Someone gives you $50,000. Where do you put it right now?

[Ivanovich]

Quote from tradestrong:

It looks like what they are doing is giving you a "speculative" APY. It's based on if the currency appreciates (proabably at the same rate it's recently been appreciating against the dollar).

So, they probably offset the principal if the currency depreciates against the dollar.

In other words, what it sounds lke to me is that they give you a "definite" interest rate and speculate on the appreciation. As an example (I'm throwing numbers out there), for the Iceland Krona, you might get 3% interest and then a speculative 10% appreciation. If the Krona doesn't appreciate at all, you get the 3%. If it depreciates let's say 10% against the dollar, you get a 3% interest rate and then a 10% loss of the principal, so you'll lose like just under 7% in that case.

That's what it sounds like to me how it works.

I don't think so. The Iceland Central Bank rate is 13.75. It's most likely that you get a good rate of return because their rates are high. If you look at the New Zealand CD they offer, it's at NZ's bank rate.

It's not speculative. But if the dollar did appreciate, you'd obviously lose some. But as I say, I'm hedged for that scenario.

 

[tradestrong]

Quote from Ivanovich:

I don't think so. The Iceland Central Bank rate is 13.75. It's most likely that you get a good rate of return because their rates are high. If you look at the New Zealand CD they offer, it's at NZ's bank rate.

It's not speculative. But if the dollar did appreciate, you'd obviously lose some. But as I say, I'm hedged for that scenario.

Then why is this stated on their webpage:
"Returns based on a fixed interest rate and potential appreciation in the selected foreign currency versus the U.S. dollar. However, if the selected currency loses value versus the U.S. dollar, you could experience a loss of principal. "

What part of the rate factors in "appreciation"? It would seem to me that if the flat rate was 13%, then no appreciation would be neccessary on the currency to account for the stated "rate". So, in other words, no appreciation should = 13%, but they explicitly say that rates are dependent on both fixed rates and appreciation? So what is the point of mentioning appreciaton? It would seem that they would only have to mention the possibility of principal loss due to depreciation since appreciation should play no role in determining the rate if it is fixed.

 

[Landis82]

WAMU is taking on new money at 5.1% in a 7-month CD. Offer is good till end of the money; tomorrow.

 

[Bob111]

there is a link on right side of webpage with all info. the rate is fixed, however-they have to convert yours let say $10K to ISK on day, when you purchase cd(looks like they ask within 1% for it). and then-convert it back at the end of the deal. Whatever exchange rate will be on that date-it's all yours.
fair deal, but...12 APY/4=3%, you lose 1% after conversion, 2% left- taxes...aghh...plus risks. ISK is looks like least volatile for last 12 months, but still plenty of possibilities. rest of those deals-i won’t even touch them..TD ameritrade deal is way to go

 

[moron28]

Quote from Ivanovich:

I've decided to look into putting it into Everbank's foreign currency CDs. The Iceland Krona is paying close to 13%.

Don't! It is a very thinly traded and volatile currency. You won't know the exact exchange rate you'll be getting when you buy and sell the CDs. The volatilty could easily eat up most of the 13% you've earned, and then some. Just look at the intraday ISK-USD charts.

 

[parabolic]

Quote from parabolic:

Buy 5 Green Monster Boxes of American Silver Eagles.

In exactly 1 month you would have already made $7000...