Investing in third world countries
I strongly recommend you to invest in either stocks or bonds. Both markets have very strict regulations, and usually follow international standards of governance. Plus, they are closely supervised by local governments, since they look to serve the interests of capital holders in order to attract foreign investment. Real estate investment is not all risky, but regulations tend to be very localized. There are federal, state/county laws and byelaws, the last usually being the most significant in terms of costs (city taxes) and zoning. So if they ever change, that could ruin your investment. Keeping up with them would be hard work, because of language, legal and distance issues (visiting notary's office to sign papers, for example). Another thing to consider is, specially on rural distant areas, the risk of forgers taking your land. In poorer countries you could also face the problem of land invasion, both urban and rural. Solution for that depends on a harsh (fast) or socially populist (slow) local government. Small businesses are out of question for you, frankly. The list of risks (cash stealing, accounting misleading, etc.) is such that you will lose money. Even if you ran the business in your hometown it would not be easy right? "Basically, unless you are an investment professional, you should not be investing in a venture in a developing country shown to you by someone else. The only time you should be investing in a developing country is if a ""lightbulb"" goes off in your head and you say to yourself, ""With my engineering background, I can develop this machine/process/concept that will work better in this country than anywhere else in the world."" And then run it yourself. (That's what Michael Dell, a computer repairman, did for ""made to order"" computers in the United States, and ""the rest is history."") E.g. if you want to invest in ""real estate"" in a developing country, you might design a ""modular home"" out of local materials, tailored to local tastes, and selling for less than local equivalents, based on a formula that you know better than anyone else in the world. And then team up with a local who can sell it for you. Whatever you do, don't ""invest"" and revisit it in 10-15 years. It will be gone."
That's because our financial sector is mainly an instrument to aggregate cash  rather than a way to foster innovation and growth. They already have so much cash in their control that other sectors are starving.  Some worthwhile endeavors are not the ones that are going to make the greatest returns, some will not show returns for a very long time. Typically these are are undertaken by the government, but the government is being reduced to a blunt object used to secure resources and markets and to protect investments.  So maybe we need a second-tier investment sector that works with longer time lines, and low immediate returns and perhaps even domestic micro-loan/grants.   /ramble yeah - the point is why should any foreign investor trust you with their money?  just because Bangladesh might have a hot housing market, doesn't make you a reliable or trustworthy partner.  Maybe if you were an established and reputable real estate investor this post might get traction. It has got to do with inflation. So as prices of goods and services rise over the years you can work out what the inflation rate is over time. So by applying the inflation rate between 1990 to 2016 you can work out the equivalent value of $30B in 1990 would be in 2016. So in other words in 1990 you bought $30B worth of a box of goods and services, then in 2016 it would have cost you $55B to buy the same box of goods and services. You can play around with this US Inflation Calculator here, to see how much an amount of money back in history would be worth today if invested at the rate of inflation over those years.  So obviously, the aim in investing is to get a return higher than the rate of inflation, so that your investment funds grow in real terms and in the future you can buy more with your funds than you can buy with them today. At the other end of the spectrum is the VICEX fund.  it invests in industries such as tobacco, gaming, defense/weapons, liquor and other companies whose products or services are widely considered not to be socially responsible "This is the best tl;dr I could make, [original](https://www.project-syndicate.org/commentary/german-g20-investment-framework-for-africa-by-wolfgang-schauble-2017-06) reduced by 86%. (I'm a bot) ***** &gt; The CWA offers interested African countries the opportunity to improve conditions for private investment, including in infrastructure.  &gt; The CWA&amp;#039;s structure is straightforward: African countries, together with their bilateral partners and international financial organizations with proven expertise on Africa, will jointly develop, coordinate, and implement tailor-made measures.  &gt; With the upcoming G20 Africa Partnership Conference in Berlin on June 12-13, we will provide a platform for these African countries to reach out to investors in order to enhance the continent&amp;#039;s engagement with the private sector.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6fxdgr/wolfgang_shauble_africa_has_an_enormous_economic/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~139006 tl;drs so far."") