How I made 17% interest in a risk-free offshore savings account

Written by Andrew Henderson
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Dateline: Tbilisi, Georgia

Since I have been focusing so much on taking action this year, I have decided to give you small reports on some of the deals that I am and will be working on. I will walk you through the steps I take as I document what I have done.

In today’s report, I am going to explain how I have recently made approximately 17% interest in a risk-free offshore savings account here in Georgia.

First of all, I plan to do the same thing I have done here in Georgia in two or three other countries, but since this is where I am based at the moment, my report will come from my experience here.

In this case, I had already set up a personal bank account, but I had also heard that the banks here offer high interest rates in the local currency, so I decided to go into the bank and talk to my banker. I told him I was ready to take some dollars and put them in the local currency to take advantage of the high interest.

How I made the first 10% in an offshore savings account

I opened a one year term deposit that I can add money to. It’s like a term deposit in that you’re locked in for a year, but within a year you can add more money. The account came with a prorated interest rate of 10.5%, plus a 0.2% bonus for doing it online.

Now, I’m always talking about how easy it is to open a bank account in Georgia — and it is — but there are times you will need to get help. It’s easy if you know what you’re doing, but in this case I didn’t, so I decided to visit my banker.

[Side note: if you deposit 70,000GEL (Georgian lira — roughly $30,000 USD) you automatically get your own private banker at one of these banks.]

My banker was incredibly helpful and, since there was that 0.2% difference for doing it online, he said he would just show me how to do it myself so I could get the extra interest. After he showed me, it literally took me only two minutes to set it all up.

Just like that, I had secured 10.7% interest and was able to fund my money through the account.

Even better, one of my team members who is less risk-averse than I am decided to invest their money for a three year period and will earn 14%.

How to get the next 7% interest

Now, up to this point in the story, I have secured 10.7% interest. So where did the rest of my interest come from?

To fully understand this next step in the process, it’s important to note that banks here charge higher conversion rates for the dollar. It’s usually somewhere between 1.5% and 2%. However, you can easily find a place that will make the exchange for you where the spread is 0.2%. In that case, you could convert $2,000 and only pay $4 to do so.

If you are able to do that, you will enjoy increased interest beyond what the bank offers as part of your term deposit; and all due to exchange rates.

Recently, everyone has been talking about how the dollar will pull back, and it definitely has. But, if you played your cards right, things will definitely be in your favor in the coming months.

Every major currency that I’ve talked about in the past six to twelve months — currencies that I told you were at dirt cheap fire sale prices and that you should be buying real estate in those countries — has now started to come back off their lows.

The Colombian peso gained 10% in two months. It’s still way down against a year and a half ago, but it’s gained 10%. So has the Turkish lira.

Before I opened my term deposit account, I thought Georgia would sit at its low a little while longer. When I was here two years ago the exchange rate was at 1.7; back in February of this year, it was at 2.48, a 45% drop in value. I figured it probably wouldn’t go to 3%, but I imagined it would stay at that rate for a little while longer.

My mistake. I didn’t get in at the bottom with 2.48%; however, I did get in at about 2.37%. And I figured that, even at that rate, it would be a solid long term, and even mid-term, investment.

I was right.

The exchange rate is now at 2.22, which is an increase of 6.33% from when I bought in, making my total interest gained to this point over 17%.

What’s even better is that in the next nine months or so that I have left on my term deposit, that number could go even higher still. Even if it were to go down to just 2.1, my overall interest earned would be 22%.

And that’s not unreasonable conjecture.

Literally, just a few weeks ago, the exchange rate was changing every single day. At first, it was at 2.29, the next day it was at 2.28, then 2.27 and now it’s at 2.22. Pretty soon it will be at 2.21 and so on.

Risk-free offshore savings accounts where YOU can invest

I share my experience not to say that Georgia is the best place or the only place you can invest in a risk-free offshore savings account. In fact, I would suggest that there are somewhere between five and ten other countries that have good banks and similarly high interest rates.

Other countries in this part of the world (i.e. the Caucasus region) are a good place to start. However, you have to know which ones to look at. For example, Ukrainian banks are all pretty much run by the mob.

Serbia, on the other hand, is a good option.

In other regions of the world, Mongolia has 14% interest rates in local currency. However, not many people know that much about Mongolia, so the currency tanked 40% after some people were talking about buying it. They have high rates but do your due diligence if before investing.

In the southern hemisphere, Argentina has high interest rates on deposits, but there are a lot of negative factors that would keep me from truly suggesting Argentina as a good place to invest.

First, up until just recently, you had a nut job running that place and you couldn’t even take your money out. Second, inflation. Sure, interest rates of 22% sound great, but the official inflation rate is at 10% (and the street inflation rate is who-knows-what!).

Taking all that into consideration, 22% becomes pretty unattractive.

What you want to do is find a country that is politically stable. I’ve said Georgia was the easiest place to bank, but I’m going to take that back a little bit and say that this whole region of the Caucuses is probably altogether one of the best places.

And here’s the thing: $500 is a lot of money to save for locals living in these emerging market countries where there are good banks. So the banks aren’t going to demand that you have millions of dollars to invest before you get the top interest rates.

In Turkey, for example, you can typically get the best interest rate with $25,000 — and close to the best with $3,000 dollars.

