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Old 16-08-2008, 06:58   #46
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The dollar question is one of time. IF your talking short to intermediate term, say within the next few years, then I think the dollar is likely to gain strength from current levels as a deep global recession plays out.

If your talking longer term.... more than 3 years.... then I would MUCH rather hold AU or Kiwi dollars. The US debt and deficit situation coupled with looming entitlement funding shortfalls spell death for the dollar. The shortfalls in SS, Medicare and Medicaid over the next 30 years exceed $45 Trillion. That is more than the entire specie of the USA today. The ONLY way that gets funded is through the printing press. Baby boomer qualification for these programs explodes starting in 2011. I for one have no intentions of sitting back and watching my dollars be destroyed through inflation when there are other options.



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Old 16-08-2008, 08:56   #47
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The dollar question is one of time. IF your talking short to intermediate term, say within the next few years, then I think the dollar is likely to gain strength from current levels as a deep global recession plays out.

If your talking longer term.... more than 3 years.... then I would MUCH rather hold AU or Kiwi dollars. The US debt and deficit situation coupled with looming entitlement funding shortfalls spell death for the dollar. The shortfalls in SS, Medicare and Medicaid over the next 30 years exceed $45 Trillion. That is more than the entire specie of the USA today. The ONLY way that gets funded is through the printing press. Baby boomer qualification for these programs explodes starting in 2011. I for one have no intentions of sitting back and watching my dollars be destroyed through inflation when there are other options.



Terry
Warren Buffet said something similar. He said that the US is taking in $2b a day in outside investments and that this is unsustainable.
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Old 16-08-2008, 15:44   #48
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noone has explained an answer to my question though, and as I am sure you can apply it to other banking needs too.

How does one open an account in other countries and if this is common
do you move your investments around as you find sweeter deals??
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Old 16-08-2008, 15:56   #49
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It is relatively easy to make foreigh investments but it is extremely hard to establish a foreign banking relationship. Usually you have to be a resident or own a locally registered corporation.
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Old 16-08-2008, 16:11   #50
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noone has explained an answer to my question though, and as I am sure you can apply it to other banking needs too.

How does one open an account in other countries and if this is common
do you move your investments around as you find sweeter deals??

Like I posted before... check out Everbank.com They offer a number of different money market accounts that enable you to invest in foreign currencies and even to diversify across various currencies. They off CD's, money markets and hybrid accounts.


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Old 16-08-2008, 16:52   #51
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Well to be honest there is not one investment mentioned where I could walk away for even a year. Haveing invested 120k and knowing it will have growen buy more than 8% without taking a major risk.
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Old 16-08-2008, 18:03   #52
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sorry if I am dragging this thread on and on but it seems some good info is being passed around on here. So I did some research and on Everbank.

I can get a WorldCurrency CD from Everbank

one of the options is

New Zealand dollar6.13%6.27%6.13%6.22%6.00%6.05%6.00%6.00%

for 3 6 9 and 12 month terms.

Now this earns a nice 6.22 for the 6month term and afterwards I can exchange the currency or get it back in US funds if i choose.

The only drawback I see is if the % drops significantly in the 6 months but that would have to drop at least 2.6% in that time for me to have even broke just even from my current 3.8% I am getting. that in and of itself would be a pretty remarkable drop wouldnt it??

Although my current was 5.24% before feds starting reducing interest but it was a drastic measure.

Is there anything I am not understanding here with these??
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Old 16-08-2008, 18:29   #53
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Keep it up.
I am learning from your work and research.
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Old 16-08-2008, 18:30   #54
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GZgunner - Also check the exchange rate spreads and any fees. You buy NZ dollars with US dollars for one price. You sell the NZ dollars back to US dollars at another price. The bank keeps the spread. Also there my be other fees involved. These must be accounted for and deducted from any real interest you are getting.

The US dollar has weakend by up to 15-20% against some currencies in the last 24 months. If it strengthens even 5% in the next year you have wiped out your earnings.

I am not saying don't do it. I am saying that you need an in-depth understanding of what you are doing.
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Old 16-08-2008, 19:35   #55
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Originally Posted by GZgunner View Post
sorry if I am dragging this thread on and on but it seems some good info is being passed around on here. So I did some research and on Everbank.

I can get a WorldCurrency CD from Everbank

one of the options is

New Zealand dollar6.13%6.27%6.13%6.22%6.00%6.05%6.00%6.00%

for 3 6 9 and 12 month terms.

Now this earns a nice 6.22 for the 6month term and afterwards I can exchange the currency or get it back in US funds if i choose.

