A few weeks ago, I set out to help my Mexican parents living in Mexico invest their money the right way. There was a lot of trial and error, phone calls, discussions with ChatGPT, and Google searches. Some scary moments, too. I am happy to report that their money is now invested better than most of us in the US could ever do.

By “investing the right way,” I mean:

  • Low fees
  • Broadly diversified
  • Protected from currency devaluations
  • Using actual investments and not speculative assets

For us in the US, investing the right way often consists of having a portion of the portfolio in these three index funds:

  • Total US market index fund
  • Total international market index fund
  • Total bond fund/short-term US Treasuries

It is generally considered wise to have a portion of your portfolio invested in the currency and country where you plan to live the rest of your life. What percentage of that will depend on how much faith you have in the country and the likelihood of it defaulting on its debt.

The other portion of the portfolio should probably be divided into all-world stocks and all-world bonds. One could make an argument to instead invest all in the US stock and bond markets since the US market has robust international exposure. But for someone living abroad, all-world bonds and stocks feel like a better choice.

Although my parents run a successful business, they don’t know what a stock or a bond is. If financial literacy is bad in the US, it is much worse in Mexico. My parents' retirement plan had always been “selling the business.” When COVID hit and they found themselves having to close shop, they had zero savings and realized “selling the business” was not going to work in case of an emergency. So, they started investing some money with a “friend of a friend” who offered a guaranteed 11% return.

So far, that person thankfully has honored the 11%, but I decided to get them out of that investment before it went south. When I talked to the “friend of the friend,” he explained the money was mostly invested in Mexican Treasuries and algorithmic currency bets.

Investing the Right Way in Mexico

The three-fund portfolio for Mexican investors consists of:

  • Mexican Treasuries (CETES)
  • Total World Stock Market ETF
  • Total World Bond Market ETF

Mexican Treasuries (CETES)

Just like buying Treasuries in the US via TreasuryDirect, you can buy Mexican Treasuries (CETES) directly from the government at CetesDirecto, with no commissions or fees. Just like US Treasuries, CETES come in different maturities, and just like TIPS, some offer inflation protection: UDIBONOS.

CETES are paying more than 7% as of this writing. I think the higher interest rates are partly due to the fact that over time, the peso tends to devalue against the dollar.

For my parents, I chose a ladder of CETES:

  • Three-, six-, 12-, and 24-month CETES
  • Three-year UDIBONOS

Once each CETE matures, it gets reinvested in the 24-month maturity. Once the UDIBONOS mature, more UDIBONOS are bought. CETES are auctioned weekly.

Opening an account is super easy. The account can only be linked to one bank account in the same name, and no other bank accounts can be added, which makes the secure account difficult to hack.

After opening, the limits on investments are small, but they can be easily expanded to 10 million pesos (around $500,000) after verifying your tax identity using what in Mexico is called an “e.firma.”

All-World Stocks and All-World Bonds ETF

This is where things got complex, and I ended up spending many hours researching and reading. Among the issues we encountered were:

  • Fees vary widely among different brokerages.
  • Bid-ask spreads vary widely among different stock exchanges, like the Mexican Stock Exchange, the London Stock Exchange, etc.—even when trading the same ETF.
  • The estate tax threshold for non-resident aliens (my parents) is only $60,000 for any investment domiciled in the US, as compared to $15 million for an individual US citizen [2026 — visit our annual numbers page to get the most up-to-date figures]. The tax rate can be as high as 40%.
  • Not all international brokerages want to do business with Mexicans.

Not everything I found was bad. For example, I discovered that outside the US, you can find the same ETF issued in two different classes: Distributing and Accumulating.

  • Distributing is basically the same as any ETF in the US, where dividends are paid every year and taxes are due on the amount.
  • The Accumulating class, on the other hand, reinvests all the dividends back into the fund and distributes nothing, allowing the investment to grow free of tax drag—just like inside a retirement account.

More information here:

Navigating the Minefield of Foreign Investing as a US Expat

5 Financial Considerations for American Doctors Wishing to Live Abroad

Fees

Unfortunately, Mexicans cannot open accounts with Vanguard or Fidelity, although Schwab does offer an international account.

Reputable Mexican brokerages charge at least 0.2% when buying or selling ETFs. The cheapest reliable brokerage I found was Grupo Bursátil Mexicano (GBM.com). Its fees drop to 0.1% after 10 million pesos have been invested. Regular banks charge at least 0.35%. Some newer online trading apps in Mexico offer lower fees, but they have not been operating for very long.

I found two international brokerages accepting Mexican investors with significantly lower fees: Interactive Brokers and Mexem.

I first helped my parents apply for an account with Interactive Brokers. After filling out the application, you're asked to fund the account to expedite the approval process, which we did with my parents’ entire savings in one quick international wire. A few days later, Interactive Brokers notified us that the account was not approved. It did not specify the reasons, but internet research theorized it was because my parents were old and had little experience in advanced trading. It took another stressful week to get the money back.

After that, I found Mexem, a European company partnered with Interactive Brokers. Again, we applied, but this time we weren't required to fund the account before approval. After several back-and-forth emails over the course of a week answering all their requests, Mexem finally approved our account. Mexem trading fees vary depending on the instrument (fixed income, stocks), but they are significantly less than the Mexican brokerages—and that’s not even counting the issues with bid-ask spreads.

