mondongo

Pepe

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Since you are in the thick of things when it comes to $$$$$.
What is a good place to put your cash reserves in the US. Not long range. The best I can get right now from a savings bank is 3.25%. Could I do better somewhere else? At the present rate I won't be able to drink any Presidentes in the DR anytime soon.
 

mondongo

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pepe

3.25% is actually pretty good for short term deposits nowadays. The fact that they you call these funds "cash reserves" means that you dont want to tie up your money for any more than a few months. It also means that you dont want to take too many risks. Unless you are willing to aborb some capital risk, then the interest you mention is not bad. For much higher risk, you can buy high yielding stocks like Real Estate Investment Trusts (REITS). But those can put your capital in jeopardy... depending on the credit rating, municipal bonds can also give you a higher return. .....Buying high risk, high yielding short term paper (large company commercial paper or emerging market debt) can give you a false sense of security. You can go along making a good return for years, then out of the blue...whammo...the company goes out of business (ENRON,KMART) or they default on its debt (Argentina, Venezuela?). Then ...poof...your entire capital is gone...and you will have to fight through the courts to get part of your money back...

mondongo
 

Pepe

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Thanks for the info. I guess I'll just drink fewer Presidentes when I get there.

Pepe
 

Escott

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First, how do you get 3.25%?

Second, check out I Bonds. www.savingsbonds.gov

Pays 4.4% with a min of 6 months holding. If you cash before 5 years there is a 3 month interest penalty.

Not bad for a one year plus investment. I buy them online using a credit card to get American Airlines Frequent flyer miles. I bought 30k in my name and 30k in my daughters name. That equaled 2 free trips to DR.

Better interest rates in the DR. I sent Golo email and hope he writes me back. He had some interesting thoughts.

Scott
 

mondongo

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Scott

I-bonds are a good alternative. But you have to be aware of the restrictions. All can be found on the website, but to summarize: a) you cannot cash them until 6 months have expired, b) if you cash them out before the first five years, you lose 3 months worht of interest..If you hold them, as you cite in your post, for only 1 year, you will not get 4.4%, you will get 3 / 12 months worth of interest deducted from it , c) as you know, these bonds depend on the inflation rate as measured by the overall Consumer Price Index...d) the amount you can cash out at time is, i believe, limited to $1,000.

The new interest rate will be set in the next coming months. And it should be lower than 4.4% since inflation has been trending down recently.

However, they are exempt from local and state taxes, which is always good.

The bottom line is that If you tend to use this money on a regular basis (every couple of months), then this vehicle may not be for you. However, if your expected use of the money is no less than a couple of years, this is a very good "i can sleep well at night knowing that the inflation boogie-man wont hurt me" investment.

I personally will invest in some money in i-bonds for my kids' education fund.

jazzcom, you should read my last post on this thread if you are thinking about investing money in risky certificates. remember the truest of truisms " There is no such thing as a free lunch". Ask yourself this question, Do Mexico,DR,Argentinca,etc pay high interest rates beacuse they like us and they think we are sexy?


mondongo
 

DRtechie

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Jan 27, 2002
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the novice asks

Guys, I know these are some novice questions but please bear with me...economics was never my favorite subject but I am trying to learn.

With the prospect of a dollar shortage in DR, is it safe to say that banks will be paying higher interest rates on dollar deposits? How safe is it to deposit dollars and is it more favorable than deposits in the US? Isn't anyone worried that DR might default on it's loans causing a situation similar to Argentina?
 

Escott

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Re: Scott

mondongo said:
I-bonds are a good alternative. But you have to be aware of the restrictions. All can be found on the website, but to summarize: a) you cannot cash them until 6 months have expired, b) if you cash them out before the first five years, you lose 3 months worht of interest..If you hold them, as you cite in your post, for only 1 year, you will not get 4.4%, you will get 3 / 12 months worth of interest deducted from it , c) as you know, these bonds depend on the inflation rate as measured by the overall Consumer Price Index...d) the amount you can cash out at time is, i believe, limited to $1,000.

The new interest rate will be set in the next coming months. And it should be lower than 4.4% since inflation has been trending down recently.

However, they are exempt from local and state taxes, which is always good.

The bottom line is that If you tend to use this money on a regular basis (every couple of months), then this vehicle may not be for you. However, if your expected use of the money is no less than a couple of years, this is a very good "i can sleep well at night knowing that the inflation boogie-man wont hurt me" investment.

