Hello From Texas; Anyone Living Completely off of CD Interest Income?

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nativetex

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Dec 5, 2013
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My wife and I are seriously considering relocating to the DR. Have been lurkers here for about 3 months. We are considering bringing enough cash there to be able to live off the interest of CD's purchased there. My research has shown that USD accounts pay 4-6% and DP accounts pay 12-18%. These are regular CD's, not commercial paper. Interest paid monthly. Was thinking that we would invest enough in a DP account to bring in about 80,000 DP per month and invest an additional amount in a USD account to bring in about $500 USD per month. We can start receiving Social Security benefits (if still solvent) in 4 years. We will be leaving a small nest egg in the USA.

Is this common among expats there or are we just dreaming? How risky are the commercial paper accounts? Would love to hear from someone currently doing this.

We would rent for 6 months to a year and then decide whether to stay and buy a villa/apartment. Thanks in advance for your replies.
 
Xavier_Onassis

Xavier_Onassis

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Aug 6, 2006
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I suggest investing in US mutual funds and transferring the money as you need it. Keep in mind that a devaluation of the Dominican Peso is a possibility. That could be a serious turd in your punchbowl. I suggest you subscribe to Hulbers Financial Digest and pick a good newsletter, invest in stock and/or bond funds in a discount brokerage account (Scottrade, Schwab, TD wATERHOUSE) and follow it religiously. Or you could check out the AAII, or TIAA-CREF mutual funds. CD's have dismal yields, and Dominican peso accounts are a lot more risky.

Renting first before you buy is clearly wise.
 
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donluis99

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Jul 12, 2004
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nativetex said:
Thanks Harleysrock. What would you consider a "good" startup cost budget?
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Depends on your personal expectation of Comfort Level of Living, to live here in the DR at the same CLL will cost at least 50% more here depending on location.

Please where, with your research can you get a 4% return on US dollars? We get like 1/4%, 14 years ago it was 2%.

From Alvin Texas, here now completing 14 years...........

g'luck!
 
Xavier_Onassis

Xavier_Onassis

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Aug 6, 2006
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Please where, with your research can you get a 4% return on US dollars? We get like 1/4%, 14 years ago it was 2%.

Bond funds: check these out: OSTIX, JAHYX, MWHYX, EXDAX. put the data into Yahoo Money (or any investment database). All paid more than 4% last year.

Here is a secret: CD's suck.
 
melphis

melphis

Living my Dream
Apr 18, 2013
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Not sure if you can still get 12 to 14% on pesos. Most I can get now is 7 to 8% on one year term. Also when I first deposited the money I got 35 pesos to usd. Now its 43. Quite a big difference but I am still ahead. I would check banks in Panama before you do anything.
 
Harleysrock

Harleysrock

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Nov 4, 2012
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Gaspar Hernández, Espaillat, Dominican Republic
nativetex said:
Thanks Harleysrock. What would you consider a "good" startup cost budget?
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Well it depends where you will be living, NC is not cheap! We needed a lot b/c we built a pool, fence roof, casita and about 100 other things and living on the beach is non stop maintenance for us.

Do you want a car? They are expensive here, gas is expensive, basically anything that is imported and of any quality is expensive.

Since you are renting first you will probably need less money? We had to basically furnish our house too bc we didn't like their stuff.

I would not come here with less than $50,000 just to start up and that is pushing it in my opinion. (that is not including the investments you have)

Things always break here, electronics get ruined etc...more so b/c of my beach life.

What area are you thinking about moving to?
 
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JayinRD

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Apr 18, 2013
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I personally wouldn't feel safe putting that kind of money in Dominican deposits but many others haven't had any problems. I feel more safe with the approx 5% return I have been getting w a mixture of US stocks, bonds, annuities. If you think the cost of living is less than Texas you are wrong especially if you plan on buying any big ticket items like a house, car, furniture, electronics.
 
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nativetex

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Dec 5, 2013
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The county taxes on my home here are $9,000 this year. Medical insurance is another $400/month. Just those two are $1150/month. Would not that go a long way there? Why do you not feel safe with deposits in DR banks?

JayinRD said:
I personally wouldn't feel safe putting that kind of money in Dominican deposits but many others haven't had any problems. I feel more safe with the approx 5% return I have been getting w a mixture of US stocks, bonds, annuities. If you think the cost of living is less than Texas you are wrong especially if you plan on buying any big ticket items like a house, car, furniture, electronics.
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DR_Guy

DR_Guy

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Feb 17, 2010
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The county taxes on my home here are $9,000 this year.

Yup, don't miss this. :laugh:
 
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DRob

Gold
Aug 15, 2007
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First, welcome to DR1!

A little over a decade ago, there was a major banking crisis in DR, which led to a very serious devaluation of the peso. (Search for "Baninter" for more info.) In order to stabilize the local currency, the Banco Central (their version of the Federal Reserve) allowed banks to issue essentially guaranteed CDs, accepting both dollars and pesos. The interest on these fairly secure instruments was upwards of 18%, and served as a major windfall for those who invested, some of whom are on this board.

Although those rates haven't been seen in years, folks still hear about 18% CDs in the DR. Unfortunately, new issues don't exist any more. The best you can hope for, really, is around 8% in pesos, which ain't all that great given their present rate of inflation.

My advice would be to invest safely back home (Vanguard mutuals, ETFs from index funds, income producing real estate, boring yet reliable stuff like that), and use those proceeds to live on.

You should be careful about investing anything anywhere until you get a solid feel for the lay of the land, there are lots of hustlers out there, and virtually no recourse if things go south.
 
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nativetex

New member
Dec 5, 2013
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donluis99 said:
Depends on your personal expectation of Comfort Level of Living, to live here in the DR at the same CLL will cost at least 50% more here depending on location.

Please where, with your research can you get a 4% return on US dollars? We get like 1/4%, 14 years ago it was 2%.

From Alvin Texas, here now completing 14 years...........

g'luck!
Click to expand...

Lived in Alvin from 80 -82. Worked at Chocolate Bayou Co; a large rice farming outfit. The rates I got were from Banco Central. Maybe they were old?
 
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No Place Like Home

Well-known member
Jul 9, 2013
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Medical insurance for me at 63 is 500 usd per year. 2 days in the hospitlal last year cost me 1 dollar and good doctors. DR insurance company
 
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DRob

Gold
Aug 15, 2007
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There's a really good thread on expenses here: http://dr1.com/forums/living/112283-living-costs-dominican-republic.html

The general consensus is that two adults can live quite comfortably on $2,500-3,000 a month in virtually any part of the country. More than that, things get very fancy very quickly, but most would counsel you to save the surplus for a rainy day.

Of course, that number changes radically if you insist on luxury living, imported food, or have problems with moderating your usage of booze or bimbos.
 
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