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **country**^#1 **African**^#2 **CWA**^#3 **Africa**^#4 **G20**^#5" There are some ETF's on the Indian market that invest in broad indexes in other countries Here's an article discussing this  Be aware that such investments carry an additional risk you do not have when investing in your local market, which is 'currency risk'  If for example you invest in a ETF that represents the US S&P500 index, and the US dollar weakens relative to the indian rupee, you could see the value if your investment in the US market go down, even if the index itself is 'up' (but not as much as the change in currency values). A lot of investment advisors recommend that you have at least 75% of your investments in things which are denominated in your local currency (well technically, the same currency as your liabilities), and no more than 25% invested internationally.  In large part the reason for this advice is to reduce your exposure to currency risk. "This is the best tl;dr I could make, [original](http://www.imf.org/en/Publications/WP/Issues/2017/06/12/Public-Investment-Scaling-up-and-Debt-Sustainability-The-Case-of-Energy-Sector-Investments-44943) reduced by 50%. (I'm a bot) ***** &gt; The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.  &gt; This paper proposes a bottom-up approach to assess large public investments that are potentially self-financing and reflect their impact in macro-fiscal projections that underpin the IMF&amp;#039;s Debt Sustainability Analysis Framework.  &gt; Using the case of energy sector investments in Caribbean countries, the paper shows how to avoid biases against good projects that pay off over long horizons and ensure that transformative investments are not sacrificed to myopic assessments of debt sustainability risks.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6gydz6/imfpublic_investment_scalingup_and_debt/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~142844 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **IMF**^#1 **investment**^#2 **paper**^#3 **debt**^#4 **sustainability**^#5" Moreover the fact that they're simply invested in two of the biggest emerging market ETFs which preform well with global stability but are overall kinda risky long term goes to show that it's not some unheard of success. As you said, the proving ground will be whether they can make money in a down economy, where it's much harder to find profitable investments. Perhaps they'll switch to bonds and commodities. Index funds are well-known to give the best long-term investment. Are they? Maybe not all the time! If you had invested in an index fund tracking the S&P500 at the start of 2000 you would still be behind in terms of capital appreciation when taking inflation into considerations. Your only returns in 13.5 years would have been any dividends you may have received. See the monthly chart of the S&P500 below.  Diversification can be good for your overall returns, but diversification simply for diversification sake is as you said, a way of reducing your overall returns in order of smoothing out your equity curve. After looking up indexes for various countries the only one that had made decent returns over a 13.5 year period was the Indian BSE 30 index, almost 400% over 13.5 years, although it also has gone nowhere since the end of 2007 (5.5 years). See monthly chart below.  So investing internationally (especially in developing countries when developed nations are stagnating) can improve your returns, but I would learn about the various international markets first before plunging straight in. Regarding investing in an Index fund vs direct investment in a select group of shares, I did a search on the US markets with the following criteria on the 3rd January 2000:  If the resulting top 10 from the search were bought on 3rd January 2000 and held up until the close of the market on the 19th June 2013, the results would be as per the table below:  The result, almost 250% return in 13.5 years compared to almost no return if you had invested into the whole S&P 500 Index. Note, this table lists only the top ten from the search without screening through the charts, and no risk management was applied (if risk management was applied the 4 losses of 40%+ would have been limited to a maximum of 20%, but possibly much smaller losses or even for gains, as they might have gone into positive territory before coming back down - as I have not looked at any of the charts I cannot confirm this). This is one simple example how selecting good shares can result in much better returns than investing into a whole Index, as you are not pulled down by the bad stocks. For a time period as short as a matter of months, commercial paper or bonds about to mature are the highest returning investments, as defined by Benjamin Graham:  An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative. There are no well-known methods that can be applied to cryptocurrencies or forex for such short time periods to promise safety of principal. The problem is that with $1,500, it will be impossible to buy any worthy credit directly and hold to maturity; besides, the need for liquidity eats up the return, risk-adjusted.  