance balances start accruing interest immediately. Generally, the cash advance APR is also higher than the card's standard rates for purchases and balance transfers.

Using a credit card to buy stocks could also affect your credit scores in several ways, regardless of what you purchase or why you initiate a balance transfer or cash advance. If you apply for a new credit card, the resulting hard inquiry may hurt your credit score a little. The new account will also lower the average age of all your credit accounts, which could cause your scores to dip.

Therefore, if you have a high credit card balance due to a big stock purchase, your credit scores could drop as a result. However, your score could also quickly recover if and when you pay down the balance.

Using a credit card to buy stock is generally not recommended. Investing in stocks carries the risk of losing money. By buying stocks with a credit card, you could end up with a high-interest credit card balance and lose your investment. Additionally, using a credit card can result in extra fees, loss of rewards, pressure to make a quick return, and an increased risk of scams.

Buy fractional shares

Fractional shares are a way to invest in a company's stock without having to purchase a full share. This means that you can buy a portion of a share, based on the amount of money you want to invest, rather than the number of shares. For example, if you want to invest $50 in a stock that costs $100 per share, you would buy half a share. Fractional shares are a great way to get started with investing, as they allow you to get started with a smaller amount of money and build a diversified portfolio.

• Research the fractional shares you want to buy: Different brokerages offer different fractional shares, so it's important to know which stocks you want to invest in and choose a brokerage that offers those fractional shares.
• Open an account with an online broker or robo-advisor: Not all brokers offer fractional shares, so make sure to choose one that does. Some popular options include Fidelity, Charles Schwab, and Robinhood.
• Fund your account: You will need to add money to your account before you can start investing. Keep in mind that it may take a few days for the funds to settle before you can start investing.
• Complete and monitor your investment: Most online platforms have a dashboard where you can easily monitor your portfolio and track your investments.

When investing in fractional shares, it's important to consider the potential downsides, such as limited stock selection, potential problems with transferring fractional shares to another broker, and additional fees. Additionally, keep in mind that fractional shares may complicate your tax returns, as you may end up with multiple tax lots.

Overall, buying fractional shares is a great way to get started with investing, especially if you don't have a large amount of money to invest. It allows you to build a diversified portfolio and invest in companies that you may not have been able to afford otherwise. Just make sure to do your research and understand the potential downsides before investing.

Invest in ETFs

One way to invest in Argentina is through Exchange-Traded Funds (ETFs). ETFs are investment funds that trade on stock exchanges and can be a great way to gain exposure to a particular market or sector. Here are some ETFs that offer exposure to the Argentinian market:

• Global X MSCI Argentina ETF (ARGT): This ETF provides efficient access to a broad basket of Argentine securities. It seeks to provide investment results that correspond to the price and yield performance of the MSCI All Argentina 25/50 Index.
• AdvisorShares Dorsey Wright ADR ETF: This ETF falls under the Latin America Equities category and offers exposure to Argentina.
• EMQQ The Emerging Markets Internet ETF: This ETF offers exposure to emerging markets, including Argentina. It focuses on internet and e-commerce companies.
• ARK Fintech Innovation ETF: This ETF provides exposure to fintech companies in emerging markets, including Argentina.
• Global X E-commerce ETF: This ETF offers exposure to the consumer discretionary sector in emerging markets, including Argentina.
• KraneShares Emerging Markets Consumer Technology Index ETF: This ETF focuses on consumer technology companies in emerging markets, including Argentina.
• Franklin Disruptive Commerce ETF: This ETF offers exposure to disruptive commerce companies in emerging markets, such as Argentina.
• Amplify Travel Tech ETF: This ETF provides exposure to travel technology companies in emerging markets, including Argentina.

These ETFs can be a good option for investors who want to gain diversified exposure to the Argentinian market while reducing the risks associated with investing in individual stocks. It is important to note that investing in ETFs still carries risks, and investors should carefully consider their investment objectives, risks, and expenses before investing.

