Mexican Unidad de Inversion

The Mexican Unidad de Inversión (UDI) is like a special kind of money that helps people keep track of how prices change over time. It's kind of like a ruler that measures how much things cost. Let's say you want to buy a toy that costs 100 pesos today, but you don't want to buy it until next year. You might worry that the toy will cost more next year because of inflation, which is when prices go up over time. But if you use UDI instead of pesos, you can be more sure that you'll be able to buy the toy for the same amount next year, even if the price goes up.

UDI is based on the Consumer Price Index (CPI), which is a measure of how much prices for goods and services change over time. The Mexican government uses the CPI to calculate the value of UDI every day. This means that the value of UDI keeps up with inflation, so if prices go up, the value of UDI goes up too.

So, let's say you put your money in a UDI-based investment. You might earn a certain amount of interest on your investment, but the amount you earn will be based on the value of UDI, not on pesos. This can be useful because it protects you from inflation. If you had invested in pesos and inflation went up, the value of your investment might be lower than you thought.

Overall, the Mexican Unidad de Inversión is a way to measure how much things cost over time and protect your investments from inflation. It's kind of like a special money that helps you plan for the future.