Is the Lira a Good Investment?

[Ovacikpeedoff]

Starman, I totally understand what you are saying about drastic fall in the value of capital when you convert it back to the source currency TL to sterling. What you also have to take into account is the interest because this is compensation for the fall in value. So at the end of the period you would have to include the interest earned in the pot to calculate the true value of your investment.

If you did I still think that the time value of the return would be less than the initial investment. This is the great problem with rapid inflation. At any time where interest paid is less than the rate of inflation your money loses value.

[starman™]

but a lot of people withdraw the interest every month as an income so therefor your capital actually shrinks.
How many people on here do this and use the interest gained as an income rather than leaving it with the original investment?
Lets put it in another way. If using the same time frame.
1992 the USD - GBP was 1.8....100,000 GBP would get you 180,000 USD
come along to 2011. that 180,000 USD would now be worth 110,500 GBP.
No interest taken into account in these figures.
Not trying to prove anyone wrong etc but just highlighting what the Turkish lira has done in the near past and what can do in the near future.

[Ovacikpeedoff]

Yes but the purchasing power of a £100k in 1992 is much greater than the £110,500 is today. So the value of your £100k has actually decreased rather than increased.

You have had the interest and you cannot ignore it.

If you are really interested in the subject of the time value of money there is a formula embedded in an Excel spreadsheet that will calculate the true value of your investment and there are hundreds of textbooks on the subject.