16% APR CD at Banco Leon

Premier

New member
Aug 8, 2003
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I've been told that many ex-pats invest and live off the monthy interest paid on this CD. Is this true, and if so, is it recommended given the inherent risks?
 

ElvisNYC

New member
Jan 27, 2006
511
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I've been told that many ex-pats invest and live off the monthy interest paid on this CD. Is this true, and if so, is it recommended given the inherent risks?
The only risk would be a currency devaluation !

Today 35 pesos = 1 dollar
Year from now (assuming) 40 = 1 dollar

Invest US$10,000 now = RD 350,000 * 0.16 = 406,000 after one year

So if it were 40 in a year that would translate to US 10,150, a gain of $150
If the peso went higher you would lose money !
 

mike l

Silver
Sep 4, 2007
3,157
462
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Then there is the redemption certificate , whereby if you lose your " bearer bond " you lose ALL of your money.

As tempting as this is, there are too many variables, where you will never recover your initial investment.

With any Investment and or chance to make more money that you thought possible,

Need I say more.....Probablly,

Caveat emptor - Wikipedia, the free encyclopedia
 

Castellamonte

Bronze
Mar 3, 2005
1,764
50
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Cabrera
www.villa-castellamonte.com
I've been told that many ex-pats invest and live off the monthy interest paid on this CD. Is this true, and if so, is it recommended given the inherent risks?
This is pretty dicey, particularly if it is your only source of income.

I bought a CD when I moved here in 2001 at Banco Popular for 16%. I put the "bearer certificate" in a safe and promptly forgot about it. It was pretty big, about RD$500,000, but I was building my house and simply spaced it.

Went to cash it in the other day and discovered the interest rates had changed over the years. I made some money anyhow, but not near as much as if I had the same money in a US savings account.

I also remember a lady who put USD $2,000,000 into CDs when she started building a home in Cabrera. The peso was 25:1 at the time (roughly). Then it went to 50:1 for a little while. Pretty much wiped her out because she needed the cash for something she was doing. Ouch! It was real sad.

Be careful...anything that looks too good to be true simply means you are not seeing the whole picture.
 

bryan1258

Bronze
Dec 24, 2007
547
60
0
There's two sides to every story.

What about the folks who bought CD's offered at 50%, when the exchange rate was 50:1 ?

And then it dropped to 30:1.....

It works both ways.
and I was one of those people. I'm way ahead on my initial "gamble". However you may consider holding off investing in pesos. See where it goes in the next few months. Buy distress sale real estate. There's some bargains out there.
 

jrhartley

Gold
Sep 10, 2008
8,190
572
0
60
i thought the cds were a fixed rate for various time periods...so the rate is what you get at the time, how does it go down
 

Tamborista

hasta la tambora
Apr 4, 2005
11,362
909
113
i thought the cds were a fixed rate for various time periods...so the rate is what you get at the time, how does it go down
Lemme splain this:

The RATE is fixed, the TASA you bought RD Pesos vs your Libra Esterlina fluctuates every day cwazy wabbit!
 
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jrhartley

Gold
Sep 10, 2008
8,190
572
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60
errrrrrrrrr you mean it only flucktates when you cccchhhange it from one current to another currant si
 

bryan1258

Bronze
Dec 24, 2007
547
60
0
Zaktly

:squareeye
Lemme splain this:

The RATE is fixed, the TASA you bought RD Pesos vs your Libra Esterlina fluctuates every day cwazy wabbit!
Look at the history of the pesos' value in relation to the currency of your choice. Then factor in the interest rate. Real simple. Good luck.:cheeky:
 

DavidZ

Silver
Aug 29, 2005
3,512
238
63
www.vipcigartours.com
One thing that never seems to come up in these CD interest rate discussions...

If you intend to use the money in pesos, you're making whatever the exchange rate is. Period. The only issue is the value of the peso to the dollar or other currency when (if) you decide to convert it back to another currency.
 

bryan1258

Bronze
Dec 24, 2007
547
60
0
Looking at the OP's initial question. He's asking if he can live off the interest from a CD. So I'm guilty of going off on a tangent regarding the value of the peso against foreign currency.