(12-11-2013, 11:19 PM)pianist Wrote: [ -> ]what about dual currency deposits? basically u r trying to sell an option to the bank. this one dun have commission to be incurred..the bank earns on the spread while u earn on writing the option - time value of money..sounds like win-win.
I did dual currency deposits before. I find that the the return is not worth the risk. The interest rates is rather low most of the time, and must time properly, depending on whether you wish to swap, or don't wish to swap, to the alternate currency when due. And over time, it may not be a win-win. I see it more of the bank win, and I win some/lose some.
(12-11-2013, 11:53 PM)NTL Wrote: [ -> ] (12-11-2013, 11:19 PM)pianist Wrote: [ -> ]what about dual currency deposits? basically u r trying to sell an option to the bank. this one dun have commission to be incurred..the bank earns on the spread while u earn on writing the option - time value of money..sounds like win-win.
I did dual currency deposits before. I find that the the return is not worth the risk. The interest rates is rather low most of the time, and must time properly, depending on whether you wish to swap, or don't wish to swap, to the alternate currency when due. And over time, it may not be a win-win. I see it more of the bank win, and I win some/lose some.
structured (
opaque) products sold by banks is to cream customers through fees and spreads.
Same as buying stocks in foreign currency thru broker.
Unless kept for reasonable long time, most end up paying significant exchanges n brokerage fees.
banks cream in terms of %, broker cream in terms of bps.
haha
Dual Currency Deposits never make sense to me. Another example where bank takes advantage on their own customers.
(13-11-2013, 09:05 AM)corydorus Wrote: [ -> ]Dual Currency Deposits never make sense to me. Another example where bank takes advantage on their own customers.
i try to learn about currency trading, and i found it's really for the "professionals" and the banks. In stocks, i found MOM & POP at least have a chance.
i have been buying(in terms of money changer) $RM for decades never sell still i think i can never make any money. Take it i have to visit my neighbour from time to time and try to protect my ($RM) spending power there.
Currency itself already not easy. Dual currency makes it a lot worst if i understand correctly. Is structured such that the bank will always SUCK YOU at Premium and at your RISKS. You lose at fee, exchange spreads and after exchange rates, give you the weaker ones...
(13-11-2013, 09:42 AM)Temperament Wrote: [ -> ] (13-11-2013, 09:05 AM)corydorus Wrote: [ -> ]Dual Currency Deposits never make sense to me. Another example where bank takes advantage on their own customers.
i try to learn about currency trading, and i found it's really for the "professionals" and the banks. In stocks, i found MOM & POP at least have a chance.
i have been buying(in terms of money changer) $RM for decades never sell still i think i can never make any money. Take it i have to visit my neighbour from time to time and try to protect my ($RM) spending power there.
I am an amateur in currency, but had some luck in my first venture into it. I opened a one year FD with Bank Of China in Sep 2012 when RMB was weak against SGD then. When the FD matures this year, I closed the account and luckily, RMB has strengthened against SGD over the year. My overall gain (interest + FX gain) was about 8%.
http://www.valuebuddies.com/thread-2398.html
Was thinking of opening a MYR account over the causeway to take advantage of the weak MYR now and higher interest there.
Investments includes risk management.
That is why the portfolio is mixed with equities, bonds, property and may include foreign currencies, wine, art pieces.
The percentage of each asset class is dependent on the overall intention and time frames.
-Preservation of wealth
-Income generation
-Capital gains
-All the above
The challenge is to pick the 'right' mix,
the 'right' property, the 'right' currency etc. No one has ever constructed the perfect mix.
Technique is always the one aspect that separates the better investors.You cannot "chiak-ka-liao". In one year, your currency may lose all its value, while your equities may have shot up 200%!
If you want to spread your portfolio risks, currencies can play a part. Choose wisely.
When I was much younger, I flew to major cities like LON,NYC,SYD,FRA. I gambled at casinos, bet on football, horses, dogs and political outcomes. In LON, I opened an account and deposited my winings there. (did not want the wife to know).
Opening an account there served 2 purpose:
- Great Britain is one option for overseas studies. The money can be used for the kids
- Since you are not a citizen, it establishes a relationship with the bank.
At that time, interest rates was great ( so was the value of sterling). Later on, risk management required me to add my wife's name as a 2nd signatory ( bo pian.. getting old )
You could do the same for A$ or US$, Euro.. these are the usual places that people go for further studies.. and also holidays. I need not change much money when I visit these countries. Bear in mind that Australia & USA tax your interest earned at source. UK allows exemption once you sign certain forms to declare that you are not a tax resident.
(13-11-2013, 09:57 AM)corydorus Wrote: [ -> ]Currency itself already not easy. Dual currency makes it a lot worst if i understand correctly. Is structured such that the bank will always SUCK YOU at Premium and at your RISKS. You lose at fee, exchange spreads and after exchange rates, give you the weaker ones...
While I don't consider myself well verse in Dual Currency (Structured) Deposits, I do believe in it for 4years do give me some experience to share. I only dual with NZD due to the close match with SGD.
I use the following "steps" to make some money from it.
1. Determine the trading zone for NZD and SGD (it's between 0.96 and 1.04)
2. When NZD is around 0.98SGD, I put in a trade to convert to NZD within a week at low spread.
3. After convert, put into 1mth FD for some interest. Or put the NZD at a wide spread for 1 mth (and hope it will not be converted) if the interest is good.
4. Repeat 3 until NZD is around 1.02SGD
5. Do a trade to convert back to SGD at low spread and get it converted back to SGD.
Repeat.
By the way, the interest is negotiable with some banks, depending on how much they want make from it.