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In Costa Rica, you could have much more flexibility in your lifestyle. You could, for example, live comfortably on an almost meatless diet of locally produced foods. Those would be much cheaper than the same foods purchased anywhere in the States. You could also opt to use only public transportation which is hardly universally available in the U.S. And if you chose wisely, you could live at an altitude here where neither heat nor A/C nor even ceiling fans are necessary. That would be virtually impossible in the States. You could also confine your health care to what the CAJA has to offer which, aside from the monthly enrollment cost, is free.

 

Thanks. Exactly how I've been thinking. But still, decisions... decisions... It would be a no brainer if I had a "better half" that would make the move with her SS income too.

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FredS, if you're anxious about being able to live on your Social Security here in Costa Rica, you should be downright hysterical about the prospect of doing so anywhere in the States. There are a couple of other points to ponder, however.

 

In Costa Rica, you could have much more flexibility in your lifestyle. You could, for example, live comfortably on an almost meatless diet of locally produced foods. Those would be much cheaper than the same foods purchased anywhere in the States. You could also opt to use only public transportation which is hardly universally available in the U.S. And if you chose wisely, you could live at an altitude here where neither heat nor A/C nor even ceiling fans are necessary. That would be virtually impossible in the States. You could also confine your health care to what the CAJA has to offer which, aside from the monthly enrollment cost, is free.

 

On the other hand, in the U.S. you could collect Social Security and continue to work at some job or another. Here, until you're a permanent resident, that would be illegal. And Costa Rican wages, should you land a job, are insultingly low. Too, in the U.S. you'd have access to Medicare which would afford you more choices of health care but at much higher rates. And you'd be in a familiar environment where your native language is spoken.

 

Decisions . . . decisions . . .

Dave, so succinctly put! Indeed, I am hysterical about the prospect of growing old on SS here in the states! I know that I'm facing a very uncomfortable, unhappy life close to the poverty line if not below it. I've been reading all the posts about increasing costs in CR and just shaking my head. Some of the posters don't seem to realize that things have gotten worse here too. My medicare/Humana premium and co-pay both continue to go up while services and coverages get cut back. There is no public transportation where I live and a 13 mile taxi ride into town, one way, costs from $25 to $40 with either of our three taxi services! Electricity, food, everything goes up continually. In January I was paying US$3.09 per gallon for gasoline and my last fill up on 7/25 was US$3.39. That's a 9% increase in seven months while neither my SS benefit nor my part time wage has gone up a penny.

 

I know there's no place that's perfect but right now it's close to 100o F and I have to keep my home thermostat set on 80 to keep my electric bill down to $150 a month. At that rate it barely keeps the indoor humidity down to a tolerable level. In the winter it's even worse; when you factor in the bone-chilling dampness of New Orleans it really makes the old bones creek. So living in the temperate Central Valley area where A/C and heat aren't needed sounds like heaven to me.

 

I read posts about having to wash and reuse plastic bags or having to make your own yogurt to save money ... I do that now! So in a sense, I see life in Costa Rica as becoming one of the majority rather than being in the minority as I am here in the US. Most people I know are part of the "throw away" culture so prevalent here in the US. I die laughing when I see someone buy those little prepackaged containers of Jello. Like, how hard is it to boil water, stir in the powder, pour into small bowls, and chill? Just more clutter for the dump!

 

Yeah, I look forward to joining the Tico culture where nothing is thrown away until it absolutely has no value left. I look forward to tropical breezes cooling a warm day; to butterflies and birds filling the garden; to no more "10 to 2" daily grind to supplement my finances; to learning a new culture; to feeling that warm fuzzy when communicating with someone in their native tongue rather than mine! Sure there will be challenges, torrential downpours and earthquakes; delays; different ways of conducting business - it's a "foreign" country. Quality of life is different for each of us. For me, I've decided that the quality of my life where I am is no longer satisfying. I've made my decision. I'm ready to make the change. Costa Rica is my choice, warts and all! And FredS, I hope you can find peace in your search for happiness in your golden years.

 

dem

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demgems - suggestion - get a small dehumidifier for one room - small airconditioner for one room - (bedroom for instance) - run both in the same room - as an air conditioner cannot dehumidify without a heater in it, and I know of no air conditioner with a heater, run both of them in the one room - put your TV etc. in that room (like a clean room for people with asthma) -try that - please let everyone know how that works! I run both an air conditioner and dehumidifier in my bedroom Works perfect! also lowers the electric bill, which is outrageous here!! Respectfully

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Fred S and demgems, something I overlooked was to mention that here, in Costa Rica, you will have essentially no "social safety net". That is, there is no program like Food Stamps, no rent subsidy for low-income folks, no subsidy for health care, etc. For one in seven Americans, the Food Stamp program is (literally) a life-saver. None of that here.

 

_________

 

On a separate note . . . I had the "privilege" of spending an hour in Banco Nacional's lobby this morning trying to get my online password sorted out. Between hands of Solitaire, I noticed that they're paying about 5% on two-year colon-denominated CDs. That's making Coopenae's 12.75% for five years look better and better.

Edited by David C. Murray

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Fred S and demgems, something I overlooked was to mention that here, in Costa Rica, you will have essentially no "social safety net". That is, there is no program like Food Stamps, no rent subsidy for low-income folks, no subsidy for health care, etc. For one in seven Americans, the Food Stamp program is (literally) a life-saver. None of that here.

