Just a few questions:
What principal did you use?
Are you qualified in any way to give investment advice?
- Thread starter third
- Start date
Bank CD's Interest Rate
Just a few questions:
What principal did you use?
Are you qualified in any way to give investment advice?
There is NO investment advice from this corner, just a matter of opinion. I have zero qualification on this subject. Just my 2 cents worth. Figures are fictional.
No problem of course, you are entitled to your opinion.
The OP seemed to be looking for advice though and was given some very practical and time honored advice in several answers..
Of course without 'full-disclosure' on the clients part a valid advice cannot be given
I will try to write this on my phone so excuse the mistakes. I've mentioned this before but I will reiterate here again. I make 12% interest on my pesos that is compounded monthly. I've been living off this for 8 years. My father before me lived off of this for 6 years. We have never converted our pesos to dollars or any other currencies. We use are monthly 12% interest to live comfortably, and have done so for a long time. For someone interested in living in the dr on dominican pesos, this is the way to go. Period. For soemone interested in converting to another currency, I don't recommend it. My family--aunts, uncles, cousins have been living this way for at least 20 years. My father and I have have done it for 14 years. If you think stocks are the way to go, go for it. Not me, nor my family will ever buy a stock...not even if it was free.. Frank
Where would be a place to exchange USD to RD in big quantities if one wanted to play it safe and just take advantage of the good spot exchange rates without paying any type of conversion commission? Even though the exchange rate seems to be fairly stable lately, there have been some pretty significant dips over the past 10 years or so.
Re the depriciation the Peso has gone from 32 to 39 to the dollar over the last 7-years from 2006 untill 2012. This would mean a further depriciation of 21% on your investment.
Now if you experienced the haydays of 2003/2004 at the end of the Hippo period...and then changed dollars for pesos at 60:1 you would have doubled your money
...
Now if you experienced the haydays of 2003/2004 at the end of the Hippo period...and then changed dollars for pesos at 60:1 you would have doubled your money
...I like this strategy and think it is relatively safe. What bank do you use Frank? I tried to contact Scotia Bank and they said they do not do the 7 year CD's. The rates they quoted for the shorter term ones were not so great. Do you pay any type of commissions or other maintenance fees on this CD? How much money would a family of 4 need to invest at 12% to generate enough cash to live a comfortable life there? (No car, rent 3 BR house/condo, Sosua/Cabarete area, food, some beers, utils, etc) I was thinking around $2,000 USD or so at today's rates. Does that sound reasonable?
What bank do you use JD? I contacted Scotia Bank but they do not do the 7 year CD's and the shorter duration ones paid poorly.
Also for a guy still living 1/2 year in the US, do you think I would have to pay income tax to the US, DR, or anyone on the gains from these CD earnings? If so, how is it treated...at what rate? Is there anyway the US could track this sort of thing, or do they not even bother?
Also for a guy still living 1/2 year in the US, do you think I would have to pay income tax to the US, DR, or anyone on the gains from these CD earnings? If so, how is it treated...at what rate? Is there anyway the US could track this sort of thing, or do they not even bother?
Banco Leon situated in La Sirena, Puerto Plata still offering 12.25% for a 7 year CD (CD is 'shared' with Banco Central). Interest is paid 6 monthly, of course the CD is in Pesos. Other rates as follows;
1 Year CD = 4.85%
2 " " = 8.75%
3 " " = 9.25%
4 " " = 10%
6 " " = 11.25%
1 Year CD = 4.85%
2 " " = 8.75%
3 " " = 9.25%
4 " " = 10%
6 " " = 11.25%
Today, Banco Leon situated in La Sirena, Puerto Plata offering 11.25% for a 7 year CD (CD is 'shared' with Banco Central). Interest is paid 6 monthly, of course the CD is in Pesos.
Wow, Frank, I am quite intrigued by this. My husband and I are arriving in Cabarete for a coupla weeks next Friday. Hope to see you at the bar. I enjoy your posts very much.
