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  1. #1
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    Default Again info about Certificate or deposit money in DR bank

    Hi,
    Really I am european so I was thinking to bring Euro so correct me if I am wrong:
    In 2012 1 Euro was about Pesos 49.60 .
    Invest in certificate for example capital Euro 100 = 4960 Pesos with average interest rate 7%
    Beginning 2013 I have 5307 Pesos
    Beginning 2014 I have 5678 Pesos
    Beginning 2015 I have 6076 Pesos
    Beginning 2016 I have 6501 Pesos
    Exchange rate April 16 1 Euro = about 51.3 Pesos
    I convert back in euro and I have 126 Euro (note exchange rate not correct 100% because they are from forex and not local banking rate)
    Of course there is the risk of fluctuation. I need your opinion please. If I invest my money in Europe my interest is almost 0. The interest rate on deposit are below zero (in Italy right now) and also some state bond give negative interests. I have some money in a fund but not very big results in years.
    Another important question:
    If you invest a sum (for example 100.000 Euro) in local currency in a Bank in Dr and after a certain period you want to convert again in the original currency (because maybe you want to transfer back to Europe) or i want to change in Usd, can i do that without any big problem or delay ? Or the bank try to avoid to change in foreigner currency? And will the exchange rate be reasonable (same if I change in Europe for ex Euro in Usd or Eur in Gbp ) or in DR is much much worst (do they charge many and many pips)?
    Any reply will be very welcome.

  2. #2
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    I say GO FOR IT then write us back in 5 years and let us know how it worked out

  3. #3
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    Perhaps start with €100K, and "dollar cost average" into €500K, @ least you'll have a better chance of breaking even in 5 years if the DOP only devalues @ a rate of 7% / year.

  4. #4
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    According to my math based on your previous post this is what I get based on 100,000USD or its equivalent. If you took 100k in 2012 and put it into a DR CD note and left it for 4 years, today you would net out $25,586US profit. This is after the 10% DR tax and is based on the numbers provided by Santiago DR in your previous post.

    If you took the same 100k and did nothing but watch it devalue, today you would have 84,934 US. A loss of 15,066.

    You would be 10,520US ahead if you bought a Dominican CD in 2012.

    Again this is all based on the percentage rates in your previous post. I can't predict the future but you certainly would have made money in the past. In my first example not only would you be ahead you would still have the original 100k not the devalued 85k. So the reality is you would be up closer to 40k after tax.

    Normally I charge for this info but what the hell. Its free money if you can stomach the risk.

  5. #5
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    Default

    40 k "after tax" his accountant must be magician.

  6. #6
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    Quote Originally Posted by pauleast View Post
    40 k "after tax" his accountant must be magician.
    I suspect the OP is trading a mini account on FXCM, LOL!

  7. #7
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    Quote Originally Posted by pauleast View Post
    40 k "after tax" his accountant must be magician.
    No magic just simple math. The 100k devalued is 85 k. The 100k in a CD for the same 4 years with intrest rates of 9, 9, 6, an 6 is 133,495 (compounded). Less 10% DR tax(on the 33,495 interest) leaves 130,145. Now minus the devalued 85k from this and you actually get 45k and change.

    You can disagree all you want but the math does not lie.

    The original question from the OP was is a CD in the DR worth the risk. Up till now it was definitely worth doing but as I said previously I can't predict the future so who knows

  8. Likes frank12 liked this post
  9. #8
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    Quote Originally Posted by fiocco View Post
    Hi,

    If you invest a sum (for example 100.000 Euro) in local currency in a Bank in Dr and after a certain period you want to convert again in the original currency (because maybe you want to transfer back to Europe) or i want to change in Usd, can i do that without any big problem or delay ? Or the bank try to avoid to change in foreigner currency? And will the exchange rate be reasonable (same if I change in Europe for ex Euro in Usd or Eur in Gbp ) or in DR is much much worst (do they charge many and many pips)?
    Any reply will be very welcome.
    Since we had a relatively long thread presumably trying to answer you (which unfortunately was closed), you may want to clarify WHAT specifically do you still need clarification on.
    Otherwise you may just read the closed thread.

  10. #9
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    I got side tracked when I did my calculations above. The bottom line is if you took the 100k US and converted it to pesos what would happen to it. If you left it for 4 years with no interest it would be worth 85k today. With compound interest of the 9,9,6, and 6 less the DR 10% tax on interest only you would have 114,000 USD. Converted back from pesos.
    Thats a difference of 29,000 to your favor.
    Sorry for the above confusion. I still think its a good deal if your not here on a US passport as any interest has to be reported back.

  11. Likes Tamborista liked this post
  12. #10
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    Quote Originally Posted by melphis View Post
    I got side tracked when I did my calculations above. The bottom line is if you took the 100k US and converted it to pesos what would happen to it. If you left it for 4 years with no interest it would be worth 85k today. With compound interest of the 9,9,6, and 6 less the DR 10% tax on interest only you would have 114,000 USD. Converted back from pesos.
    Thats a difference of 29,000 to your favor.
    Sorry for the above confusion. I still think its a good deal if your not here on a US passport as any interest has to be reported back.
    I think the mistake you are making is to compare against the "devalued" amount.

    The OP has the money in hard currency. He wouldn't convert it to DOP and let it stand. His alternative would be to put the money in a hard currency CD in a reputable 'first world' bank, earning ~0.15% a year (basically enough to cancel the very low inflation). Essentially he would keep the same US$100K. That is the reference amount to compare against. If he invested instead in a DOP CD he would earn US$14,000 instead (per your calculations).

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