ryyannon Posted March 4, 2008 Report Share Posted March 4, 2008 New Zealand banks are currently offering 8+ percent P.A. interest on fixed-term (CD) deposits. Since American interest rates have gone South (and will probably continue to do so) I'm thinking of moving some of my U.S. based savings into these accounts. Of course, in the unlikely event that the dollar appreciates against the NZ dollar (unlikely, in my opinion) I could lose. There's also the question of losing a few percent on incoming and outgoing exchange rate charges, plus bankwire fees and other nickle-and-dime stuff. But overall, and even factoring in fee structures, NZ looks like a winning proposition as a place to park some savings. Do we have any financially-enlightened Aussie or Kiwi members who'd like to offer their considered opinion on such (perfecly legal, TwoTone) shenanigans? Not all at once, please.... Quote Link to comment Share on other sites More sharing options...
rodwc Posted March 4, 2008 Report Share Posted March 4, 2008 Gerry Hervey ( Hervey Norman ) once owner of the large retail chain here in Melbourne, Hedged some of his multi-millions by backing the A$ ,12-18 months ago against the US$. This was when the Aussi $ was 60 cents against the US $. The Aussi $ peaked at 95 cents last week against the US $. So its the same old thing, money makes money. Go for it whilst there is still a chance, but don`t put all your eggs in one basket !! Quote Link to comment Share on other sites More sharing options...
phaedo Posted March 5, 2008 Report Share Posted March 5, 2008 The idea behind the higher rates is the likelihood the currency will drop, thus you end up earning the same % rate anywhere in the world. Plus the risk of default. Not that it is really an issue in NZ, but the currency has been high for a long time; I would say given the looming US recession there shouldn't be a big change in the exchange rate in favor of the US, although NZ has been a largly farming country traditionally, but has moved away from that a great deal, it is still there thus a recession would not have as big an impact as the manufacturing countries. It is a couple of years since I left there, so am out of the loop a lot, but I think elections are next year - be around November usually. So no problems with change of government. Not sure what else to add really. Quote Link to comment Share on other sites More sharing options...
cornerstone Posted March 5, 2008 Report Share Posted March 5, 2008 I would consider betting on the NZ$ as fairly risky because its rate is heavily influenced by cross-rates out of its control; it could be volatile. But don't listen to me, because I am in the process of making a fairly similar investment move myself (really) Quote Link to comment Share on other sites More sharing options...
ahchard Posted March 6, 2008 Report Share Posted March 6, 2008 There are many people doing that at the moment, especially the japanese... which is the main reason why our dollar is so high... each time the reserve bank increases our interest rate, more people invest their money here and our currency goes up... does not help the exporters, but there is nothing much they can do... The main reason the govt has been raising interest rates is to control inflation and try to push down the booming property prices. This seems to have worked as the property market has slowed down considerably. It is highly unlikely that the reserve bank will increase the interest rates anymore and might be starting to reduce it slowly maybe from the end of 2008 or sometime next year. So, you will have to make your own risk assessment... if you put x amount of money here for 12 months or 18 months, how much interest will you make, and then... if after that time, the reserve bank drops interest rates by .25 or .5, how much will that affect the nzd:usd exchange rate? if you transfer yr usd to nzd at a rate of 0.81 and then change it back to usd after 18 months at 0.76, will you have made any money? also depends on your financial position... if you are not in desperate need of that cash, then you can hold out and wait till you get at least the same exchange rate or better... but you never know what the exchange rate will do. We just had quite a big budget deficit reported... Whatever, you do... as someone already said... dont keep all your eggs in one basket...make sure you are playing with what you can lose... hope i made sense... feel free to ask any more questions. I am in the real estate market in nz and also dabble in the sharemarkets a little... i have good friends in senior positions in the banking industry as well. Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 6, 2008 Author Report Share Posted March 6, 2008 Thank you all for your sound advice: I've been in contact with some NZ banks, and as soon as I can convince them that my two cents are not part of a vast and tentacular international money laundering operation, it is possible that I'll send a trial amount over to see how I make out at the end of a six or twelve month period. I'm quite aware that if something looks (almost) too good to be true, then... but there is a strong possibility that the situation in NZ represents a better alternative to investing in term deposits in the U.S. Actually, almost anything at this point represents a better alternative than investing one's money in dollars, short of simply running them through a paper-shredder. Will the U.S. dollar ever bounce back against the Euro? It might, but only when enough major players decide that there's money to be made in letting it appreciate. They've certainly made buckets of money in speculating on the dollar/euro parity, but like every party, it could end when people decide that they've had enough fun. As astute readers can see, I don't really believe that the given value of a currency is based on logical factors as much as emotion - and at the bottom line, greed. There are a whole mix of reasons that the dollar is at an historical low against other currency, none of which (the reasons, that it is) are particularly binding the moment that it's decided that huge amounts of money can now be made by going in the opposite direction. Thanks again for your input and suggestions...it's been most interesting and infomative! Quote Link to comment Share on other sites More sharing options...
