Deep Singh

Anybody tried it?

jay knowles

I dont know much about this,but a very rich disabled man i know said if he were younger and fitter this is where he would be looking to earn serious money.JAY

KiwiGTI

I always thought you needed serious money to do it anyway, ie: be a large financial institution.

For example how are you going to borrow £10 millions from a Japanese bank and then invest int in NZ or Iceland?

jay knowles

You may well be correct,but thats not what i understood when the old boy started explaining a few bits and pieces to me.JAY

Deep Singh

Does it have to be £millions? Can't it be less and still make a decent return? ie borrow at 4% somewhere with equity from your house and invest it somewhere that gives 10% return. Or have I misunderstood the whole concept?

Petem95

A lot of Japanese individuals invest their money in NZ, but it will of course be a little harder if you need to borrow in Yen, paying in Sterling, then investing NZ $. You'll lose out each time you exchange the currencies, and of course the value of the pound is high againt the Yen, but you could lose out if that changed around suddenly, say due to a US style subprime mortgage collapse in the UK.

Factoring in all these things means you'd have to invest largeish sum to make it worth the risk.

After all you can ineffect get a near 10% return on 45k-60k/year with NS&I.

KiwiGTI

I think you may slightly misunderstood it.

The only way an individual could partake in this is to go to Japan, get a loan locally and invest it in one of the high return countries, all at the risk of the exchange rates.

There also seems to be a lot of rumours that the carry trade may unwind this year.

daddyscoob

Hi Deep

SPEN555

Also,

You are borrowing money and exposing it to different risks which don't coincide with the loan. E.g. re-mortgaging the house, if you told the bank what you were doing they would bump up the interest rate to factor in the higher risk, or tell you to sod off

all IMHO.

Deep Singh

So what you guys are saying is that my plan to get rich by sitting on my **** is flawed?

I was in Turkey last week where the banks are paying 14% on savings. Also happened to have just read an article regarding the carry trade of Yen invested in NZ (which as mentioned may unwind as the NZ dollar recently strengthened)

This got me thinking that if I remortgaged the house at say 5% and got 14% in Turkey thats 9% return on a leveraged investment. Since its in Turkey I would presume 'ahem' avoiding Gordan Brown would also be easier

Anyway looking at the Lira vs GBP over the last two years I see that it has fluctuated between 2.3 and 3 ie 30% which would obviously wipe out any gains and even cause losses. Or I suppose if you were lucky and bought in at 3 and it went to 2.3 whilst also getting 14% on the capital you'd be quids in!

Pete, the NSI worries me because its a fixed amount above inflation. But we all know that the inflation figures used by the Govt are flawed, so will my investment really be growing? The fact that its tax free though is very attractive.
Lets say I want to keep hold of my own cash, would it make sense to mortgage for £60k and put it into the NSI? I'll still get circa £3k a year for doing nothing won't I?

Hi Daddyscooby