Banco Central Certificates

[iluvdr]

Central Bank CD Rock!

I have brought CD's from the Central Bank for nearly a year now. I converted, when the pesos was at 49! Off course I practically double my money today, but the evaluation of the currency was not the purpose of my investment, it just works out to my benefit!
Anyways, I have never had any problems collecting my interest, unlike the majority of people on this forum, even though I acknowledge the potential risk (like any investment by the way...) I feel quite secure with the present investment!
If you read any of my previous post you can see that I have been predicting stable and stronger pesos since October last year and that I have been ridiculed, laugh at, bash all over for my optimistic views. I don't mean to rub it in anybodies faces, but who is laughing now?
Call it luck... then I have been lucky most of my life... I still know better then to try to double my money at the casino?!
I'd rather call it calculated intuition, witch I am rather good at. My advice to you, is do your homework, but at the end follow your intuition. On a scale of 1 to 10 I give the CD's at Central Bank in the mid term an 81/2.As for pesos it will remain stable for quite some time and might even appreciate...

Good Luck!

 

[Escott]

I have brought CD's from the Central Bank for nearly a year now. I converted, when the pesos was at 49! Off course I practically double my money today, but the evaluation of the currency was not the purpose of my investment, it just works out to my benefit!
Anyways, I have never had any problems collecting my interest, unlike the majority of people on this forum, even though I acknowledge the potential risk (like any investment by the way...) I feel quite secure with the present investment!
If you read any of my previous post you can see that I have been predicting stable and stronger pesos since October last year and that I have been ridiculed, laugh at, bash all over for my optimistic views. I don't mean to rub it in anybodies faces, but who is laughing now?
Call it luck... then I have been lucky most of my life... I still know better then to try to double my money at the casino?!
I'd rather call it calculated intuition, witch I am rather good at. My advice to you, is do your homework, but at the end follow your intuition. On a scale of 1 to 10 I give the CD's at Central Bank in the mid term an 81/2.As for pesos it will remain stable for quite some time and might even appreciate...

Good Luck!

You have been long on peso since October of last year? When did you purchase the Central Bank Cd's?

What do you base your 8 1/2 on other than intuition?

 

[iluvdr]

You have been long on peso since October of last year? When did you purchase the Central Bank Cd's?

What do you base your 8 1/2 on other than intuition?

Somewhere around May or June.
Off course we can start a whole new thread on my quotation of 81/2. My initial motivation to acquiring pesos last year was base on the fact that clearly the pesos at 49 was undervalued and that in the last decade it's been unheard of the national bank of any country crashing!
Today, well I take a look at Haiti witch is the poorest country in the hemisphere. Haiti's principal business partner is the DR. The gourde there is 36:1 and as been stable for the last 10 years regardless of all the politic and economic disasters.
Why should the DR be worst off?
Why should the currency of the DR witch historically has been higher then the Haitian gourde become suddenly weaker?
Believe it or not the two countries have more in common then just there border. I want list in this post the principle indicators that one should observe...
But besides my unconventional approach to predicting the currency exchange.
some of the DR's best economistes and even there strongest critics tend to predict a stable currency in the short and midterm with a devaluation at the worst of 35:1 !
On previous post, the equation as already been done and even at that rate, one still stands to make close to 9% on there investment! That is why I rate The CD's at 81/2. Any investment where you can not lose money should be above 5!

 

[Firefan]

Investing

Interesting thread. I have been investing for many years and generally with success even though got a bashing in the 2000-2002 .com dip. :nervous:
Mostly in a globally diversified low cost index fund portfolio.

To believe that one can beat 20%+ per year in the stock market is ambitious at best. Nobody on the planet that I know of has gotten that kind of returns over longer periods (+10 years) - maybe some obscure hedgefund or speculator taking very high risk/margin Etc.

That said: the 20%+ PESOS CDs (note here that interest rates vary every day so that, besides the bank competition, explains the different rates mentioned here) is a nice return BUT the main big draw back is that you will have to take on the currency risk. $10k changed to pesos at rate 30/$ = 300.000 Pesos. after one year worth 360.000 pesos BUT if exchange rate gets to 40/$ you will only get $9000 out when changing back.

One should naturally not put entire nest egg in a banking system still weak and lacking transparancy :bandit: .

On a side note: the hassle of opening accounts at bank that currently have a few % points more than the one I already use BHD (and that seems to change) is not worth it for me - that might explain why some stick to 20% interest even though the special of the month might be 23% somewhere else.

How to tackle it? Well since I live here it is slightly more simple. The prices change slower than the exchange rate (even for imported goods) so a steady pesos income to cover my CERTAIN local costs is usefull. If I know I use say 5000 Pesos per month (P60k/year) on basic groceries I change USD to I have
P300k and set the CD up for monthly payments of interest.

Cheers!

 

[iluvdr]

That said: the 20%+ PESOS CDs (note here that interest rates vary every day so that, besides the bank competition, explains the different rates mentioned here) is a nice return BUT the main big draw back is that you will have to take on the currency risk. $10k changed to pesos at rate 30/$ = 300.000 Pesos. after one year worth 360.000 pesos BUT if exchange rate gets to 40/$ you will only get $9000 out when changing back.

