Best country to keep your money?

Discussion in 'Trading' started by AshanD, Oct 3, 2005.

  1. AshanD


    I just found that banks in my native country (Sri Lanka) pay about 8-11% annual interest to their savings accounts. Thats much higher than what I'm getting in my US account so I am thinking of transfering my savings over there. Does anyone know of other countries with higher than average interest rates?

  2. nice interest rates, but what is the risk of parking your money there? are your rights as an american protected or can the govt one day "appropriate" your $$$ ??
  3. That's a naive statement. Banks there are paying that high a rate because most likely, there is an inflationary threat or the local currency is/was or will be further devalued. In the long run, there is usually no net incentive to do this with the exception that the funds are invested in some highly appreciating assets like stocks/bonds/real estate. I don't follow local markets there at all so...

    Edit: Having said that, if your situation were such that you are *intending* on returning to your country to live there permanently again, then the whole situation would be different and the rate situation would be telling you to put your money in some hard assets there now for a good return 5-10 years down the road, but again, I don't follow SriLanka.
  4. Mvic


    Yeah, and Russian bonds paid 25% and all the hot money was parked there until they defaulted/devalued and the traders all lost their jobs (many houses closed their doors on emerging markets bond operations after that debacle). Same thing with argentina etc etc. They are paying for currency/gov/inflation risk and 8-11% return is not enough IMO.
  5. I would also consider the FX rate fluctuations and the ability to hedge your FX exposure. Without the ability to hedge the FX, the high interest rate is almost meaningless. Brazil, and most of Asian (during the asian economic crisis), interest rate rached 20-30%, however, the ability to hedge interest rate was very limited, with FX spot rates dropping like stones.

    On the positive note, those people that I know who hold the 30 year T-bonds that bought around 81-82, when the coupon rate was 10-12%, should have their bond mature in the next 5 years now.

  6. swcom


    I read an article with Jim Rogers that said the best place in the not-too-distant future will likely be those countries with the most natural resources - Canada and New Zealand were mentioned. I am not sure if he meant Forex, or parking cash there. I think the latter . . .
    Definitely DO NOT put cash into a bank account in a country with an unstable government - ever.
  7. nassau


    Costa Rica offers a better than standard interest rate.
    In a lot of these cases you must exchange your usd to their currency. Mexico last year also offered a better rate of return.

    You might also look at some of the Switz Private banks. You wil find their 3 and 5 yr rates higher than in the usa. Italy and Portugal.

    You also might be able to receive a higher rate but what is the cost of handling...
    If you are looking for a better rate you might find using a US bank or wherever and having them manage your funds via their trust funds are safe as they are trust funds and you get the benefit of the bank trading you funds for a small fee as tjey do their portfolio.

  8. The Central Banks of Costa Rica and Sri Lanka and many other developing economies systematically debase/devalue their currencies at regular and pre-announced intervals. The (perceived) higher interests rate in those countries is a reflection of this.

    There's no free lunch
  9. gnome


    In the '80s, I knew some people who cashed out of the US completely to deposit their money in Mexico banks.... for like 24% interest. I cautioned them about "currency devaluation", and they asked, "what's that"?.

    Long story short... after 2 years in Mexico, they brought their money back to the US... after taxes and currency devaluation, they'd lost money.... I supposed they even lost more buying power from inflation in the US, but I didn't count that.

    Putting one's capital on deposit for high interest rates almost always has more risk than perceived.
  10. GTG


    A higher rate of return reflects a higher amount of risk. If your comfortable with that higher risk then by all means send all of your money to a bank in Sri-Lanka.
    #10     Oct 3, 2005