Calis Beach and Fethiye Turkey Discussion Forum
Property For Sale in Calis Beach & Turkey => Moving To Turkey => Topic started by: karaokemark on March 31, 2008, 21:16:02 PM
-
I know this will only be a rough estimate and will change in the coming years, If I had £100,000 (one hundred thousand)to live off in Turkey full time what would be the best way to invest it and what return could I expect at todays rates.
Mark
-
this was discussed just last week Mark
{A Link to an old CBF topic was here - no longer available}19493
{A Link to an old CBF topic was here - no longer available}20443
These threads should give you some answers
-
Mark. I'll leave the sums to Stoop or someone else but with investment in a high interest account you would easily get by on the interest without touching your capital. (Obviously depending on the lifestyle you choose):P
Ken :D
p.s. I think the sums have probably been done in the threads Anne has quoted.
-
Thanks for that I have found the info on the previous threads, now it becomes very tempting
-
If you invest your money in a bank I would suggest FINASBANK .
£100,000 invested equates to about £15,000 per annum but will vary obviously with interest rates.
-
I know it looks tempting to get 15-17% when you would be looking at 6% in the UK, but the difference is for a reason. the YTL is higher risk. Interest rates need to be high to offset the risk of currency instability which as you know has a long and inglorious history in Turkey, with the major banks cashing in at the expense of the general population. (investing their own money in currency speculation, in effect betting against the lira which was a contributory factor in its decline - like a horseowner picking his jockey with a wink, then betting on other horses in the race).
Inflation is on the rise around the world, with the stronger developing economies, like Turkey, among the worst affected. It's lovely to get the equivalent of £17k pa instead of £6k, but what about when your £100 k in YTL becomes worth £50k? £5k? £500? £5.
Could it happen? I first came to Turkey in 1979. The old TL stood the day before I arrived at 25 to the pound. The next day it underwent a 100% devaluation. When I passed back through a few months later it was around 80. On my honeymoon it was around 850. A couple of years later 1500. From there you know where it went - to south of two million to the pound. At that time it was the world's least valued currency unit and declared a matter of national shame by Mr Erdogan.
Lightening does strike twice in the same place.
The chart here shows a decline by a factor of 150,000. Converting your £100,000 back to sterling would net you 67p.
Conversely, if you stay in Sterling, you will be largely immune from the effects of Turkish devaluation. Of course you will still need to find an interest rate higher than inflation in the UK to give you a real rate of return, but you don't have to put all your cash in... well, cash.
See the slide.
It may not happen, but before you make such a huge financial manoeuvre, best to take at least a glance in the rear view mirror.
* 1966 — 1 U.S. dollar = 9 lira (TL)
* 1980 — 1 U.S. dollar = 90 lira (TL)
* 1988 — 1 U.S. dollar = 1,300 lira (TL)
* 1995 — 1 U.S. dollar = 45,000 lira (TL)
* 1996 — 1 U.S. dollar = 107,000 lira (TL)
* 2001 — 1 U.S. dollar = 1,650,000 lira (TL)
* 2004 — 1 U.S. dollar = 1,350,000 lira (TL)
* 6 May 2008 — 1 U.S. dollar = 1.25 lira (YTL)
Does the Turkish government anticipate a resurgence in inflation? Who knows, but on the 1st Jan 2009, there will be a new highest banknote - the 200YTL.
New highest banknotes. Ring any distant bells?
Good luck and think carefully. If you're unsure, you could put a small slice in the higher yielding Turkish account and see how it goes, but remember - eggs? baskets?
-
Mark,
A very good post which shows the principle of Return V Risk very well.
I have a friend who moved to Spain 4 years ago and took his company pension at 50. It gets paid over here in £ and then he transfers it into Euros (only option he has). Guess what? The Euro has reached an all time high against the £ and he's well down on his monthly income. Inflation is also rising in Spain. For the first time last week he and his wife actually mentioned coming home. They have never mentioned this before and have always said they would never ever do so. Alarming how things can change so quickly.
