Financial
Buying Icelandic Bonds?
13/02/07 23:31 |
Permalink
In surfing my about the web I happened upon a thread
on Fatwallet Finance that greatly interested me
regarding a CD denominated in Icelandic Krona. What's
so interesting about it? It is a 3 month CD that is
paying 13.38% APY. Now in this day and age of 6%
mortgages in the United States this is a crazy high
and fairly safe return. This even beats the
historical average for the stock market!
So why didn't I immediately open an account?
1. Minimum investment of $10,000.
2. Currency risk. (This just means that the Krona floats against the dollar and you could gain or lose money based on what happens to the exchange rate).
3. Conversion fees. A possible deal breaker. (The cost to transfer in and out of the account.)
Hear is what Everbank has to say:
If you request funds in this account to be denominated in a currency other than the currency sent to us to fund the account, EverBank will convert your funds using a then current conversion rate set by EverBank. Your currency conversion rate will be within 1% of the wholesale spot price EverBank pays for your currency. Exceptions may occur when a specific conversion rate is agreed upon between you and EverBank.
The above made me wonder if I could directly purchase treasury bonds. After some research on the web it looks like the unfortunate answer is no.
The final possibility is to find a mutual fund or ETF that invests in Icelandic bonds. I haven't gone down this road yet, but a quick search of Fidelity didn't show anything particular.
If only things had worked out bit better. After all, who doesn't want to invest at a guaranteed return of 13%!
Possibly useful links:
Everbank
Fatwallet thread
Iceland Bonds
So why didn't I immediately open an account?
1. Minimum investment of $10,000.
2. Currency risk. (This just means that the Krona floats against the dollar and you could gain or lose money based on what happens to the exchange rate).
3. Conversion fees. A possible deal breaker. (The cost to transfer in and out of the account.)
Hear is what Everbank has to say:
If you request funds in this account to be denominated in a currency other than the currency sent to us to fund the account, EverBank will convert your funds using a then current conversion rate set by EverBank. Your currency conversion rate will be within 1% of the wholesale spot price EverBank pays for your currency. Exceptions may occur when a specific conversion rate is agreed upon between you and EverBank.
The above made me wonder if I could directly purchase treasury bonds. After some research on the web it looks like the unfortunate answer is no.
The final possibility is to find a mutual fund or ETF that invests in Icelandic bonds. I haven't gone down this road yet, but a quick search of Fidelity didn't show anything particular.
If only things had worked out bit better. After all, who doesn't want to invest at a guaranteed return of 13%!
Possibly useful links:
Everbank
Fatwallet thread
Iceland Bonds