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Boomer |
How about investing in Japan?
I remember how it was back in 1990 when Japanese business people were making it big. I actually worked for a large Japanese company at that time and experienced it first hand (and first class). Then things changed, as they inevitably do. but now...drum roll... Warren Buffett leads global investors into 'cheap' Japan - Nikkei Asia. |
Their national debt is worse than ours, I believe.
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"A flurry of big spending packages and ballooning social welfare costs for a rapidly ageing population have left Japan with a debt pile 263% the size of its economy - double the ratio for the United States and the highest among major economies." From: Analysis: Japan'''s debt time bomb to complicate BOJ exit path | Reuters. |
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Because the SP500 companies are already there, and you have that in your base portfolio, the intl funds end up being riskier tiered companies, so you are diversifying by adding a lower quality set of companies, no matter what currency the home country is using. |
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Countries Using the US Dollar The list of countries are: Ecuador (which you might have in your name, which is most likely the basis for your point? I have been to Guayaquil and Quito, but in the late 70's) Puerto Rico El Salvador Zimbabwe Guam Virgin Islands British Virgin Islands Panama Bonaire Democratic Republic of Timor-Leste (where?) American Samoa Commonwealth of the Northern Mariana Islands Federated States of Micronesia Republic of Palau Marshall Islands Turks and Caicos There are many other countries which peg/fix their local currency to the US dollar, however those pegs can be broken, and are subject to the whims of the foreign government, and crashing economies. |
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I am not talking about countries that peg/fix their local currency to the US dollar. I am talking about countries that have adopted the US dollar as their official currency. The OP inquired about investing in CDs in foreign countries. I don't invest overseas because I like to keep life simple. However, I have looked into it, specifically in Ecuador, where the official currency is the US dollar. In January of this year, Banco Diners Club of Ecuador was issuing 1-year CDs that returned 7.20%, in US dollars. It's probably higher now. I imagine that the hoops that one has to jump through in order to qualify are complicated. I wonder about Puerto Rico or the Virgin Islands. |
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For what it is worth, Citi Bank has a branch in Quito, Ecuador and Banco Pichincha has a branch in Coral Gables, Florida. |
If someone is considering buying a CD at a foreign bank chasing higher interest rates, be aware that US citizens are required to file one or two special US government forms reporting their foreign bank accounts if their foreign accounts exceed specified thresholds. The penalties for not filing are relatively significant. Also, many US citizens with foreign bank accounts have a tax professional prepare their reporting form(s) and may incur an extra preparer cost.
Here are the forms: FinCEN’s FBAR: Report Foreign Bank and Financial Accounts | FinCEN.gov IRS’s form 8938: About Form 8938, Statement of Specified Foreign Financial Assets | Internal Revenue Service |
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I do wonder what the CD rates are in Puerto Rico and the Virgin Islands. US territories and possessions are not considered "foreign" for FBAR. |
My family has owned Israel bonds since the 1950's when they first became available. I had five in my name as a gift from my grandmother when I was born. I cashed them in somewhere around 2010.
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