ahchard Posted March 6, 2008 Report Share Posted March 6, 2008 ryy... if u need help with a bank let me know... the regional manager of one of the major banks is my buddy... and because of that, i get very good service from all the local branch managers. Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 6, 2008 Author Report Share Posted March 6, 2008 Will do, and thank you: I'm having a hard time convincing these Kiwi bankers that I'm not a member of the Mob, Al Quaida - or both at the same time Quote Link to comment Share on other sites More sharing options...
offshore Posted March 6, 2008 Report Share Posted March 6, 2008 Ryy, Just hope you don't use your avatar in your communication with those bankers! 'Cos even K1w1 bankers would know they had seen that face .....somewhere! Offshore Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 6, 2008 Author Report Share Posted March 6, 2008 On the contrary, I always send this along with queries about investing my nest-eggs... Quote Link to comment Share on other sites More sharing options...
ahchard Posted March 6, 2008 Report Share Posted March 6, 2008 Here are some rates i copied from the website of one of the major banks... if you invest more you are able to negotiate better rates... $5,000 - $9,999 $10,000 - $49,999 $50,000 + 30 days 2.75 4.00 7.00 60 days 2.75 4.00 7.00 90 days 5.00 7.00 7.00 100 days 5.00 8.50 8.50 120 days 5.00 8.35 8.35 150 days 6.00 8.00 8.00 180 days 6.15 8.00 8.00 210 days 6.15 8.10 8.10 270 days 6.15 8.80 8.80 1 year 6.15 8.00 8.00 18 months 6.10 8.00 8.00 2 years 6.10 8.00 8.00 3 years 6.10 7.70 7.70 4 years 6.10 7.60 7.60 5 years 6.10 7.60 7.60 Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 6, 2008 Author Report Share Posted March 6, 2008 One of several banks offering rates like these, ie. 8.70% on anything over $10,000 NZ for eight or nine-month periods. Sounds quite good to me, but of course, I know nothing about how these banks are run - or their reputation.... http://www.bnz.co.nz/Rates_and_Fees/1,1184...Term_Investment Term Deposit Rates Term Investment Interest Rates p.a. Term $2,000-$4,999 $5,000-$9,999 $10,000-$49,999 $50,000-$99,999 $100,000-$250,000 30 - 59 days* 2.00% 3.00% 3.00% 3.00% 5.25% 60 - 89 days* 2.00% 3.20% 3.20% 3.20% 5.25% 90 - 119 days* 2.00% 4.50% 6.90% 6.95% 7.00% 120 - 149 days* 2.00% 4.50% 7.05% 7.10% 7.15% 150 - 179 days* 2.00% 4.50% 7.90% 7.95% 8.00% 180 - 209 days* 2.00% 4.50% 8.10% 8.15% 8.20% 210 - 239 days* 2.00% 4.50% 7.75% 7.80% 7.85% 240 - 269 days* 2.00% 4.50% 8.70% 8.70% 8.70% 270 - 364 days* 2.00% 4.50% 7.90% 7.95% 8.00% 1 year 2.00% 5.00% 7.90% 7.95% 8.00% 18 months 2.00% 5.00% 7.90% 7.95% 8.00% 2 years 2.00% 5.00% 8.40% 8.40% 8.40% Quote Link to comment Share on other sites More sharing options...
rodwc Posted March 6, 2008 Report Share Posted March 6, 2008 The main reason the govt has been raising interest rates is to control inflation . It is highly unlikely that the reserve bank will increase the interest rates anymore and might be starting to reduce it slowly maybe from the end of 2008 or sometime next year. Talking about Australia now, anybody can bet their last dollar that interest rates ARE going to go up at least once if not twice THIS year. It is only slowly dawning on the Aussis, that they have to keep their wallets Closed, if inflation is going to be slowed. They can not think that they can spend money they have not got, ( ie , credit ), and , service a big mortgage! The last couple of interest rate rises will push a lot of families over the edge. Health insurance up 5% TODAY. Sad, but they were living too close to the edge anyway, to be realistic about surviving in today`s world. Higher numbers of morgage foreclosures are allready happening every week. House and land prices will fall, but not to the bargain basement levels, especially when a large proportion of Australians , allready own their own homes. Quote Link to comment Share on other sites More sharing options...