I personally will invest in some money in i-bonds for my kids' education fund.

jazzcom, you should read my last post on this thread if you are thinking about investing money in risky certificates. remember the truest of truisms " There is no such thing as a free lunch". Ask yourself this question, Do Mexico,DR,Argentinca,etc pay high interest rates beacuse they like us and they think we are sexy?


mondongo

You got part of it right. You can cash in as many bonds as you like. They are also 100% Tax deductable when used for your childs education. I funded my daughters college with EE bonds that still pay 6 %+. I bought a slew of I-bonds 11-30-01 which pay me 5.92%. There is a limit of 30k a year in any particular Social Security number. The reason the bonds went from 5.92 to 4.4 is that they dropped the base rate 1 percent. It would have been 5.4 otherwise. Do NOT forget the 4 RT airline tickets I get to the DR for free or as a bonus. One other thing, if you buy them online at the end of the month you get interest for the whole month. I actually used my Delta card last year and got 2 miles for every dollar because of a promotion. For 30k Spent I get 2 RT tickets to Mexico.

I did mention the 6 months min to cash and I did mention the 3 month interest penalty for cashing in under 5 years. I have been buying a minimum of 1000 US dollars a month for 12 years. I didn't want me childs college to depend on my financial gambling.

As far as the risk involved in higher rates I would like to quote someone named the "Donald". "It's all in the Art of the deal"
You can structure deals to cut risk to acceptable levels by making it right for yourself. I would be happy to discuss this via email if you would like.

I am in the real estate business and have been for 20 plus years. It is time for me to cash in and blow this cold popcorn stand and find warmer digs. My bones are too old to suffer anymore.

So, as I liquidate property I am holding paper at between 7 1/2 to 8% which isnt bad. I am maxing out my I-bonds for continuity and safety. As the days go by I still have to invest. I don't like the stock market. I am not sure how long this turn around will take. As I close on properties I need to be able to find suitable investments. Unlike the other guy I only get under 2% in CD's here unless I want to go out several years which I do NOT.

I would like to bring money down to the DR to invest because it appears that this is the place I am going to relocate. I know the R.E. business here and have spoken to people and attorneys in the DR. If the peso is devalued there is risk. If I can get my money guaranteed by property it doesn't matter really especially if there is less than a 60% loan to value. Leaves room for Peso devaluation and I can also stay in Dollars that way. Still looking for other avenues to invest. I was interested in what Golo had to say but he hasn't responded to my email.

Regards,

Scott
 

mondongo

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i-bonds

jazzcom, according to the website you posted

"You're allowed to cash up to $1,000 worth of bonds at one time based upon documentary identification alone"

Can you descirbe what it was about my post that was not correct? I'm always looking to improve or correct my knowledge.

thanks, mondongo
 

Escott

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Re: i-bonds

mondongo said:
jazzcom, according to the website you posted

"You're allowed to cash up to $1,000 worth of bonds at one time based upon documentary identification alone"

Can you descirbe what it was about my post that was not correct? I'm always looking to improve or correct my knowledge.

thanks, mondongo

Largest I-Bond is 1000- dollars. Stands to reason that you would have to cash more than one to get more than that.

You can go to your issuing bank and cash them all in. You may need positive ID if you want to do more than 1000- bux at one time.

Where are you located?

Regards,
Scott
 

Escott

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from savingsbonds.gov

1.2 I'm having a hard time cashing my bonds. My bank isn't convenient to where I work or live, so I've tried to cash them at a bank where I'm not a customer. This bank told me they could only cash up to $1,000 of my bonds. What can I do?

If you need to cash more than that, a Federal Reserve Bank that handles savings bond transactions can help you. You'll need to sign the request for payment on the back of the bonds before a certifying officer at a bank, provide your social security number, and mail the bonds to the Federal Reserve Bank that services your area.

-=-=-=-=-

Hope this helps. I guess there is a reason for this although I don't know it. I guess you can get it all done with a little effort.

Regards,
Scott
 

Pepe

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Jan 1, 2002
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Rates

This are two places to check for the latest rates.

www.rate.net and www.bankrate.com

The quotes are usually apy. They should hold up for a while unless Mr. Greenspan strikes again.

Another good place to check is Credit Unions, if available.

Pepe