Considerations that every broker takes into account before investing in Chile

Chile is the fourth largest economy in South America, behind Brazil, Argentina and Colombia. Its GDP was 317 billion USD in the year 2021. For the same period, its GDP per capita was 16,488, which ranks it second in Latin America.

This country presents a wide variety of options for investing, from bonds and real estate market to mutual funds and of course online trading. It is also a free market economy.

And although there are certain formalities to comply with, according to the current tax and legal framework, its regulation is transparent. Below we will know a little more about this and other considerations that every broker should take into account to operate in Chile.

What to invest in Chile?

Although the expectations for 2023 are quite modest, Chile is a country that has grown a lot in recent years. And for the opportunities it provides, it attracts a lot of migrants from other countries of the continent.

In addition, it offers great attractions for doing business; even foreign investors enjoy equal treatment. Let’s see what are the best markets to invest in the southern country.

Real estate sector

Traditionally, it is one of the safest investments, since it is rarely devalued. Although it requires a strong contribution and maintenance, it has the advantage that it can be rented, generating profitability. 

There is great growth in this sector in Chile. On the other hand, there are several options to acquire: through mortgage loans, buying in green (when it is still in the permitting process) or in white (before the start of construction), which reduces costs.

Bonuses and deposits

As for bonds and other installment instruments, the following can be mentioned:

• Promissory notes of the Central Bank of Chile (discountable and adjustable with payment in coupons);
• Time deposits issued by banks and financial companies;
• “Debenture” bond: issued by open joint stock companies.

Assets

In Chile, there are two stock markets: the Electronic Stock Exchange of Chile and the Stock exchange of Santiago, one of the oldest in Latin America, founded in 1893. More than 200 issuing companies participate in it and it is currently estimated that there are transactions for more than 2,000 million USD per day, both in shares and income instruments and other securities.

Mutual and investment funds

Other business alternatives are mutual and investment funds. In the first, a patrimony is constituted from the contributions of natural and legal persons, to then invest them in various securities: stocks, and bonds, among others. As for investment funds, they are alternatives in which people contribute capital, which will be managed by expert investors.

Online trading

In online trading, various assets are traded. Currently, in the Chilean market, you can invest in Cryptocurrencies, Currencies, and CFDs (Contract for Differences), among other securities.

Startups

Chile is a territory from which several startups have emerged that have positioned themselves well. By mid-2022, Cornershop (supermarket at home) became the first Chilean unicorn. And it is estimated that there are seven companies close to making this leap. Although investing in a startup has its risks, it is possible to enter the game with a not-so-high net worth, especially in the first round of fundraising.

Other online alternatives

Other investment alternatives that can be taken into account are:

• Crowdlending
• Crowdfactoring
• ETFs (exchange-traded funds)
• Index funds

What to keep in mind to operate in Chile?

Now that we have already taken a look, and we know what we can invest in, it is also good to know other considerations that every broker should take into account, before opening operations in Chile.

And although, as already mentioned, the current legal framework is transparent and there is little state interference in free market affairs, there are still some formalities that need to be fulfilled.

These procedures are not cumbersome, but they are necessary to operate without major problems. About it, the first step that any investor, whether a natural or legal person, must take is the procedures before the Internal Revenue Service (for its acronym in Spanish SII).

Namely, the registration of the Unique Tax Role (for its acronym in Spanish RUT), in order to be able to carry out commercial operations. Since 2020, this procedure can be done online, by completing a form and attaching the data requested on the page.

Then, it is also necessary to prove your address and go to the Internal Revenue Unit of the place where the company is located or where the company’s activities are carried out. And make an affidavit of initiation of activities, informing the SII that the activities that are carried out can generate taxes.

Additionally, depending on the type of business organization chosen, there are other requirements. For example, in the case of public limited companies, it must be published in an official journal and then attach a copy of the publication. And if it is a Limited Liability Company, present the legalized certificate and the proof of registration in the Trade Registry.

On the other hand, to be a stockbroker it is necessary to accredit studies in this regard and register in the register of brokers and agents. It is also necessary to comply with the requirements required by the stock exchange to which the broker wishes to join.

It is appropriate to note that a foreign broker can offer its services to domestic investors, for example in the foreign exchange market. Regarding FOREX, in Chile, the regulation of this market is on behalf of the Superintendency of Securities and Insurance. However, there is still no regulation for other markets, such as futures contracts.

The best broker and the best investment

When investing, you have to consider both the returns and the risk, or even more, the risk tolerance. To do this, if you are not an experienced investor, you have to take into account the recommendations of experts, advisors or brokers, knowledgeable in the field.

Ideally, investments should be made with intermediaries who are professionals, who inform and guide the investor. Of course, you should always look for reliable and reputable brokers, which comply with the requirements established in the legislation of each country.