[Boomer]

Originally Posted by Gigi3000

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

I am of the “better the devil I know” philosophy.

Boomer

[manaboutown]

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.

[Gigi3000]

Their national debt is worse than ours, I believe.

[manaboutown]

Originally Posted by Gigi3000

Their national debt is worse than ours, I believe.

It seems their demographic pretty much aged into retirement coupled with a low birthrate. That may have something to do with it. I really know almost nothing about the situation in Japan.

"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.

[CoachKandSportsguy]

Originally Posted by Ecuadog

What about countries that use the US dollar as their official currency?

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.

[Ecuadog]

Originally Posted by CoachKandSportsguy

If you buy foreign stocks or bonds or other financial interests, you are exposed to CURRENCY fluctuations...

Originally Posted by Ecuadog

What about countries that use the US dollar as their official currency?

Originally Posted by CoachKandSportsguy

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.

I think you're talking solely about foreign stocks, bonds and funds. I don't see other financial interests, such as CDs, being exposed to CURRENCY fluctuations in a country that uses the US dollar as its official currency.

[CoachKandSportsguy]

Originally Posted by Ecuadog

I think you're talking solely about foreign stocks, bonds and funds. I don't see other financial interests, such as CDs, being exposed to CURRENCY fluctuations in a country that uses the US dollar as its official currency.

True, but the list is pretty small and the countries are pretty small.
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.

[Ecuadog]

Originally Posted by Ecuadog

I think you're talking solely about foreign stocks, bonds and funds. I don't see other financial interests, such as CDs, being exposed to CURRENCY fluctuations in a country that uses the US dollar as its official currency.

Originally Posted by CoachKandSportsguy

True, but the list is pretty small and the countries are pretty small.
...

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.

It's not the size of the country that matters, but the stability of the issuing entity, e.g bank or credit union, that matters.

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.

[CoachKandSportsguy]

Originally Posted by Ecuadog

It's not the size of the country that matters, but the stability of the issuing entity, e.g bank or credit union, that matters.

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.

So what firm would you use to buy the CD? and for the foreign country market access and transaction, you might have to pay to a hefty commission. I have purchased intl equities through Fidelity, and the commission was hefty, fortunately it was a big percentage return. Not familiar with the intl purchase of CDs. . .

[Ecuadog]

Originally Posted by CoachKandSportsguy

So what firm would you use to buy the CD? and for the foreign country market access and transaction, you might have to pay to a hefty commission. I have purchased intl equities through Fidelity, and the commission was hefty, fortunately it was a big percentage return. Not familiar with the intl purchase of CDs. . .

I really don't know. I was interested in CDs in Ecuador because I have an address in the country and could deal directly with the bank. Foreigners can open bank accounts in Ecuador. One of the requirements being that you have a residence, usually. Some institutions are more lienient and the requirements may vary. They might adjust their requirements with letters of credit or with minimum deposits. I decided to do nothing.

For what it is worth, Citi Bank has a branch in Quito, Ecuador and Banco Pichincha has a branch in Coral Gables, Florida.

[spinner1001]

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

[Fltpkr]

Originally Posted by Gigi3000

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

Not certain if you are including balanced funds such as Vanguard’s Target Retirement or Lifestrategy Funds in your question, but they have a portion of the fund holdings in non-US bonds. I believe that Vanguard also offers mutual funds devoted to bonds outside the US. When I have tried to time the market or chase returns, I have usually ended up regretting it. So, I have tried to resist reacting to the stock or bond market and stay mostly invested in balanced funds. I use Vanguard exclusively except for a portion actively invested at a bank-associated investment group, which has not really done any better or worse than Vanguard thru market ups and downs.

[Ecuadog]

Originally Posted by spinner1001

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.

...

Thank you for that. The IRS is one of the reasons I decided not to pursue it.

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.

[OrangeBlossomBaby]

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.

[retiredguy123]

Originally Posted by Boomer

I am of the “better the devil I know” philosophy.

Boomer

I agree. Stock and bond purchases in the U.S. are regulated by the SEC, which may or may not be effective. But, who knows what regulations control stocks and bonds in other countries?