Ukrainian CD's -- 18.75 APY

[gsjackson]

I believe Contrarian Expatriate has expertise on this subject, and perhaps he will weigh in, but maybe others have some familiarity as well.

Ukrainian certificates of deposit pay as much as 18.75 APY right now. That, of course, compares to around 1 percent in the U.S., and not much more in western Europe. I assume that there is enormous risk inherent in the Ukrainian instruments. Anybody have a decent idea of just how much? I definitely wouldn't put money in Latin America. Is Ukraine in the same category, owing to similar cultural factors?

[ladislav]

I believe Contrarian Expatriate has expertise on this subject, and perhaps he will weigh in, but maybe others have some familiarity as well.

Ukrainian certificates of deposit pay as much as 18.75 APY right now. That, of course, compares to around 1 percent in the U.S., and not much more in western Europe. I assume that there is enormous risk inherent in the Ukrainian instruments. Anybody have a decent idea of just how much? I definitely wouldn't put money in Latin America. Is Ukraine in the same category, owing to similar cultural factors?

I might risk part of my holdings there but do keep in mind that Ukraine is a VERY unstable country ala Latin America. It has no experience with democracy or industrial capitalism as it is a traditionally agrarian society and its leaders can be clueless. Nevertheless, you may want to start small to see how it works.

I was in Ukraine though and I saw these ads on billboards and posters of different banks. I talked to some local people and they told me that banks go bankrupt all the time there. There is no FDIC there as far as I know but I could be wrong.

I would advise you google Expat Ukraine Forum and ask the many people who are living there permanently and get a second and third opinion.

I like your "cultural factors" point. It did in fact become Europe's Latin American country.

[Montanaland]

That is quite a high return and deffinetly needs to be investigated more before one sees his/hers $ dissapear. I remember rock posting on here a while back about such returns available.

[zacb]

I wa slooking into this awgile ago, and it would actually boil down to 6% after inflation. I know unicredit has yields like that in Ukraine, and I would be more likely to support them. I honestly suggest buying stock in dom, since they have at least a 10% dividend.

[Contrarian Expatriate]

I have been investing for years in high-yield accounts abroad and my strategy is to choose the banks that are the most established and best capitalized. Typically, one must open the account in-person and choose the local currency option to get the highest rates.

I now wire money periodically into these accounts. After they mature after 2 years, I roll them over into newly established accounts.

If you are skittish about a particular country, choose three different countries with high rates to spread your risk. Your money is more at risk in the US stock market than in a foreign Term Account or CD.

Caution: You must report these accounts (if over $10,000 collectively) to the US Treasury each year via the FBAR report by June.

You must also report these accounts on your IRS tax forms, and you must pay passive income tax to Uncle Sam or risk having them seized from you. This is the real risk of having these accounts rather than losing your money to some shady operation.

The beauty of these accounts is not only the high rates, but also the fact that your money is in non-US currency. So when the dollar starts to plummet due to the continued printing of more dollars, your wealth will explode do to the high rate and the rising local currency in which you are invested.

This is a no-brainer that savvy investors have been doing for years! It works well, and these banks are often more solvent than US overrated banks.

[ringspun]

I have been investing for years in high-yield accounts abroad and my strategy is to choose the banks that are the most established and best capitalized. Typically, one must open the account in-person and choose the local currency option to get the highest rates.

I now wire money periodically into these accounts. After they mature after 2 years, I roll them over into newly established accounts.

If you are skittish about a particular country, choose three different countries with high rates to spread your risk. Your money is more at risk in the US stock market than in a foreign Term Account or CD.

Caution: You must report these accounts (if over $10,000 collectively) to the US Treasury each year via the FBAR report by June.

You must also report these accounts on your IRS tax forms, and you must pay passive income tax to Uncle Sam or risk having them seized from you. This is the real risk of having these accounts rather than losing your money to some shady operation.

The beauty of these accounts is not only the high rates, but also the fact that your money is in non-US currency. So when the dollar starts to plummet due to the continued printing of more dollars, your wealth will explode do to the high rate and the rising local currency in which you are invested.

This is a no-brainer that savvy investors have been doing for years! It works well, and these banks are often more solvent than US overrated banks.

Which would you say was a safe country though?

[zacb]

As far as safest, I would say some of the Islamic banks, like the ones in Malaysia and such would be the least likely to rip you off, and they offer from 3-5 perecent. They also go according to Islamic banking, which means that they have to have tight reserve amounts. Just athouht. And btw, the Islamic banking ones have specific accounts that are governed according to Sharia.

[Contrarian Expatriate]

I have been investing for years in high-yield accounts abroad and my strategy is to choose the banks that are the most established and best capitalized. Typically, one must open the account in-person and choose the local currency option to get the highest rates.

I now wire money periodically into these accounts. After they mature after 2 years, I roll them over into newly established accounts.

If you are skittish about a particular country, choose three different countries with high rates to spread your risk. Your money is more at risk in the US stock market than in a foreign Term Account or CD.

Caution: You must report these accounts (if over $10,000 collectively) to the US Treasury each year via the FBAR report by June.

You must also report these accounts on your IRS tax forms, and you must pay passive income tax to Uncle Sam or risk having them seized from you. This is the real risk of having these accounts rather than losing your money to some shady operation.

The beauty of these accounts is not only the high rates, but also the fact that your money is in non-US currency. So when the dollar starts to plummet due to the continued printing of more dollars, your wealth will explode do to the high rate and the rising local currency in which you are invested.

This is a no-brainer that savvy investors have been doing for years! It works well, and these banks are often more solvent than US overrated banks.

Which would you say was a safe country though?

Certainly not the USA. With interests rates so low for so many years, inflation eats away at your money as time goes on.

There is no "safe" country, because the one's that are often considered safe, give the lowest interest rates. Don't be afraid of risk. Any established bank in the world is safer than the US stock market and most Americans don't hesitate to invest there. Go after the highest rates in reasonably well run countries with responsible central banks. I'm not talking about Greece and Cyprus type countries.

To start your research, check out the Moody's and S&P bank ratings reports on the countries banking systems and check out this site:

http://term.deposits.org/

The list changes often so check that site regularly and be ready to pounce when a country you are comfortable with breaches the 10% per year mark.

There will be one or two blokes that scream bloody murder because the rating agencies did not foresee the credit crisis in 2008, but these rating services are more reliable now than ever since they were highly criticized during that time.

While the naysayers tell you you are stupid for banking outside the US, pick up 10 to 15 percent per year and laugh all the way to the bank!

[aozora13]

Are you there countries that have high yield CDs? I saw that high yield for Ukraine and you have to put about $37k for investment. What options should do people have to invest in foreign CDs? If you can help by PM or other advice it would be good.

[Contrarian Expatriate]

Are you there countries that have high yield CDs? I saw that high yield for Ukraine and you have to put about $37k for investment. What options should do people have to invest in foreign CDs? If you can help by PM or other advice it would be good.

Certificate of Deposit is a US banking term. Other countries call them Term Accounts, Time Accounts, Investment Accounts, Bond Accounts, and any number of other names.

A lot of personal research needs to be put in to see if they are right for you. As a policy, I don't recommend particular countries or banks to others. Start with that website and learn about some options, but you really need to get professional advice on the annual reporting requirements of overseas accounts lest the US Department of the Treasury seize your money as a penalty. Loss of funds due to IRS problems are far more likely than the bank or the country you choose going belly-up.

[aozora13]

Thanks, I will do more research in foreign investment. Also, I think I am more inclined to avoid Treasury by reporting my overseas account as the US govt has treaties with almost most major countries in the world.