I seen this in the Finanncial mail on Sunday , as anyone had any experince with this bank or this type of investment ????
A bank in London called th Nedbank can offer a 12 % return on your money per year based on you converting your money into South african Rand , the money stays in the U.K .
Not sure if the 12% is before or after the usual U.K Taxes.
Any Advice ???????????????????????????
Well you have currency risk - ie you will almost certainly convert it back for less £££ than what you paid. You do have to pay tax on the 12% you receive.
I don't think you will be covered by the deposit protection scheme for this.
I presume if the Rand becomes stronger , you could have a double windfall...
Sure you could. You might also want to look out your window for flying pigs every now and again as well. You might want to consider why there is a 12% interest rate, is it because the currency is doing so well that there is no need to encourage people to 'invest' in it?
Ah thats better, you agree its a risk, so the 'guaranteed' 12% return is irrelevant since its a return of 12% extra rands, and all you are really doing is gambling whether the rand will go up or down. fair enough, if thats the gamble you want to take.
Isn't that the case with any kind of investment? Whether you invest in Sterling, Euros, Dollars or whatever that currency can still rise or fall relative to others.
Not if your original money is in sterling and you intend to buy things at soem later time with sterling. Then you have no currency risk if you invest in a sterling-based investment. If you invest in another currency you lose when you change the sterling into that currency, then you have the currency risk, then you lose again when you exchange it back to sterling.
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