KB Posted March 6, 2008 Report Share Posted March 6, 2008 Higher numbers of mortgage foreclosures are already happening every week. The sad reality of buying McMansions Ken Quote Link to comment Share on other sites More sharing options...
cornerstone Posted March 6, 2008 Report Share Posted March 6, 2008 One of several banks offering rates like these, ie. 8.70% on anything over $10,000 NZ for eight or nine-month periods. Check out these folk http://www.raboplus.co.nz/ I think the additional liquidity of having the money on call is well worth the difference; or rather, I don't think not having access to it, or to future interest rate rises, is worth the extra. I suspect that the AU$ is a less volatile bet - but don't quote me on that. Talking about Australia now, .... House and land prices will fall I don't think so, not in a period of high inflation. Possibly in real terms they might, but when things are getting stormy property is not a bad bet - people will always need homes, and there some some decent tax advantages over income from interest, say. Whatever the papers say - there's plenty of dough around at the moment, no question - people have cash. And onto that economy they're about to throw a massive tax cut in July..... Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 6, 2008 Author Report Share Posted March 6, 2008 Check out these folk http://www.raboplus.co.nz/ I think the additional liquidity of having the money on call is well worth the difference; or rather, I don't think not having access to it, or to future interest rate rises, is worth the extra. I'm with you on that. Raboplus has a S&P AAA rating - which is as good as it gets. I'll definitely look into this - and thanks much for the link Update: It looks like they want to keep a good thing for themselves: there's no provision for non-resident/non-nationals in the registration process. I might give them a call to find out what their policy on this is, and will report back when I've more information... Quote Link to comment Share on other sites More sharing options...
rodwc Posted March 6, 2008 Report Share Posted March 6, 2008 I don't think so, not in a period of high inflation. Possibly in real terms they might, but when things are getting stormy property is not a bad bet - people will always need homes, and there some some decent tax advantages over income from interest, say. Whatever the papers say - there's plenty of dough around at the moment, no question - people have cash. And onto that economy they're about to throw a massive tax cut in July..... It`s only an itsy bitsy tad high, and I wouldn`t go believing what ANY pollie, has stated in the past. Tax cut ? They will forget about that willy nilly if it suits them, and say a tax cut right now, would only fuel present inflation, meanwhile they give all pollies a wage rise of 12% !!!! Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 8, 2008 Author Report Share Posted March 8, 2008 For anyone else interested, these people offer the highest rates I've found, and came through in a very friendly way; seems to be the best deal going at the moment: http://www.westpac.co.nz/ The quetion now is whether it's going to be worth moving funds over (wire fees plus conversion into NZ dollars plus conversion and wire fee back) compared to the rate I can get where I already am.... The definitive answer would be in the certainty of a continued rise in NZ to U.S. dollar parity. My intitmate conviction is that this remains a good move - just as was buying gold a year (or more) ago... Before I provoke any more insanely jealous reactions - like the time I posted here for advice on a huge certified check a bank sent to me by mistake - let me add that ryyannon is a total idiot when it comes to most things, including money: he never bought into gold when he knew it was going to go through the roof, just as he'll probably watch the dollar diminish to negative values over the next year, while being replaced by the New Zealand Dollar as the world's reference currency. So sleep tight, ye mean-spirited few: ryyannon is actually getting poorer with the passage of time, betting in his own insane way on the ultimate of long-shots: that the meek, poor and stupid (his strongest qualities) shall inherit the earth - as if anyone except a total moron would even want it by then. Anyway, having done the research on the New Zealand term investment question, I hope that at least someone profits from it. And lastly (but first, in intention) let me once again thank the kind souls who contributed to this thread with their own suggestions, information and analyses! Quote Link to comment Share on other sites More sharing options...
Victoria Posted March 8, 2008 Report Share Posted March 8, 2008 Will the U.S. dollar ever bounce back against the Euro? Not if the USA wishes to stay competitive with the Chinese. I know it sucks for our hobbies, and for travel, etc. but this is really key to the US economy. As ever, thanks for the info this post elicited, Ryyannon. Can you believe I still have my old Lloyds bank account, and haven't made at least inquiries like yours, in all these years? Quote Link to comment Share on other sites More sharing options...
ryyannon Posted March 8, 2008 Author Report Share Posted March 8, 2008 It's a pity you don't have it all in a Sterling Lloyd's account... Quote Link to comment Share on other sites More sharing options...
cornerstone Posted March 9, 2008 Report Share Posted March 9, 2008 One thing that occurred to me was the non-resident withholding tax - it might be worth just checking through the tax implications too. Quote Link to comment Share on other sites More sharing options...
ahchard Posted March 9, 2008 Report Share Posted March 9, 2008 no worries... if you are non-resident you can apply for a non-resident witholding tax status... i think the tax rate for that is 2% you wont even notice it... effectively say interest at bank is 8.80%, 2% of that is 0.176%.... Quote Link to comment Share on other sites More sharing options...
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