Investment and interest rates

teg17 · Post by **teg17** » Mon 01 Oct 2012 6:44 pm

Can anyone let me know what the current fixed deposit rates are for funds held in Turkish lira, and if so are they significantly higher than sterling or any eu rates to make large amounts worth holding in the local currency ?
Does anyone do it or is it regarded as to much of a risk ?
I am making an exploratory trip in November to consider the possibilities of moving to the TRNC and have funds invested in both sterling and South African rands so it is a somewhat tricky decision.
Thank you in anticipation
Trevor

Keithcaley · Post by **Keithcaley** » Mon 01 Oct 2012 8:19 pm

you can currently get 8% to 10% interest rates on 'timed' Turkish Lira deposit accounts, dependent on the amount deposited - rates are negotiable, so you need to haggle - you might get more!

There are Government guarantees on funds deposited with banks in TRNC - please ask individual banks about the conditions and limits to this guarantee, something written on a forum is not a guarantee

Philoz · Post by **Philoz** » Mon 01 Oct 2012 8:41 pm

Trevor.
The lure of high interest rates is a little dangerous, as unless you reside in the place where your money is it can leave you out of pocket when you try to repatriate your money because of exchange rate fluctuations.
You also need to consider inflation.
An investment @ 3% if the inflation rate is 1% you are making 2% in terms or 'real growth'.
An Investment @ 10% if the inflation rate is 12% means you get an attractive return on the face of it-but in reality you are losing money as your capital has depreciated by 2% in terms of buying power.
In other words the 3% deal is better.

In answer to your question- If you have a nice wedge you can get 10-11% (before stopaj@10%).
The deposit protection scheme referred to Only applies to local banks.
Although Turkish banks are regarded as pretty sound as they sorted themselves out a few years back.
Hope this helps.

teg17 · Post by **teg17** » Mon 01 Oct 2012 9:12 pm

1. Thanks for the reply Keith. If the rates you mentioned are reasonably accurate and people invest their future in the TRNC for the long haul would it not make sense for those who are resident to rather have surplus funds invested there instead of back in the UK where the rates are much lower or am I missing a point somewhere. Obviously there is an exchange rate risk if people do not stay but I have noted that many have been resident there for many years and would have reaped the benefit accordingly.
2. Philoz, appreciate your input and understand your point as I have been living in South Africa for many years where they have a volatile currency and higher interest rates relative to the UK and the Euro zone. However if Keith's figures are accurate I would have thought that the return would have exceeded the inflation rate by a comfortable margin. My problem is that I have a chunk of funds in SA and am not sure whether to leave them there, move the funds to my onshore/offshore accounts in Europe or to the TRNC. Gets more complex the more I think about it.

Keithcaley · Post by **Keithcaley** » Tue 02 Oct 2012 8:27 am

Trevor, I also understand Phil's reasoning, but just as you suggest, I see no point in investing money at 1 or 2% return in the UK when I live in TRNC...