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8% International CD - anyone doing this?
05-16-2008, 04:16 PM
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#1
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Recycles dryer sheets
Join Date: Mar 2007
Posts: 319
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8% International CD - anyone doing this?
I am considering taking a portion of my international index fund and moving it to a international CD. No tax's and high yield sounds tempting. Only negative is - you cannot take your $ out early and no FDIC insurance.
Thoughts?
http://www.mlnbank.com/EN/homepage.htm
Thanks
In-control and happy about it
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Just Trekking thru!
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05-16-2008, 04:18 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,764
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Sounds to good to be true. Walks like a duck..
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05-16-2008, 04:21 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Jan 2007
Location: Silicon Valley
Posts: 1,812
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I believe if you are a US tax payer you will have to pay US taxes on the interest earnt.
I am getting 8.10% on money I have invested in Australia in a term deposit. It is possible to get the money out if you need it. Not FDIC insured, but I have absolutely no concern about the bank going under because it is one of the big 4.
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I be a girl, he's a boy. Think I maybe FIRED since July 08. Mid 40s, no kidlets. Actually am totally clueless as to what is going on with DH.
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05-16-2008, 04:32 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,490
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hold on to your wallet!
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05-16-2008, 04:43 PM
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#5
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Full time employment: Posting here.
Join Date: Dec 2006
Posts: 886
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My CD's (term deposits) here are insured by the Estonian government (Bank of Estonia Guarantee Fund) in similar fashion to the way the FDIC works in the U.S.
I can take my money out at any time before the deposit ends, but I would forfeit all the accrued interest I had up to that point.
Rates are around 5.6% in local currency at the moment. Not stellar, but not shabby either.
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05-16-2008, 04:48 PM
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#6
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Full time employment: Posting here.
Join Date: Dec 2006
Posts: 886
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You can check this place out. Says their World CD is FDIC insured, but I didn't read all the fine print.
EverBank | Foreign Currency - WorldCurrency CDs
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05-16-2008, 07:43 PM
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#7
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Dryer sheet wannabe
Join Date: Nov 2007
Posts: 16
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Quote:
Originally Posted by Trek
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EverBank is here in Jax. I was a happy Compubank customer, but they were bought out by Netbank and turned into a bunch of shysters. Everbank have taken over Netbank and I wouldn't touch them with a bargepole, based on my experience with Netbank.
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While Alluring, Foreign Currencies Can Be Elusive
05-16-2008, 07:46 PM
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#8
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Recycles dryer sheets
Join Date: Apr 2006
Posts: 143
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While Alluring, Foreign Currencies Can Be Elusive
The New York Times ran a story about foreign currencies recently (free registration may be required):
http://www.nytimes.com/2008/04/05/business/05money.html
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05-16-2008, 07:53 PM
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#9
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Administrator
Join Date: Apr 2006
Posts: 23,038
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..
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Living an analog life in the Digital Age.
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05-16-2008, 08:29 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2004
Posts: 2,670
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Quote:
Originally Posted by In-control
I am considering taking a portion of my international index fund and moving it to a international CD. No tax's and high yield sounds tempting. Only negative is - you cannot take your $ out early and no FDIC insurance.
Thoughts?
Millennium Bank
Thanks
In-control and happy about it
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Send me your money. I will give you the same terms as that bank plus 1%.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
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05-17-2008, 02:52 AM
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#11
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Full time employment: Posting here.
Join Date: Dec 2006
Posts: 886
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__________________
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05-17-2008, 06:15 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Considering the huge number of high yielding investments available in today;s market, why would you even consider giving your money to a sleazy, offshore pseudo-bank that might well be a ponzi scheme?
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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05-18-2008, 05:27 AM
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#13
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Recycles dryer sheets
Join Date: Mar 2007
Posts: 319
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Thanks all - as always you helped me make a decision.
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Just Trekking thru!
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05-18-2008, 11:18 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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I might suggest that its wise to leave arbing foreign currencies and their associated interest rates to the experts, but they seem to have a heck of a time making money on them either.
While there is FDIC insurance against the bank failing, there is no insurance against variances of the currency itself. AFAIK, if you buy $10,000 dollars worth of cd's in another currency, your dollars are converted to that currency and at the term end of the cd, converted back to dollars.
While its possible you'll get the same exchange rate at the end as the start, its somewhat unlikely.
So you might get 6-10% interest payment, then get your principal back reduced by 10-30%.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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05-18-2008, 12:14 PM
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#15
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Recycles dryer sheets
Join Date: Apr 2006
Posts: 143
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Here are a couple of recent videos from Morningstar that are related to foreign currencies:
The Dollar Dilemma in Investing:
Morningstar Video
3 Foreign Dividend Stocks Worth the Trip:
Morningstar Video
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05-18-2008, 12:14 PM
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#16
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Recycles dryer sheets
Join Date: Jul 2007
Posts: 119
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Quote:
Originally Posted by cute fuzzy bunny
I might suggest that its wise to leave arbing foreign currencies and their associated interest rates to the experts, but they seem to have a heck of a time making money on them either.
While there is FDIC insurance against the bank failing, there is no insurance against variances of the currency itself. AFAIK, if you buy $10,000 dollars worth of cd's in another currency, your dollars are converted to that currency and at the term end of the cd, converted back to dollars.
While its possible you'll get the same exchange rate at the end as the start, its somewhat unlikely.
So you might get 6-10% interest payment, then get your principal back reduced by 10-30%.
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Hedging?
If the USD is your operating or base currency, that can be mitigated. Many interesting CD rates in various currencies out there. All with reputable financial organizations.
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Ty Webb to Carl Spackler: "Got a pond...got a pool and a pond. Pond would be good for you."
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05-18-2008, 01:42 PM
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#17
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Administrator
Join Date: Apr 2006
Posts: 23,038
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Quote:
Originally Posted by cute fuzzy bunny
I might suggest that its wise to leave arbing foreign currencies and their associated interest rates to the experts, but they seem to have a heck of a time making money on them either.
While there is FDIC insurance against the bank failing, there is no insurance against variances of the currency itself. AFAIK, if you buy $10,000 dollars worth of cd's in another currency, your dollars are converted to that currency and at the term end of the cd, converted back to dollars.
While its possible you'll get the same exchange rate at the end as the start, its somewhat unlikely.
So you might get 6-10% interest payment, then get your principal back reduced by 10-30%.
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Or you might get your 5-10% interest and gain 20-30% on the currency, if you correctly gauged the direction of the market. The Brazilian Real has been very, very good to me over the past year, and one did not need to be a genius to see which way the currency would trend. In the end, it is all in your risk/reward calculus. My Everbank CD's are a small portion of my portfolio and I am prepared to take the consequences if I have made a mistake in my analysis.
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Living an analog life in the Digital Age.
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