The only alternative is a bond ETF which has a high probability of getting crushed as interest rates continue to rise, so that fails the above criteria. The only alternative for investment now is a short term deposit with a bank. For speculation, anything goes... The best strategy is to take the money and continue to build up a financial structure: saving for risk-adjusted and time-discounted future annual cash flows.  After the average unemployment cycle is funded, approximately six or so years, then long-term investments should be accumulated, internationally diversified equities. I'd say that the assets are 'invested' in non-productive sectors of the economy such as the finance sector. Also in pure market speculation and in revolving corporate acquisitions which inflate the nominal money supply but don't increase either physical production or services delivered by one thimble or one minute. "This is the best tl;dr I could make, [original](https://openknowledge.worldbank.org/handle/10986/27944) reduced by 56%. (I'm a bot) ***** &gt; Bringing e-Money to the Poor: Successes and Failures examines the lessons of success from four country case studies of &amp;quot;Gazelles&amp;quot;―Kenya, South Africa, Sri Lanka, and Thailand―that leapt from limitation to innovation by successfully enabling the deployment of e-money technology.  &gt; These countries have thereby transformed the landscape of financial access to their poor.  &gt; Because technology is not a silver bullet, the case studies also explore other strategic elements that need to be in place for a country to expand access to financial services through digital technology.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6vuj7f/bringing_emoney_to_the_poorpdf/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~198017 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **access**^#1 **country**^#2 **e-money**^#3 **technology**^#4 **financial**^#5" There are many Shariah compliant investments, so that could direct your resulting searches. Shariah compliance is a very strict interpretation of Islam and for investing offers strict guidelines in what to invest in and excludes investments in companies that engage in certain businesses such as gambling, tobacco, pork and trading of gold and silver on a deferred basis (and more). Many multinational financial service companies such as the Standard & Poors (S&P) offer Shariah Compliant funds and indices, as such, it makes it easier to invest in a variety of different assets through them. You can also look at their fund's constituents and invest in those assets directly. Secondly, going back to your original question about a compound interest equivalent, you can look at the products offered by Shariah Compliant banks. Now, if it is really important for you to adhere to the strictest interpretations of your faith, you should know that most Islamic Banks have interest bearing assets within them and that they disguise that fact. The global financial system is based on interest bearing instruments such as bonds, and Islamic banks are large holders and issuers of those instruments, and all of their consumer products are also based on the interest rates of them. Even convoluted alternatives such as Islamic mortgages, where they are advertised as non-interest bearing equivalents, many times are also the interest bearing version. Unfortunately, these lies are enough for the banks to continue to get business from their target audiences, but outside of Islam this is a very standard and stable business practice. The point is that you should look very carefully at the alternatives you find. "I'm not defending Faber, but from an statistical point your logic is terrible.  It's a lot easier to go from 2 to 4 than it is from 200 to 400 - so any undeveloped third-world country should be growing a **lot** faster than places with existing stable economies.  And to put ""fastest growing"" into context, it's 8.5%, which isn't even as big as I was expecting considering the US is growing at 3% and has a much larger base value." "Shariah compliant investments attempt to achieve your ""ethical investing"" ideals. Many countries around the world have a long list of shariah compliant investments and lots of journalists will go great lengths to reveal when a company is not really shariah compliant. Standard & Poors (S&P), an American financial services company, hosts a Shariah compliant index too, but on the Toronto Stock Exchange in Canada due to the Islamaphobia rampant in the United States. But of course, international companies are indifferent to any single country's social problems, and in your new pastime as an international speculator you will get the same luxury too and exemption from the political spectrum. S&P/TSX 60 information can be found here: http://web.tmxmoney.com/tmx_indices.php?section=tsx&index=%5ETXSI Business sectors prohibited from the Shariah index include: Gambling, Pornography, Tobacco, amongst others. In the United States, the concept has been renamed ""B-Corporation"" (a play on the federal term C-Corporation and S-Corporation), and has garnered enough of a movement that several states have created these as entities people can actually register them with the state, but these are not recognized as ""B-Corporations"" to the federal government. Shariah compliant investments will be easier to find worldwide, due to the popularity of the associated religion."