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Thread: 401k,457 VS Dominican bank CD

  1. #1
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    Default 401k,457 VS Dominican bank CD

    After watching some of my co-workers 457/401k accounts plunge 20000-80000$ USD in the last few years,I'm starting to assume,my money is probably safer in a DR CD account.Yeah,yeah,I've read 'bout the meltdown in DR banks,but when you watch your accounts taking hits for -800$ USD every quarter,it's hard to imagine it could be worst.I say go big and go home.We are taking a risk anyways,might as well make it worth it.At least the banks are making a guarantee on your return.Whether the financial institution is gonna be belly up before your maturity expires is a risk worth more taking than taking hits throughout the year,besides,you are getting a fix rate of return,and according to the bank customer rep I spoke to(Banco popular),your interest gets transfer monthly to a savings account for even more gains.Yes,yes,its sounds great but I'm sure there's risks involved,but like I said before,can't be worst than here,taking into account the rate of return upnorth.Hoping to hear from those with positive and negative experiences.Of course it makes more sense to get the return in dominican pesos,even with devaluation,I feel you still get more than up north.Just my thoughts and opinions,not facts.

  2. #2
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    You can go Commercial Paper also. Kinda like Dominican Stocks. I hear a pretty good yield from those also.

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    Completely disagree. I would NEVER take my 401k funds and put them in a Dominican bank. Reasons:

    - A USD account in a Dominican will give you very meager returns. You're better off moving your 401k funds to US bonds.

    - A Peso account may give you decent returns, but that will wash away as the Peso devalues against the USD, which happens 99% of the time. Sometimes these devaluations are huge (i.e. During Hippo's government) then all of sudden those 500,000 pesos you had that were worth maybe about 17,000 USD are now worth about 9000 USD. You just lost 1/2 your money.

    - Dominican banks are not REALLY insured. In theory yes there's some insurance, but the reality is that it all depends on who's in power, the circumstances the bank went under, etc...do a search for Banco Universal (Leonel Almonte) and of course Baninter to see what could potentially happen to your money.

    - Remember that with a 401k you're saving for your retirement, so these dips in stock value can actually be a blessing in disguise because if you continue to contribute as before you can buy more shares which will make your total value skyrocket when the economy recovers. If you're close to retirement then you shouldn't be investing aggressively and your portfolio should be very conservative with very little invested in risky stocks, but if you have 10+ years until retirement then you can be more aggressive and just keep putting in your money. Don't look at it on a daily basis as you'll drive yourself crazy with the down swings and it won't do you any good as you won't be getting that money out for a while anyway.

    If you have disposable money that you can afford to lose without making a huge dent to your retirement then try your luck at any of the many risky, but potentially rewarding businesses in The DR.

    My two cents.

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    Will definitely take your advise and experience into account.And don't worry,I wouln't put "all my eggs in one basket"but like you said,play with an amount that would not put a dent on my savings.Thanks all for contributing to the thread.

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    Quote Originally Posted by ricky11 View Post
    if you take money out of your 401k and are not 59 1/2 you have to pay a penalty plus possible additional taxes
    You can take a loan without paying the penalty.

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    Yes, I have invested in an advertizer on this site wtih good results. Certainly better than GM, AA shares etc.
    Now some people reckon that Russia and Brazil are hot both for property and shares. Russia has a good part of the European gas market.
    An alternative is a mutual that invests in bonds in a number of developing countries including the DR.
    US is having bankruptcies that is making the market risky in some peoples opinion - e.g. Kodak.
    Maybe a spread of develoing country bonds and property is attractive.
    But as they say do your own due dilligence.
    pi2

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    All ideas are useful
    pi2

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    What are the steps involved in opening a CD account with no previous bank account in DR? I keep reading you need a reference letter from your financial institution.If that's the case,what you should the letter state and is it acceptable from a foreign bank.Can you open a CD account with no funds on site and instead have it wire fron the US to start the account?

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    Quote Originally Posted by suarezn View Post
    Completely disagree. I would NEVER take my 401k funds and put them in a Dominican bank. Reasons:

    - A USD account in a Dominican will give you very meager returns. You're better off moving your 401k funds to US bonds.

    - A Peso account may give you decent returns, but that will wash away as the Peso devalues against the USD, which happens 99% of the time. Sometimes these devaluations are huge (i.e. During Hippo's government) then all of sudden those 500,000 pesos you had that were worth maybe about 17,000 USD are now worth about 9000 USD. You just lost 1/2 your money.

    - Dominican banks are not REALLY insured. In theory yes there's some insurance, but the reality is that it all depends on who's in power, the circumstances the bank went under, etc...do a search for Banco Universal (Leonel Almonte) and of course Baninter to see what could potentially happen to your money.

    - Remember that with a 401k you're saving for your retirement, so these dips in stock value can actually be a blessing in disguise because if you continue to contribute as before you can buy more shares which will make your total value skyrocket when the economy recovers. If you're close to retirement then you shouldn't be investing aggressively and your portfolio should be very conservative with very little invested in risky stocks, but if you have 10+ years until retirement then you can be more aggressive and just keep putting in your money. Don't look at it on a daily basis as you'll drive yourself crazy with the down swings and it won't do you any good as you won't be getting that money out for a while anyway.

    If you have disposable money that you can afford to lose without making a huge dent to your retirement then try your luck at any of the many risky, but potentially rewarding businesses in The DR.

    My two cents.
    What about if you just live off the interest and keep the capital intact? it doesn't matter if it devalues,you just creating chum change.On a 100.000 usd,you would get,let's just say 1200.00 usd monthly...that would probably cover your rent or car payment.So essentially you driving around for free beacuse you lent them money.So even if you break even at the end,you did rip some benefits....no?

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    Quote Originally Posted by nyc dad View Post
    What about if you just live off the interest and keep the capital intact? it doesn't matter if it devalues,you just creating chum change.On a 100.000 usd,you would get,let's just say 1200.00 usd monthly...that would probably cover your rent or car payment.So essentially you driving around for free beacuse you lent them money.So even if you break even at the end,you did rip some benefits....no?
    WHERE???? Tell me where I can make this investment in the DR.

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