See below how this an from Jyske bank can help you with multi currency investments.
Thomas Fischer speaking about multi currency investments at our course.
The current global credit crisis has created distortions that make many investments look bad. These same distortions have made leveraged multi currency investments better.
Governments and central banks have lowered interest rates in numerous countries, including the US. This means that four currencies can be borrowed at Jyske Bank with low lending rates.
Those currencies are the US and singapore dollar, the Swiss franc and Japanese yen.
The Jyske Bank rates, depending on the amount borrowed, are:
US$ 4.125% to 4.875%
Swiss franc 4.250% 5.000%
yen 2.500% 3.250%
SGD 3.000% 3.750%
The multi currency distortion is created because deposit rates on other currencies at Jyske Bank have risen.
Interesting Jyske Bank deposit rates are on Turkish lira, Australian and New Zealand dollars, Icelandic kroner, Hungarian florin and South African rand. These rates are:
New Zealand 8.000%
South Africa 10.250%
If one wished to leverage investments at Jyske Bank with the least (other than forex) risk, one could simply borrow the four currencies above and invest in deposit accounts in the six high rate currencies.
Take for example an investment of $100,000 leveraged with a $200,000 loan of $50,000 borrowed in each of the four low rate currencies. This raises $300,000 to invest.
The average loan rate (at the highest rate) is 4.21%.
$50,000 is invested in each of the six high interest rate currencies.
The average interest rate earned is 8.56%. The annual interest earned is $25,687.
The loan cost is $8,420. The income after loan payments is $17,267 or 17.26% on the $100,000 invested.
This is not bad. Such a portfolio is well diversified currency wise and geographically. There is still a currency risk and investors should never leverage more than they can afford to lose.
Every investment has risk. The key to good multi currency investing is to be sure that the premium you are paid for taking the risk is good.
17.26% is more than a fair premium in my opinion, but we can do even better with bonds as we’ll see in an upcoming message.
Until then may your investing be filled with distortions.
Learn how to be a multi currency investor. See www.garyascott.com/calaog/bldh
Learn more about Jyske Bank rates from Thomas Fischer at Jyske Bank at firstname.lastname@example.org
Until next message, may you profit by being familiar with unfamiliarity.
Join me with Thomas Fischer of Jyske Bank this May 23-25 for our International Investing & Business Made EZ in North Carolina.
Here is Thomas helping delegates at a recent international investing course
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