Interesting Approach!
Hum... once again why is every one speculating on the worst outcome???
why 40:1 rather then 35:1 ( wich seems more realistic) or even 20:1 (interest + capital gain...). no one can predic the futur, even a currency as strong as the US dollar as been dropping in most international markets over the last year. You got to work with what you have and not pay so much attention to futur currency exchanges. In my opinion consider the pesos at lets say 29:1 now and in a year from now 29:1 you would have gain 26% on your money in Central bank CD's. Nothing is for sure in life and speculating on currency is like reading your Horoscope. Never invest more then you can afford to lose, however no investment is always a sure lose (due to inflation...). If anybody as been listening to advise regarding CD's since I got on this forum they would have made some serious cash by now!

 

[Firefan]

I do not disagree and have myself, for reasons mentioned put "grocery covering" amount into a CD at around the current P30/$.
So I am not speculating on the worst outcome (and also not on the best) - and am having a bit of USD in reserve for any on coming Pesos weakness ($ cost averaging I guess...) to pick up another CD (to cover monthly internet or whatever). I like looking at it like that.
Cheers!

Interesting Approach!
Hum... once again why is every one speculating on the worst outcome???
why 40:1 rather then 35:1 ( wich seems more realistic) or even 20:1 (interest + capital gain...). no one can predic the futur, even a currency as strong as the US dollar as been dropping in most international markets over the last year. You got to work with what you have and not pay so much attention to futur currency exchanges. In my opinion consider the pesos at lets say 29:1 now and in a year from now 29:1 you would have gain 26% on your money in Central bank CD's. Nothing is for sure in life and speculating on currency is like reading your Horoscope. Never invest more then you can afford to lose, however no investment is always a sure lose (due to inflation...). If anybody as been listening to advise regarding CD's since I got on this forum they would have made some serious cash by now!

 

[Firefan]

In the news;
Central Bank reduces yield on savings
The Central Bank announced yesterday it is reducing the interest rate on savings certificates from 30% to 24% and 27% to 20%. The yield on new deposits is as follows: 20% (30 day deposits), 22% (80 day deposits), 23% (180 day deposits) and 24% (365 day deposits). Regardless of the term, deposits can be retrieved after the first 30 days, with cancellation penalties ? 90-178 days, yield of 22%, and 180-364 days, yield of 23%.
Central Bank requires a minimum of RD$50,000 per certificate. Certificates that are not redeemed upon expiration are automatically renewed for the original term and at the current yield.

Cheers, FF

 

[iluvdr]

Pesos appreciating !

I don't want to scream victory yet! But just remember I said so...
For all off you that did not have the balls to invest in Banco Central CD's
I sincerely pity you...

P.S. Off course it not to late . and no I don't work for BC...

 

[Snuffy]

Oh you don't have to pity them. Most of them have more than enough money.

 

[iluvdr]

Oh you don't have to pity them. Most of them have more than enough money.

Common Snuffy... no one never as ENOUGH MONEY! Just ask Donald trump :0

 

[Snuffy]

Perhaps Donald is not content with the wealth he has. I know that I am content with what I have. I don't need to be pitied because I did not invest in these CDs. It never bothered me at all. I just don't understand why you have to smear it in their faces. I for one am happy for your good fortune. It is better to celebrate that good fortune in silence.

 

[iluvdr]

Perhaps Donald is not content with the wealth he has. I know that I am content with what I have. I don't need to be pitied because I did not invest in these CDs. It never bothered me at all. I just don't understand why you have to smear it in their faces. I for one am happy for your good fortune. It is better to celebrate that good fortune in silence.

Thanks for the advice Snuff... I was just trying to be helpfull to snagfil on this post, maybe I pushed it a bit far!
My point is when you see a good opportunity don't wait to long, it may not be there for ever. The Banco Central CD's ,I beleive ,are a great investment opportunity. The rates are dropping fast as the pesos stabilize.
There is still a window of opportunity here, but not for long...

Good Luck snag and to all you " hater's " well good luck anyways...

 

[Escott]

Interesting Approach!
Hum... once again why is every one speculating on the worst outcome???
why 40:1 rather then 35:1 ( wich seems more realistic) or even 20:1 (interest + capital gain...). no one can predic the futur, even a currency as strong as the US dollar as been dropping in most international markets over the last year. You got to work with what you have and not pay so much attention to futur currency exchanges. In my opinion consider the pesos at lets say 29:1 now and in a year from now 29:1 you would have gain 26% on your money in Central bank CD's. Nothing is for sure in life and speculating on currency is like reading your Horoscope. Never invest more then you can afford to lose, however no investment is always a sure lose (due to inflation...). If anybody as been listening to advise regarding CD's since I got on this forum they would have made some serious cash by now!

I think that "every one" is speculating on the worst outcome because it has happened here in the DR year after year? With the exception of Sept to March the peso has depreciated against the dollar for EVER?

