You got some good advice on this thread. Do NOT underestimate the risk of currency spreads. % ROI is all relative when you have currency spread risks. Case in point, a few years ago my friend was raving about how she was going to get a guaranteed 20%+ annual rate in Argentina and I highly advised against it. 20% a year is moot if the currency devaluates at a faster rate (which it has done).
I’m not saying that will be the case with you but just keep in mind those risks. Anytime something is paying out that kind of yield, there will be risks.
Another risk which I didn’t see mentioned (although someone did mention the FBAR reporting) is that your odds of getting audited by the IRS drastically go up once you fill out a FBAR. (Take it from me as someone that has gotten audited 3 times in 5 years).
As well, I have many clients and friends that all have gotten audited and the one thing we have in common is we’ve all filled out FBAR’s. So by basic deduction I assume your odds of getting audited are drastically higher once you fill one of these out.
An audit in and of itself is not necessarily a problem but it’s a big hassle! And I think once you get audited your chances are higher in subsequent years that you will continue getting audited. (Again, not scientific but just based on what I’ve seen with many friends and clients and myself).
I still fill out a FBAR each year as I still have accounts in several foreign countries but I’d say keep in mind the main risk which is currency spreads/devaluation and also the hassles with potential audits by the IRS.
I’m certainly not saying you shouldn’t do it. I know people that have been very happy and seemingly making solid returns (so they tell me) in Uruguay and Paraguay. Just go in with your eyes open with the various risks.