The question is what’s your risk-reward? Obviously, some currencies are just a mess, but overall it’s not impossible to find strong currencies in stable countries with good banks.

If you are interested in opening an offshore savings account and want our help, apply for a Strategy Call and we can find the right fit for you and your offshore goals.

Andrew Henderson
Last updated: Dec 27, 2019 at 3:07PM

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21 Comments

  1. bartrand

    Interesting. Which bank was this?

    Reply
    • John

      A lot of this is just bullshit and if you read between the lines it’s a promotional write up to have you do business with the listed website in the article.

      Reply
  2. Reid K.

    In some countries, it’s possible to make a killing just by depositing money in the bank. While it has worked in some cases, there are a few concerns that I have with this strategy in general..

    For starters, banks aren’t in the business of giving out free money. By intending on making money through bank deposits, you’re essentially betting against the bank. If a bank doesn’t think they can make well over 10% (in terms of Georgian Lari) on a deposit, they’re not going to pay 10% interest. Since this is the core of a bank’s business, they have all the numbers and projections down to a T – much moreso than individual investors.

    Of course, banks are often wrong – but if they are wrong on something like this, it contradicts them being responsible and safe to bank with.

    One thing in Georgia’s favor is that they’re targeting 5% inflation this year – high, but certainly not Argentina. But it’s still high enough to where I think that if the lari were to appreciate against the US dollar, it would be because of an inherent weakness in the Dollar, not strength in the lari – basically, the lari would increase against the dollar, but not against most other currencies.

    There’s potential, but I think one would have to crunch some numbers to find an ideal jurisdiction for this. It’s possible that, for example, depositing Malaysian Ringgit at 5% per year would be better than depositing lari at 10%.

    Reply
    • Mohammed Saleem

      you are right

      Reply
  3. Adel Soliman

    GO TO EGYPT YOU WILL GET 18% IMMEDIATLY ON LOCAL CURRENCY

    Reply
    • Hans Wolfgang

      The bank there almost stole all my money. Hsbc egypt is a robber.

      Reply
  4. Andrew

    Can you open corporate accounts in Georgia?

    Reply
  5. Tigran

    Great article!

    What are the tax implications for US residents. Is the interest earned considered wages or treated as LTCG (assuming 1 year maturity on CD). In addition, what would you be paying on the FX rate gain?

    Reply
  6. don loustel

    wjhat is the best country to get guareenteed savings on you term deposit protected. I get 2% in Canada but would like 8to10% on my money.term deposit 50,000.00 but I want to be able to get my money and interest bank after 1 year.

    Reply
    • Rajesh Babu

      I would say India. A fixed deposit in India would give you 8 to 11% Annually and the economy is stable too.

      Reply
      • Mohammed Saleem

        In India, now they are offering a maximum 7.25% on fixed deposit

        Reply
  7. Ali

    Azerbaijan is 5% for USD

    Reply
  8. Tanka

    banks here charge higher conversion rates for the dollar. It’s usually somewhere between 1.5% and 2%. However, you can easily find a place that will make the exchange for you where the spread is 0.2%. In that case, you could convert $2,000 and only pay $4 to do so.

    A place meaning a non-bank, a money-changer? Could you please give some more specific information on such an easy place? Thank you very much.

    Reply
  9. Jean

    Lebanon you get 10% interest on lebanese pound,
    The conversion rate from lebanese pound to US dollar has been steady for over 20 years, great open and safe banking system next to swiss

    Reply
  10. Mohammed Saleem

    The conversion rate of GEL against 1USD was 2.47 in December 2017 and it is 2.66 in December 2018, there is an 8% fall in GEL against USD

    Reply
  11. Ria Greaves

    I am in a country where you will be active soon. I am very interested in foreign fixed deposit while my country’s currency is decining fast against mayor currencies.

    Reply
  12. David

    The Georgian bank is probably TBC in Tbilisi. You can open an account there in about 10 minutes.

    Reply
  13. SDJ

    With people having deposited money in Swiss banks, what became of it when the US
    Govt. became wary of this?.

    Reply
  14. Monday

    Currently residing in Tbilisi.
    CDs at TBC offer 11.4% over 5 years paid monthly into your account
    Bank of Georgia offered the same and also have the best CD at 15% over a 5 year term paid at maturity. There is ZERO taxation on CDs, if you look at TBCs London stock exchange they are financially well positioned to take on this debt. Georgian inflation rates are at 7.5% and government and banks are competitive at reducing this number.
    This is a no brainer, I’m buying next week, exchange rate is ~3:1 on USD I’m
    Bringing AUD at ~ 2:1 and a new residency visa thank you Tbilisi. I have not factored arbitrage of fx into my calculations.
    **The only drawback is no real insurance. current insurance maxed out at 5,000 gel per account soon will go up to 15,000 gel per account. This is why I check the banks stock ticker to assess fundamental value and management.

    Reply
    • Monday

      Further to this USD is paying 5.5% P.A paid by the month over a 5 year CD
      1.5% in euro
      1% GBP available at liberty.
      You WILL NOT get even 2% in the states this very day and it is also 100% zero (Georgian) tax.
      So if your worried about inflation or fx rates and are not convinced by gel get the USD CD

      Reply

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