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Thread: Banca Santa Cruz. 14.8% interest, pesos

  1. #51
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    Quote Originally Posted by cavok View Post
    Who knows how financially sound Banco Santa Cruz is(?). My point just was that it is a registered bank with branches all over the country - as opposed to "bancas"(which is how the OP spelled it) which are nothing more than gambling houses that frquently also have loan sharking operations, and others like Anoeca that have zero regulation.

    I agree. I think someday you'll see the DR adopt the USD as their official currency. All those nice little difference colored pieces of paper that come out of the ATH's are nothing more than monopoly money.

    Banco Central is not much different than other 3rd world country central banks - better than some, worse than others, but it's bonds are just a step above junk rating. You can get similar interest rates on sovereign bonds in other 3rd world countries, too. The high rates are a "risk premium". You get premium rates for taking the risk.
    Confusing a banca with a bank is a common mistake for many new people coming to the DR. Hopefully, they learn the difference quickly.

    DR's bonds have for as many years as I have been following them....always been "highly speculative" "Non investment grade"......known in bond circles as "Junk Bonds."

    But why chase yield for so little reward? Likely because people see negative rates in Europe and low 2's on the US 10 year and think DR bonds are some how a dream come true.

    But, its all good...until its not.....


    Respectfully,
    Playacaribe2

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  3. #52
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    It's interesting perspectives here, so let me clarify some things...

    1.) I misspoke earlier, I actually make 12%. But 1% is taken out for taxes.

    2.) I've been collecting interest for around 13 or 14 years. My father did it before me. The peso has been losing its value, so obviously, you're not really making 11% or 12%, but more like 8% per year.

    3.) Converting the interest back to dollars doesn't make sense. It's just another big lost. Its better to just leave it in pesos and use the interest to supplement your income here.

    4.) It's risky to depend only on the interest for income.

    5.) Using my interest here, I bought another car this year, a new motorcycle last year, and about 4 or 5 motorcycles in the last 13 to 14 years. Nothing extravagant, just used motorcycles and a couple of used cars: 2008 Jeep Wrangler (4-door), and a 2013 Ford Escape SE Ecoboost.

    6. There is a real risk of the peso continuing to lose its value against the dollar. So, i don't recommend people to make this kind of investment. It's not like it was 8 and 10 years ago. So, when friends of mine ask me if they should do it, I'm like, I don't think its worth it anymore, and besides, the Dollar is so strong right now, why do it?

    Frank

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  5. #53
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    Quote Originally Posted by frank12 View Post
    It's interesting perspectives here, so let me clarify some things...

    1.) I misspoke earlier, I actually make 12%. But 1% is taken out for taxes.

    2.) I've been collecting interest for around 13 or 14 years. My father did it before me. The peso has been losing its value, so obviously, you're not really making 11% or 12%, but more like 8% per year.

    3.) Converting the interest back to dollars doesn't make sense. It's just another big lost. Its better to just leave it in pesos and use the interest to supplement your income here.

    4.) It's risky to depend only on the interest for income.

    5.) Using my interest here, I bought another car this year, a new motorcycle last year, and about 4 or 5 motorcycles in the last 13 to 14 years. Nothing extravagant, just used motorcycles and a couple of used cars: 2008 Jeep Wrangler (4-door), and a 2013 Ford Escape SE Ecoboost.

    6. There is a real risk of the peso continuing to lose its value against the dollar. So, i don't recommend people to make this kind of investment. It's not like it was 8 and 10 years ago. So, when friends of mine ask me if they should do it, I'm like, I don't think its worth it anymore, and besides, the Dollar is so strong right now, why do it?

    Frank
    And yours is a bit of a unique situation.

    Having said that, there are still investable US stocks paying dividends equivalent to peso certificate yields with, in my opinion, less risk.

    Different strokes for different folks.

    And yes there truly is real risk of the peso continuing to lose value against the dollar as the Fed has begun to raise rates here, changing the risk reward equation to favor dollar investments.

    Respectfully,
    Playacaribe2

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  7. #54
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    Quote Originally Posted by playacaribe2 View Post
    And yours is a bit of a unique situation.

    Having said that, there are still investable US stocks paying dividends equivalent to peso certificate yields with, in my opinion, less risk.

    Different strokes for different folks.

    And yes there truly is real risk of the peso continuing to lose value against the dollar as the Fed has begun to raise rates here, changing the risk reward equation to favor dollar investments.

    Respectfully,
    Playacaribe2
    There is also the real risk of the U.S. stock market and many other stock markets around the world going into a longer-term protracted decline. Mostly due to the unprecedented leverage that was taken to get them to where they are today.

    In terms of dividends from stocks, those can be suspended or reduced at anytime. It is not as though they are exactly the same as fixed income.

    There is a very solid reason why U.S. interest rates from T-bills to Notes and Bonds continue to dwell in the basement. Many want to use the convenient excuse that this is the result of central banking actors. One better hope that is the case, because the alternative is something similar to a hyper debt leveraged unwind.

    Investing in $RD peso denominated paper with a currency that continues to devalue against the USD is not the best idea at even a 10% interest rate over a 7-10 year time frame.

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