Get it yet?

I am still more comfortable making less in dollars and will stay that way. Maybe I will cash a few hundred tomorrow to live on!

Escott

 

[Snuffy]

There has been a sense of euphoria with Leonel regaining power. The increased buying back into the economic should have been expected. I sense it is slowing down. A metro is just what the government needs to breathe life into the economy at the expense of future generations. I would give this all another six months to settle then evaluate the situation.

 

[iluvdr]

Nothing personal...

But with all the respect I have for some of you members on this forum. You have been singing the same song since I got on ..."This is not going to last " or ... "Dooms day is coming"... call it realistic, I still feel it as pessimistic.... if some one askes for advice in investing in the DR. I think an honest answer is that right now, the DR is as safe or as risky as anywhere else. Follow the golden rule:
" Never invest what you can't afford to lose! "
As for currency fluctuation: You can look at the glass as half full or half empty.
Yes, the past tends to let us expect the worst, but the futur seems bright! (with some curves offcourse) . If all the conditions where perfect you would not be getting 26%. Just take for exemple other countries that are behind on the DR .... such as Jamaica or even Barbados, you can't get more then 12-16% on CD's in there currency. Once again even "Haiti" with a very stable currency over the past 10 years... you can't get more then 18%!
This is the opportunity I speak off. For a moderate risk, High Yield ! the answer to the prayers, most world wide investors, such as myself , can't afford to turn our backs on! I have move more then 30% of my over all assets to the DR and I expect to progressively bring that up to 60% with in the next 6 month.I have convinced most of my sibblings, father and aunt to do the same.When some of us decide to follow, others take the lead!
I am not trying to make the people with opposite views on this debate look like fools... just purely, conservative and and close minded! some of you make good points, but you are only looking at one side of things... Sucess is not a key for every one! This is just my 2 cents...

 

[Firefan]

I think CDs here are a good option for some of ones portfolio as I have already mentioned. The posters on this board are simply sending the message that there is more risk involved than a US or EU based big bank+the currency risk(or bonus!) - trust me; there are people out there that do not understand that.

You have done your homework and will be fine. Personally I am hoping for another Pesos dip to pick up one more CD.

As for the interest rate seems you missed my above post: now they pay only 20% for 30 day time deposits up to max 24% for 1 year deposits.

Cheers!

 

[iluvdr]

....And we have a winner!

You have done your homework and will be fine. Personally I am hoping for another Pesos dip to pick up one more CD.

Cheers!

Good for you Firefan! Smart move...

 

[Lambada]

You will only be 'fine' if you hedge your bets & don't put all your eggs in one basket. Yes I have peso investments, but have only converted enough capital to pesos which produces interest in pesos which I will actually use each month. The rest is in sterling & dollars, some of which is here in the DR & some of which is in 3 other countries. That hedges against all manner of things & is also more tax efficient. Personally, I would not convert 60% of my overall assets to pesos, for future tax reasons here in the DR as well as because of instability of exchange rate (not currently, I agree, but it was & it could be again).........but I did covert just under 10%. That is a risk I am prepared to go with.......albeit not with Banco Central.

 

[iluvdr]

And we have another winner !

You will only be 'fine' if you hedge your bets & don't put all your eggs in one basket. Yes I have peso investments, but have only converted enough capital to pesos which produces interest in pesos which I will actually use each month.
...but I did covert just under 10%. That is a risk I am prepared to go with.......albeit not with Banco Central.

This is what I call the silent majority, offourse, every one seems biais on this board...
Do you really beleive that the rich will tell you the secrets to there wealth?
It takes a lot of guts to come out in the open and tell everyone how your making money and even more guts when you have to expose yourself to criticizim for trying to help.
People on this board: The majority of wealthy dominicans and expats are buying CD's at Central Bank, they have been doing this for ever.
When the currency goes down they buy more to leverage, that is the true secret. It doesn't scare me that the pesos goes up or down. If it goes down I will buy more.If it goes up I will sell some... Just remember to limit your risk to what you can afford to lose... and we will all be OK.

 

[Firefan]

You know that we are in general agreement and that as long as you have done your risk evaluation you are fine. but just one thing though; the banks here are not exactly the best boys on the block (tons of bad loans/lose accounting Etc.) and we have mostly discussed currency risk. Just thinking loud here but it might make sense to use several banks (and accept a few % points below the highest on some of the CDs?) in order to improve safety.

On the other hand if Banco central goes down I guess they all go.....

Cheers! FF

This is what I call the silent majority, offourse, every one seems biais on this board...
Do you really beleive that the rich will tell you the secrets to there wealth?
It takes a lot of guts to come out in the open and tell everyone how your making money and even more guts when you have to expose yourself to criticizim for trying to help.
People on this board: The majority of wealthy dominicans and expats are buying CD's at Central Bank, they have been doing this for ever.
When the currency goes down they buy more to leverage, that is the true secret. It doesn't scare me that the pesos goes up or down. If it goes down I will buy more.If it goes up I will sell some... Just remember to limit your risk to what you can afford to lose... and we will all be OK.