I guess whatever you do when you move abroad you are taking a risk when it comes to investing your hard earned dosh. If you need a high income and can NEVER see yourself needing to change the money into £ again then it's a risk you might want to take.
If, however, you are not sure that Turkey is for life or you do not have other funds you can fall back on then I would urge caution.
-
What also perhaps should be thought about - although to be honest, it's something none of us like to think about - is what happens if one of you pops your clogs?
Keeping your money in the UK means that YOU can decide exactly who you want your hard earned to go to. The situation in Turkey is far from clear, even with a will (look at Loz's post) & could possibly lead to your nearest & dearest being strapped for cash at a time when they are most vulnerable.
Mark. In hindsight IF we had placed all our money in the Turkish lira back in 2003 (2.70 to £?)- we'd have way more than doubled our money BUT as the other Mark above said I'd seen the Turkish lira halve in value frequently (seemed like every year) since the early 80's - so I was way too chicken/cautious.
The Lira is VERY strong now against the pound BUT will this/can this continue? I don't know - if I did know for certain I'd be rich. If you jump at the wrong time you can lose lots - you can also gain lots too BUT there are no guarantees. The last 5 years have not been typical, will it continue? Who knows?
-
As I have mentioned once before somewhere else. If (I say if as I didnt) invested 100,000 sterling when I first moved here when the rate was 8600 lira to the pound, lived off the interest and didnt touch the capital, and now I decided after all this time to move elsewhere and change my 100,000 back into sterling then I would have just 400 quid.
Thats what Turkey can do. If its a short term punt it might be worth but f its over 10 years or more then you have to be pretty stupid or just love throwing money away if you invest in the lira.
-
starman I don't doubt what you say however in your calulations what interest/ componded sum over those years would you have leaving the interest to accure over the whole period,I think you may have lost but not over 99% surely.
-
c1 - no matter which way you look at it - if Starman got say 15% interest(net) and his investment devalued by 10% per annum (conservative estimate) then he is only getting a real return of 5%. On £100k I could get you 5% interest (in the UK) with guaranteed capital return after 5 years (and probable capital growth).
Risk /Return
-
stoop, I can get 6% from ING but after tax, bearing in mind that they (banks) collect the tax (basic)at souce, leaving the individual to pay the extra tax assuming you pay at 40% rate this doesn't seem a good investment in the uk either. I think over the period you would lose money slower in the uk than turkey although the 15% return has fluctuated over a period to over twice 15% if my memory serves, however we maybe in for some devaluation of sterling shorty (already slipping against euro). you pays you money and you take your chances. you might want to explore investing in tax free isa's as income and growth has some tax saving eliment.if you havn't already checked it out,you can then get the income direct into your nationwide account etc, sits out side you tax limits, not much use if you intend to exit uk for good, a balance of risk return spread over all markets does work out. best of luck with what ever you decide :)
-
It all depends what risk you are prepared to take with your £100k. If in five years time you want to come back to the UK and the YTL is week against the £ then it could cost you a fortune. On the other hand - taking 6% (net of basic rate tax) and STILL having £100k in the bank might be a better option if you are adverse to high risk investments.
My own view is that if I was relying on 15% return from my total life savings in order to live in a foreign country then I would seriously consider whether I was doing the right thing or not. But then I am a fairly cautious investor.
-
You can talk all you like about rates.
But surely if you are living in Turkey and investing money you would be looking at the exchange rate and markets everyday. If there was a big shift in exchange rates one way or the other then surely you would convert one to the other to protect your capital?
To just convert and leave your money in one account would be madness.
-
What are your thoughts on government bonds & shares in say telephones etc. I haven't as yet looked into this in great depth,but will be doing so soon as part of an investment plan. Would not a mix of £s,ytl,bonds & shares be an option?