 

_________

 

On a separate note . . . I had the "privilege" of spending an hour in Banco Nacional's lobby this morning trying to get my online password sorted out. Between hands of Solitaire, I noticed that they're paying about 5% on two-year colon-denominated CDs. That's making Coopenae's 12.75% for five years look better and better.

 

Just curious ...would you agree ...

CR: 12.75% interest rate - 5.75% CR inflation = 6% real rate of return.

US: 1% interest rate - 3% US inflation = -2% real rate of return

 

Can you assume the exchange rate is constant since it has been around 500 for a long time?? So, 6% CR compares with today's US -2% rate??

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Just curious ...would you agree ...

CR: 12.75% interest rate - 5.75% CR inflation = 6% real rate of return.

US: 1% interest rate - 3% US inflation = -2% real rate of return

 

Can you assume the exchange rate is constant since it has been around 500 for a long time?? So, 6% CR compares with today's US -2% rate??

Hmmm . . .

 

Well, where I grew up, 12.75% minus 5.75% left 7.0%, not 6.0%.

 

That aside, I think you may be overstating the Costa Rican rate of inflation (although I'm in no position to argue the point). Assuming that you have it right, the computed rate of inflation may or may not impact upon everyone the same. While it's entirely possible, for example, that real estate and vehicle prices are rising, we're not buying either (which would be our largest purchases, if we were making them), so to some extent we are insulated from whatever inflation is occurring as are many who exist in this economy.

 

Nonetheless, the U.S. rate of inflation (I thought it was much lower than 3%) offsetting the virtually nonexistent interest rates on U.S. CDs does, indeed, make even Banco Nacional's crappy 5% on colones look very good. And it makes Coopenae's 12.75% for five years look impossible to pass up. Using your computed real rate of return on U.S. CDs, the net difference at BNCR would be 7% per annum and 14.75% at Coopenae. Yowser!

 

As for the exchange rate, all I can say is that it's been very stable for about three years just a few colones one side or the other of c500:$1.00US. What the future holds is anybody's guess.

Edited by David C. Murray

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Hmmm . . .

 

Well, where I grew up, 12.75% minus 5.75% left 7.0%, not 6.0%.

 

That aside, I think you may be overstating the Costa Rican rate of inflation (although I'm in no position to argue the point). Assuming that you have it right, the computed rate of inflation may or may not impact upon everyone the same. While it's entirely possible, for example, that real estate and vehicle prices are rising, we're not buying either (which would be our largest purchases, if we were making them), so to some extent we are insulated from whatever inflation is occurring as are many who exist in this economy.

 

Nonetheless, the U.S. rate of inflation (I thought it was much lower than 3%) offsetting the virtually nonexistent interest rates on U.S. CDs does, indeed, make even Banco Nacional's crappy 5% on colones look very good. And it makes Coopenae's 12.75% for five years look impossible to pass up. Using your computed real rate of return on U.S. CDs, the net difference at BNCR would be 7% per annum and 14.75% at Coopenae. Yowser!

 

As for the exchange rate, all I can say is that it's been very stable for about three years just a few colones one side or the other of c500:$1.00US. What the future holds is anybody's guess.

 

oops ...thanks for the math catch

 

Here is the exchange rate I used ... assuming pegged at 500 for so long makes the colon almost the same as a dollar with little currency risk. Note the recent rise though.

http://fx-rate.net/USD/CRC/

 

 

Here is the inflation data I used

http://www.elfinancierocr.com/finanzas/inflacion-IPC-INEC_0_328767125.html

 

Isn't BN 5% offer minus 5.7% inflation similar to what the US is offering on Tbills - negative real return in exchange for safety?

 

I would think that in a "normal" market that 2-3% should be the risk-less US offer (2-3% over TBill) and I would think in a "normal" market that a place like CR would have a higher margin so 6-7% Coopenae offers appears "normal"??

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Jim, if you click on the "Monthly Average" button on the exchange rate chart on your first link, you'll see that it's dead-flat at c500:$1.00US back to October of 2012. If the chart went back to October of 2010, I think you'd see virtually the same line.

 

As for the inflation rate, I'm not going to dispute efinance's number. Working from 5% annual inflation doesn't make a compelling argument for the Costa Rican CDs whether you buy 'em from BNCR, BCR, or another source at 5%. I think you're right, though, that plus 5% in interest counterbalanced by minus 5% for inflation equals zero growth.

 

On the other hand, 12.75% - 5% inflation still nets you 7% actual growth in purchasing power, no?

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On the other hand, 12.75% - 5% inflation still nets you 7% actual growth in purchasing power, no?

 

And the unquantifiable question is how much risk are you taking on for 7% investing in a cooperative? They seem to have a good balance sheet so I think the risk is low. In 10 years at 7% you would have doubled your money.

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Hmm... I think I'll leave my money where it is. In the US invested in tax-free muni bonds, high quality corporate bonds and high-quality preferred stocks that are all paying between 5.5% and 7.5%

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Hmm... I think I'll leave my money where it is. In the US invested in tax-free muni bonds, high quality corporate bonds and high-quality preferred stocks that are all paying between 5.5% and 7.5%

 

Mark, the problem with US interest investments is not the return but the lose of capital. YTD yield has been positive but the return has been negative.
Corporate Bonds
Treasures

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You only lose money if you sell for less than you paid. I am not selling the bonds I have because I like the returns. I haven't bought any bonds in a few years because the returns are too low. What I am buying now are preferred stocks in quality companies that pay good dividends.

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speaking of the economy and problems in Costa Rica - I continue my ongoing wait (days) for a decisión from Clínica Biblica as to whether they want me to spend MY money in their establishment -

Edited by newman

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