Bid-Ask Spreads

I have been an investor in the US for more than 15 years. I have bought ETFs in the past and never bothered understanding bid/ask spreads. When I bought ETFs in the US, I often used a market order placed outside trading hours, and I never even bothered to check what price I ended up paying. I actually don’t think it made much of a difference in the US because the ask/selling price and the bid/buying price are so close to each other. There are so many buyers and sellers in the US stock market that liquidity is usually not a problem.

That is not the case when trading in the Mexican Stock Exchange (BMV). At any given time, there could be just a few buyers and sellers of ETFs, making the buy and sell price difference grow considerably. In these situations, placing a market order to buy an ETF will get you to pay the ask price, essentially adding another 0.3%-0.6% fee to your transaction. Placing a limit order to buy at a price between the bid and ask price could reduce that amount some but would not eliminate it, and it could risk completing the transaction altogether.

The London Stock Exchange (LSE) is nowhere near the volume of the New York Stock Exchange (NYSE), but it does move significantly more money than the BMV.

The thing about investing as a Mexican from Mexico is that you have to avoid US-domiciled investments (the ones that are legally registered and operating under the laws of the United States) if you plan to have more than $60,000 invested. That leaves you with either the LSE or the BMV.

Estate Tax Thresholds and Dividend Withholding

The issue with US-domiciled investments for non-resident aliens is actually twofold:

  1. The US automatically withholds 30% of dividends, unless the investor fills out Form W-8BEN, in which case only 15% are withheld.
  2. If the investor dies with more than $60,000 invested in US-domiciled assets, the estate will have to pay up to 40% in taxes above the $60,000.

For non-Irish residents, including Mexican residents, Ireland does not impose any withholding tax on dividends paid by Irish-domiciled ETFs. If the investment is domiciled in Ireland, no US estate tax will be incurred.

These two issues are huge, and they do not get the attention they deserve from Mexican brokerage houses. For example, Grupo Bursátil Mexicano (GBM Plus), on its platform, offers the option to trade in Mexico (BMV) and/or Trade USA (NYSE). Trading in the LSE or other exchanges is not offered. For Trade USA, GBM does fill out Form W-8BEN for you, but no mention is made about the 15% dividend withholding or estate tax laws.

UCITS ETFs

As a Mexican investor, you ought to buy ETFs that have UCITS in their name. What constitutes a UCITS fund is basically an investment that has been vetted by EU regulators that will benefit the investor. Basically, it assures that the investment will have liquidity and diversification, among other things.

Most of these ETFs are domiciled in Ireland or Luxembourg, which helps address the issues with dividend withholding and estate taxes. UCITS ETFs can be bought on the LSE and the BMV. For my parents, I chose:

  • Vanguard FTSE All-World UCITS ETF (VWRA) – USD Accumulating
  • Vanguard Global Aggregate Bond UCITS ETF (VAGU) – USD Hedged Accumulating

The above ETFs are sold on the LSE. A variation of these ETFs can be found in the BMV under the names VWRA/N and VAGU/N. It was extremely difficult to find them on the BMV, and the Mexican brokers don’t really advertise them. On GBM.com, one can trade these ETFs on the BMV in Mexican pesos. Basically, these two funds can be bought in two different stock exchanges: LSE in dollars and BMV in pesos. They can be bought using a Mexican brokerage or through Mexem or Interactive Brokers.

  • Mexem or Interactive Brokers: After wiring pesos to them, the money needs to be converted to US dollars before buying ETFs on the LSE. There is a fee for that, but it was very low at around $10 for each $100,000.
  • GBM.com or Mexican banks/brokerages: ETFs can be bought in pesos directly on the BMV.

Although there is a small fee to trade pesos to dollars, the overall fees as a percentage of the trade end up being around 0.03% on Mexem compared to >0.55% on the Mexican brokerages after accounting for explicit fees and spread costs. Over an investing career, the cost can end up being quite significant—in the hundreds of thousands of dollars.

More information here:

Investing in Tax-Advantaged Accounts for Non-US Citizens

How Do I Claim the Foreign Tax Credit?

What About Real Estate?

I did not include any real estate in my parents’ portfolio, but there are REIT UCITS Accumulating ETF funds available with reasonable expense ratios. One example is the SPDR Dow Jones Global Real Estate UCITS ETF (Acc).

A Written Financial Plan

My initial goal with my parents was to move their savings into a reasonable portfolio for their age. We have not written a financial plan yet, but we should so we can address issues such as insurance, wills, rebalancing, etc.

Final Thoughts

It was a long few weeks, but now I have my parents invested:

  • 40% in CETES
  • 40% in all-world stocks
  • 20% in all-world bonds

They are still working with no plans to ever retire, but because of their age, I did not want to be more aggressive than that.

One thing I realized during the process is how my parents had zero computer and internet skills. They are 100% dependent on other people managing their investments—and who better to do it than the person who will have to take care of them if something happens to them? I am glad I did the above for their investment’s sake, but I'm even more glad to have some handle on their finances before health issues or memory loss make it even harder.

I am not a financial advisor, tax expert, or professional in finance. I’m just someone who follows investing as a hobby and wanted to help my parents. Please do your own research and seek professional advice before making financial decisions.

Have you ever invested while living in Mexico or another foreign country? What was your experience like? Was the process difficult to learn?