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Foreign Currency Fixed Deposit
By Derek  •  May 13, 2008
This almost happen to me some years back when Foreign Currency Fix Deposit was very popular. Luckily for me, I had no money at that point of time else being a financial idiot then, I would have readily invested my money. Some were offering as much as 10% interest and Fix Deposits are supposedly risk free! I would like to remind others not to jump into a product that promises you very attractive returns. Always be dubious on such products. If something is too good to be true, there will always be a catch somewhere. Losing money on 1 month foreign currency fixed deposit By: PanzerGrenadier How many times have you heard of the term, “past results is not a guarantee of future performance?” when it comes to investing? I learnt a painful lesson today when my foreign currency fixed deposit (FCFD) matured because I made a wrong calculation of the risk-return of investing in the FCFD. The lesson cost me $783.47 in realised losses. What happened? Foreign currency fixed deposits or FCFD for short are basically fixed deposits but in a currency that is other than Singapore dollar. I have had some measure of success with a deposit I placed sometime ago in NZD yielding 8.3% interest at an exchange rate of NZD/SGD 1.07. I had been monitoring NZD and thought I was able to get a sense of how volatile the currency could be against the Singapore dollar. Whilst this deposit is set to auto-renew both principal and interest perpetually, I decided that since I managed to get good returns from this instrument, why not try another tranche to get better returns as compared to 1% on Fairprice Plus Savings Account. So I went ahead to place a deposit of NZD 12,890 x 1.1077 (S$14,278.25) at an interest rate of 8.1%. Now if I had placed that deposit for 1 year, I would be able to beat bank savings rates of 1% so long as NZD/SGD didn’t fall by more than 7.1% over 1 year. But I made a big error… Read more...
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By Derek
Derek is an investor who follows Peter Lynch style of investing. He prefers to use simple and straight forward information for stock analysis. He started TheFinance.sg with the intention to bring together all bloggers and professionals who are interested or already in the area of Finance and Investing, and to create a community where everyone is free to write and to share their articles, experience and opinions.
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