Retirement accounts (Afore, AFP, previdência)
Low–midWhat it is
Mandatory, government-supervised systems that build retirement savings from employer/employee contributions — Afore in Mexico, AFP in Colombia, Chile and Peru, and the public INSS plus private previdência privada options in Brazil. Often the largest long-term investment account most people have without ever actively choosing it.
How to buy it
Employed workers are typically enrolled automatically; check your balance and administrator through the national regulator's portal (CONSAR in Mexico, SBS in Peru, CMF in Chile). Self-employed people can usually open and contribute voluntarily. Many countries also allow comparing and switching administrators.
Pros
- Often includes employer contributions — money you would otherwise not receive at all
- Tax incentives in most countries for voluntary top-ups
- Forced long-term discipline, which is hard to replicate on your own
Cons
- Money is locked away until retirement age or specific allowed exceptions
- Default fund/risk settings may not match your actual age or risk tolerance
- Administration fees vary between providers and are easy to ignore for years
A worked example
A young worker automatically placed in a conservative default fund could be leaving long-term growth on the table for decades — checking your fund type once and adjusting it to match your actual time horizon is one of the highest-leverage five-minute tasks in personal finance.