Yvonne
aka jimmygibbon
Yvonne
aka jimmygibbon
Excellent advice so far!!! You're getting a nice return with the added safety of the US regulatory system. Of course all these systems are garbage but in the pit of trash pick the best one. Outside of a meltdown you are quite safe and betting conservatively in my opinion. Investing in the DR via a bank rigamarole is a sucker's bet. Just look around the country and see what it looks like. I was somewhat bullish when the DR Central Bank was dealing directly with the investors because then you had an implicit IMF guarantee of a bailout if the DR CB melted down. The IMF has always bailed out the DR gov't and CB.
Now you've got this bank rigamarole which I don't trust. Plenty of US investors took their hard earned US dollars 20 years ago when the peso was 12 to 1 or somewhat only to see their 100,000 dollar investment as an example turn into 30,000 dollars. You'll lose over time. That's why they pay such high rates versus the US. You're giving up your money over time to get a nice return today. I don't recommend that to anyone. Now if you've made your money in the DR in pesos that's a whole another story but even then it's better to change into dollars and sit on them. They'll always be worth more over time.
Historically, the DR has had too many pitfalls and failed systems in the banking industry to believe this time it's different. There are better options out there and plus we don't know the extent to which the DR banks are involved in scam flim-flam operations like the Baninter scare some years back. That one nearly toppled the DR economy were it not for the IMF. Of course if you need an income within the DR and you're a home made production then investing over there would be your only option. It's best avoided if you can and follow Conchman's advice. It can't get better than that.
I like this advice; it's good advice, and i agree with it, except for one detail which I've already pointed out earlier but will reiterate again...if you live here and your money is in pesos, and you do not plan on converting to another denomination and losing on the exchange rate, then by all means why not stick your pesos in a Central Bank CD--sold through other banks--which are paying 8% to 12%.
This is the way to go. Period. Of course, if you were lucky enough to get that money compounded monthly, then that would be that much better. There's a lot to distrust here in this country when it comes to scammers promising big interest rates and things too good to be true, and my understanding is that some people here have taken a hard hit by someone who had the unfortunate consequence of being defaulted on by borrowers--which in turn made him default on his investers.
I would never recommend this kind of investment. The way to go is with bank cd's through the Central Bank paying modest, realistic, interest rates of between 8% and 12%, and not some ridiculous high interest rates--paid on both Pesos and Dollars--that should be drawing red flags left and right from anyone with a semblance of common sense and realistic expectations.
Frank
http://www.dominicantoday.com/dr/lo...ll-respect-bank-secrecy-but-warns-tax-dodgers
There is an exemption of 240,000 rd per year interest gain on the 10% tax. In other words if you have a CD in pesos you don't pay any tax unless you earn more than 240,000 rd per year.
There is an exemption of 240,000 rd per year interest gain on the 10% tax. In other words if you have a CD in pesos you don't pay any tax unless you earn more than 240,000 rd per year.
If there is a 10% charge on interest above say, $100,00 pesos annually or $200,000 pesos annually, then why not open several CD accounts so that the interest you earn on each individual account comes to under the threshhold taxable limit. In other words, instead of having one cd account paying $200,000 in interest a year, why not split it into two seperate accounts so that you got two accounts with two different banks--or possibly even the same bank, paying $100,000 each--which would be half of the threshhold limit.
Or you can get around the problem by having several CD accounts--I.E--one in your wife's name, one in your name, one in your children's name, etc.. if you got two children and a wife, well, right there you got four seperate accounts--paying four seperate interest, to four different individuals, including yourself.
but really, i bet you wouldnt even need to go through all this trouble. i bet you could go to three seperate banks and buy three different cd accounts that all came under the threshhold limit of say, $100,000 or $200,000, etc. I doubt they would have any idea that you got different accounts all over town. The bureacracy here can't even keep track of how many people work for the eletric company and what their capacity is for the company.
There's always ways around these issues. This is the DR, brother. wake up!
Frank