EverBank and foreign currency CDs?

Has anyone had experience purchasing CDs in foreign currencies from EverBank? I'm looking at returns of 7% and above from places like Brazil and Iceland. As I understand
it from their website, which is not terribly clear, the principle is FDIC insured although any fluctuation in currency as related to the US dollar is your loss or your gain.
Any experience and/or opinions, greatly appreciated.
Louise
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

High yield and high risk go together, like a hand and glove, like breathing in and breathing out. A lot of people as the years go by are quick to believe they have at last found an exception to this fundamental financial principle, but over and over again reality bites. That doesn't mean that nobody can make a killing in foreign currencies and other risky investments. It means that the chances of doing so are very small and the chances of losing your shirt are very large.
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Don wrote:

Your observation is right. Risk goes with reward. In this particular case, there is a theory called "interest rate parity" easy to google and find good definitions. It basically claims that if I buy a foreign CD at 10% instead of a US CD at 5%, (one year), that is a sign the market is pricing the foreign currency to drop by 5% against the dollar during that time. You are actually bet against the 'big boys' to buy such a CD thinking exchange rates are doing something else. I was going to counter your 'lose your shirt' remark, until I reread OPs choice of Brazil as one of the countries. The currency risk there may very well be at that level. (I am no expert on annual exchange rate volatility, but that is what OP should study to better understand his risk.
JOE www.blog.joetaxpayer.com
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

You could follow your own advice, Google "uncovered interest parity", and learn that empirically most of the evidence is *against* this theory. The second paragraph of my earlier reply summarizes the evidence. I also posted a message earlier in this newsgroup about "emerging market bond funds", citing a paper that found they can play a role in individual investor portfolios.
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
snipped-for-privacy@aol.com wrote:

Well, I just learned something. I know theories aren't all 100% such a EMH, or such, but didn't know interest rate parity was canceled as a valid hypothesis. Not a very common topic. This is how I felt when they canceled Pluto..... JOE
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

This scenario is also an excellent example of the fact someone seeking financial advice faces two kinds of risk. The first is the risk of the investment product itself. The second is the risk of buying a product, maybe itself risky, maybe not, from a person or organization that sells the product for too much or skims off a lot of the gain -- in this case 5% of an already questionable 12%!
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Last I looked, their website admitted of huge comissions on exchanging your $ into and then back out of the foreign currency - so much that many months of interest would be cancelled out.
http://www.currencyshares.com has etfs that appear to do this more cleanly, and many more are in the works according to news. Or invest in a stock or bond fund based in foreign currency. Big irrationalities exist in currencies and interest... that make reward not based on risk over the last few years, but maybe soon the gravytrain will stop.
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

One word: "1998". Everyone from individual investors to giant hedge funds was playing emerging markets and international exchange. Many got burned when two currencies went south overnight and the US banking system almost collapsed. (The Fed assembled a consortium to alleviate a hedge fund run by Nobel prize economist that had bad bets nearly the size of th US GDP.) And one hedge fund accused of triggering the currency run (Soros) cleaned up.
Dont bet what you cant afford to lose. Kep diverse in this era of uncertainty.
-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.