Episode 2: Steadily increasing your assets with foreign bank time deposits

This is my second post, I am Pomza, a foreign investor living overseas. I will strive to provide valuable information every time for those who are considering overseas investment in the future, so if you are interested in overseas investment, please be sure to follow me.

Starting this time, I will紹介 three overseas investment destinations over several posts. The destinations I紹介 here are investments I have experience with and have actually earned profits from, so I think they will be helpful. Based on my experience, the conclusion is that if you do not choose the wrong investment destination, you can steadily increase your assets. I hope this information will be a参考 for selecting investment destinations.

Investments I have experience with

① Overseas bank fixed deposits

② Overseas real estate investment

③ Overseas business investment

These are the three. Unfortunately, I have no experience with overseas stocks. Now I will explain each item, including how much you can potentially earn and the risks involved in investing. This time, I will explain ① overseas bank fixed deposits, and I will contribute about the other destinations in future posts.

＜① Overseas bank fixed deposits ＞

As the name suggests, this refers to arranging fixed deposits with overseas banks. It is an investment that is possible as long as you can open a bank account, so the barrier is very low. The reason for calling it an "investment" is that it has higher risk and higher return than Japanese banks.

As a risk, there is the risk of bankruptcy. In emerging countries, there is no system to protect deposits like in Japan. In Japan, even if a bank goes bankrupt, deposits up to 10 million yen are guaranteed. However, in many Southeast Asian countries, no such system exists. Therefore, if a bank fails, there is a possibility you could lose everything. Therefore, finding a bank with strong capital or a bank backed by government capital and arranging fixed deposits is the lowest-risk method.

The biggest advantage of arranging fixed deposits overseas is the deposit interest rate. In Japan, fixed deposit interest rates at megabanks are around 0.01%. And the normal savings account interest rate is 0.001%. It is tempting to think fixed deposits offer ten times the rate of normal savings, but when you think in money, the difference is shocking. If you deposit 1,000,000 yen for one year, fixed deposits would yield 100 yen, while a normal savings account would yield 10 yen. From this, it becomes clear that depositing money in Japanese banks is not suitable for increasing wealth.

On the other hand, interest rates in overseas, especially in emerging countries, vary greatly.

From my research by viewing various countries' bank websites, Argentina has the highest interest rates among emerging countries, with fixed deposit rates at an astounding 35%. However, this rate is denominated in the local currency, the peso, and the peso can have inflation rates exceeding 50%, so the real rate could be considered effectively 0%.

Second place for high fixed deposit rates is Venezuela at 21%, and third is Mongolia at 13%. Like Argentina, these countries’ fixed deposit rates are in their own currencies, and due to high inflation, the real interest rate is low.

Although the rates are high, high inflation can offset them, making the gains illusory. However, there are countries overseas where you can arrange fixed deposits without worrying about inflation. In other words, you can arrange fixed deposits in U.S. dollars (USD). And within those, there are countries (more precisely, banks in those countries) that offer high interest rates.