Use a robo-advisor

Robo-advisors are digital platforms that automate investment management. They use algorithms to build and manage an investment portfolio for you, based on your goals, risk tolerance, and time horizon.

Low Fees, High-Quality Features

Robo-advisors typically charge low fees while offering valuable features such as automated portfolio rebalancing, exposure to a diverse range of asset classes, and financial planning tools. Some also provide access to human financial advisors for more personalised guidance.

Simple, Streamlined Process

Robo-advisors make investing simple and accessible. To get started, you answer a questionnaire about your financial situation, goals, and risk tolerance. The robo-advisor then uses this information to determine your investor profile and create a customised investment plan.

Time-Saving and Convenient

Robo-advisors handle the day-to-day management of your investments, so you can be largely hands-off if you prefer. They automatically monitor your portfolio and make adjustments as needed to keep it aligned with your goals. This saves you time and effort in actively managing your investments.

Wide Range of Options

There are numerous robo-advisor providers to choose from, each with its own unique features and benefits. For example, Vanguard Digital Advisor offers tax-loss harvesting and a range of financial planning tools, while Betterment provides advanced tax optimisation strategies.

Reduced Risk Through Diversification

Robo-advisors typically offer a variety of investment portfolios tailored to different investor profiles. These portfolios are well-diversified, investing in a wide range of asset classes to minimise risk. This helps to ensure that your investments are not overly exposed to any single market or asset class.

Human Advisor Support

While robo-advisors automate the investment process, many also offer access to human financial advisors. This provides the best of both worlds: the efficiency and low cost of automated investing, along with the option for personalised guidance when needed.

Suitability for Long-Term Investing

Robo-advisors are particularly well-suited for long-term investing, such as retirement planning. They can help you set long-term financial goals and create a customised plan to work towards them. Additionally, some robo-advisors offer features like retirement income projections, allowing you to estimate how much income you can expect during retirement.

In conclusion, robo-advisors offer a convenient, low-cost, and accessible way to invest your money. By using algorithms and automation, they simplify the process of investing and provide a valuable tool for risk-averse investors who want a more passive approach to managing their portfolio.

Buy and sell stock CFDs

CFDs, or Contracts for Differences, are a type of derivative trade that allows investors to speculate on the price movements of an underlying asset without owning it. This means that investors can profit from price changes without needing to purchase the asset itself. CFDs are traded on a margin, which means that investors only need to put up a small percentage of the total trade value as a deposit. This is known as leveraged trading and can magnify both profits and losses.

When trading CFDs, investors can go long or short, depending on whether they believe the price of the underlying asset will rise or fall. For example, if an investor believes the price of an asset will increase, they will 'buy' (go long) and if they believe the price will decrease, they will 'sell' (go short). It is important to note that both 'buying' and 'selling' can result in losses, so investors should ensure they understand how CFDs work and carefully manage their risk.

CFDs can be traded on a wide range of asset groups, including stocks, indices, forex, and commodities. This allows investors to access a variety of markets and asset classes in a user-friendly and potentially less capital-intensive way. The process of booking a trade is the same regardless of the market being targeted.

One advantage of CFDs is the ability to "sell" a market if it is believed to be overvalued. This practice, known as "short selling", allows investors to profit from downward price moves, rather than being restricted to a traditional "buy-and-hold" approach. Additionally, CFDs offer increased trading functionality, such as the ability to implement stop-losses when opening short positions to help manage risk and mitigate losses.

However, it is important to consider the risks associated with CFD trading. CFDs are considered complex instruments and are not suitable for all investors. In particular, the use of leverage can lead to rapid and significant losses if the market moves against the investor's position. Additionally, the CFD industry is not highly regulated, and there may be liquidity risks and margin requirements that investors need to maintain.

Overall, while CFD trading can provide opportunities for investors to profit from price movements, it is important to carefully consider the risks involved and ensure that CFD trading aligns with one's investment objectives, risk tolerance, and financial situation.

Frequently asked questions