The only drawback I see is if the % drops significantly in the 6 months but that would have to drop at least 2.6% in that time for me to have even broke just even from my current 3.8% I am getting. that in and of itself would be a pretty remarkable drop wouldnt it??

Although my current was 5.24% before feds starting reducing interest but it was a drastic measure.

Is there anything I am not understanding here with these??
As Dan has cautioned, there is a forex differential that you must figure into the equation. That is, do you think the $US will appreciate/depreciate/stay the same in the cross with the $Kiwi over the term of the CD investment? Had you, for example, opted for the $Kiwi on July 15 when it stood at a high of .7642 to the $US, you would have seen it crash over the next month as the dollar staged a bear market rally that took it to a low of .7155 to the $Kiwi on August 11.

That represents a move of almost 9% in less than a month. Can you stand that kind of volatility? In addition, as Dan has pointed out, Everbank will extract a percentage for their trouble, which is either 1/2% or 3/4%, IIRC. That's a pretty stiff headwind to beat into.

On the other hand, if you believe this short-term rally in the dollar will be short-lived and that the $US will revert to its form of the last ~7 years and turn down again against other currencies such as the $Kiwi, now could be the perfect time to put such a trade in place. Why? Because if the $US heads down again, even if it doesn't move as dramatically as it has over the past month, you will have a nice tailwind compounding the benefits of the interest rate offered on the $Kiwi.

As Dan has politely suggested, make sure you understand all the ramifications of what it is you're proposing to do before you put capital at risk. Yield (interest on your invested funds) is but one aspect of such an investment, and while it's the easiest part to comprehend, it's actually a rather minor consideration in such an investment.

Good luck in your efforts.

TaoJones
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Old 17-08-2008, 11:41   #56
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<snip> Had you, for example, opted for the $Kiwi on July 15 when it stood at a high of .7642 to the $US, you would have seen it crash over the next month as the dollar staged a bear market rally that took it to a low of .7155 to the $Kiwi on August 11.

That represents a move of almost 9% in less than a month. <snip>
Correction: Although I used the right numbers when I ran this, I used an incorrect number when I composed the post. The actual low on August 11th for the $Kiwi was .6957, not .7155. The difference between the high of .7642 and the low of .6957 is .685, which is a move of 8.964%.

Keep in mind, GZgunner, that the quoted yield of 6+% is per annum. In other words, one must place one's capital at risk for one year to earn the entire 6+%. If one opts for a shorter-term CD, say 3 months, divide the yield by 4 to determine the real return of ~1.5%. If the chosen term is one month, the real return is ~.5%.

So, if a person had gone into a one month $Kiwi CD on July 15th when the $US/$Kiwi cross reached a high of .7642, when the term expired on August 14th with the $Kiwi closing that day at .6965, the investment would have earned ~.5% in yield, but lost 8.86% in the $US/$Kiwi exchange, plus the brokerage fee.

Let's put it in terms of actual American dollars. Had you invested $140,000 in the above transaction on July 15th, at expiration of the one month term your capital would have earned .5% ($700), but lost 8.86% ($12,404) on the $Kiwi fall against the $US. There would be a fee paid on the transaction as well.

Compounding the loss is the fact that you must gain more than you lost just to get back where you were, in percentage terms. Why? If a person invests $100 and loses 50%, he's left with $50. To get back to where he started, he must gain $50, therefore he must gain 100% on his $50 capital to break even. Trust me, it's a lot easier to lose half your capital than it is to double it.

In the example above, leaving aside the transaction fees, your $140k capital has been reduced to $128,296 ($140,000 - !2,404 + 700 = $128,296). To get back to where you began, that $128,296 must gain 9.12% ($140,000 - 128,296 = $11,704, which is ~9.12% of $128,296). This is why money management is so critical to sound investing - once you've incurred a big hit to your investing capital, it's that much harder to get back to where you began.

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Old 17-08-2008, 13:38   #57
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You might want to cruise for a year and see if you would enjoy it!!!
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Old 17-08-2008, 13:49   #58
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You might want to cruise for a year and see if you would enjoy it!!!
My plan.

Just have to convince the Admiral that we really don't need the big house any more.
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Old 17-08-2008, 17:05   #59
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Just my simple thoughts...

**** DO NOT SELL THE HOUSE! ****

If you don't have one, get one with a large down payment.
It's a profit center. As the housing market is dropping out, the people who are loosing their house STILL need a place to say. Rents are going up.

Greg
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Old 20-08-2008, 12:02   #60
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All this financial advice is great, but there is no guaranteed 8% out there. If there were, and you knew about it, you would be making big money as a fund manager.
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