Author Topic: Is it time to bin lira e-deposit accounts?  (Read 5989 times)

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Offline JohnF

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Is it time to bin lira e-deposit accounts?
« on: March 15, 2017, 12:06:41 PM »
I read an article by a Turkish economist this morning and it was food for thought.

Now that inflation is in double digits again (with no signs of short term recovery) are lira deposit accounts still best value for your money?

Ok, you're getting nine or ten percent return on your money but, after tax is taken off, the net return (%) is considerably less than the inflation rate. 

However, if you'd opted for the less generous rates on dollar and euro time deposit accounts (currently 1.5% and 0.5% respectively) due to the poorly performing lira, this bloke reckons you'd actually have seen returns of 14% and 11.5% respectively.  You can't argue with his maths and once you lop off the tax, you're still ahead of those with lira accounts.

On the basis that there is a high likelihood that the lira will continue to lose ground against the dollar over the next few months, irrespective of the result on 16th April, maybe now is the time to look at other ways to make your pot go further.

Thoughts?

JF

Offline 1calis

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Re: Is it time to bin lira e-deposit accounts?
« Reply #1 on: March 15, 2017, 16:39:18 PM »
Heard Garanti have a bond that is yielding 18% per annum. Interest is paid daily and funds can be removed with a few days notice.

Offline JohnF

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Re: Is it time to bin lira e-deposit accounts?
« Reply #2 on: March 15, 2017, 17:01:15 PM »
Unlikely. 

That said, you show me a link and I'll have the missus get in there like a ferret up a drain pipe.

JF

Offline 1calis

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Re: Is it time to bin lira e-deposit accounts?
« Reply #3 on: March 16, 2017, 17:08:11 PM »
I do not have a link but if you go upstairs in the garanti just down from migros in Fethiye you can get details. There is a connection with Blackrock. Have not committed as I am still looking for some answers.

Offline JohnF

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Re: Is it time to bin lira e-deposit accounts?
« Reply #4 on: March 17, 2017, 13:55:56 PM »
I hope the questions you're asking are the right ones as, generally speaking, bonds are fixed term and don't allow for dipping in and out.  Some of the government bonds available are round about 11% so 18% suggests pretty high risk.

Are you sure this isn't some sort of fund or other investment?

JF

Offline 1calis

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Re: Is it time to bin lira e-deposit accounts?
« Reply #5 on: March 17, 2017, 17:11:01 PM »
The interest rate is not guaranteed,it has swung between 12 and 24% over the last year. Have been told the money would be covered by financial guarantee if the investment failed. Hmm.

Offline JohnF

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Re: Is it time to bin lira e-deposit accounts?
« Reply #6 on: March 18, 2017, 11:18:51 AM »
Have been told the money would be covered by financial guarantee if the investment failed. Hmm.

I think "Hmmm" is a very appropriate comment there - that claim sounds like the financial equivalent of a Turkish builders "problem yok, problem yok!".

JF

Offline davybill

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Re: Is it time to bin lira e-deposit accounts?
« Reply #7 on: March 19, 2017, 07:21:51 AM »
I will stick with my 11% from Seker Bank.

Offline Google

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Re: Is it time to bin lira e-deposit accounts?
« Reply #8 on: March 19, 2017, 12:25:25 PM »
I will stick with my 11.75 from TEB

Offline JohnF

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Re: Is it time to bin lira e-deposit accounts?
« Reply #9 on: March 19, 2017, 17:16:09 PM »
I will stick with my 11% from Seker Bank.
I will stick with my 11.75 from TEB

I'm sure you will.  However, the point of the original post was to point out that there are ways to make more than you're getting from Şekerbank or TEB.

Lets say you had £100k to invest one year ago today.

If you'd simply lumped it into Şekerbank or TEB at 11% and not taken out any interest you'd have made 48,247tl.  Unfortunately, your initial investment is now only worth £92, 427.  In lira terms, you've lost 34,078tl so your net gain is only 14,168tl.

If you'd converted your initial investment into dollars and did the exact same, with the lower interest rate of 1.5%, you'd have made $2,176 which equates to 7,898tl.  However, your initial investment (after conversion) is now worth £117,073.  In lira terms a gain of 76,828tl, which if you add your interest makes an overall gain of 84,726tl and your original £100,000 is still intact.

Obviously this is simply an example, and I haven't taken into account taxes or fees - if you'd left the original stake in sterling then your gains wouldn't be as much, but still more than you'd have made in lira.  Its also skewed a bit by the strong pound from a year ago but the principle is solid, hard currencies hold their value, the lira doesn't (currently).

The whole scenario relies on a falling lira, which is what we've had for six or seven years now. 

JF







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