When the local government decided to eliminate real estate purchases as an investment option for the Golden Visa, many believed that this practically marked the end of the program. However, data from various specialized sites shows that interest in the program is far from waning.
In 2019, only 7 applicants to the Golden Visa invested in funds. This number has grown significantly in recent years, reaching 352 by September 2023, demonstrating the potential of this investment option.
What is an investment fund?
In Chile, the Financial Market Commission (CMF) defines investment funds as “assets made up of contributions from individuals and legal entities, known as contributors.” It can also be described as a financial services company whose mission is to attract investors and increase capital.
The fund pools money from contributors and invests it in selected assets, which are generally stocks, debt, real estate, and private equity (investment in private companies that are not publicly traded).
In Portugal, some terms are used differently. For example, the “Fundo de Capital de Risco” (FCR), despite its name, is equivalent to a Private Equity fund. Similarly, the “Sociedade de Capital de Risco” (SCR) refers to a Venture Capital fund (a form of Private Equity that is granted to small companies with high growth potential in their early stages).
What are the advantages of investing in funds?
If the goal is the Golden Visa, the main appeal of fund investments is that it allows applicants to obtain a predictable return of 3% to 10% annually and a total return on investment within 5 to 10 years.
Another significant advantage is professional management. By investing in a fund, the capital is managed by financial experts with deep knowledge of the Portuguese market. This not only reduces the inherent risks of the investment but also saves the investor time and effort, as they don’t need to be involved in the day-to-day management of the investment. Moreover, many funds are designed to maximize returns and minimize risks, providing a safer and more structured investment strategy.
Diversification is also a key factor. Funds in Portugal are typically made up of a mix of assets, allowing investors to reduce exposure to specific risks. This diversified approach is particularly attractive in an uncertain global economic environment, where capital protection is essential.
Portugal also offers a favorable tax environment for foreign investors. Although the country imposes capital gains taxes, there are mechanisms and double taxation treaties that can significantly reduce the tax burden, depending on the investor’s jurisdiction.
Finally, Portugal is a country with a stable and growing economy, with a government that actively supports foreign investment. Legal security, quality of life, and the possibility of obtaining residency in a European country are factors that enhance the appeal of investing in funds in Portugal.
At AIM Global, we have offices in Lisbon and a team of professionals with extensive knowledge of the local financial environment. We can help you find a fund that suits your investor profile, interests, and needs.
Schedule a meeting with us today to start realizing your international mobility project. We will guide you every step of the way.
