Loan for Investing in other country at 8% fixed

iolanthe07

Why is an international student gettting funding from British taxpayers? !!!!!! is that about?

dealer_wins

iolanthe07 wrote: »

Why is an international student gettting funding from British taxpayers? !!!!!! is that about?

The OP is probably just a wind up merchant.

niser

Voyager2002 wrote: »

Which country? And what is the inflation rate?

I remember studying abroad, and being very excited to find that my bank there would pay interest of 17 per cent. I was a little less thrilled to find that the inflation rate was 22 per cent.

Hi,
The country is India. The inflation rate in India was recorded at 6.46 percent in September of 2014.

niser

DaveTheMus wrote: »

I would like to know how that works...

Hi,
In India, the fixed deposit rate is 9% per year(compounded quarterly). So If I can get a loan here at a cheaper rate of interest, say 4% then we can gain 5% on the amount. But the issue is:
1. Loan have to re-payed in monthly installment and in India the minimum period of fixed deposit is 1 year.
2. The currency fluctuations have to be considered. Because the fixed deposit would be indian currency. But if we want to do fixed deposit in Pounds then the rate of interest will be lower.

niser

jon1555 wrote: »

Seems Legit, please provide details of :beer:

Hi,
In India, the fixed deposit rate is 9% per year(compounded quarterly). So If I can get a loan here at a cheaper rate of interest, say 4% then we can gain 5% on the amount. But the issue is:
1. Loan have to re-payed in monthly installment and in India the minimum period of fixed deposit is 1 year.
2. The currency fluctuations have to be considered. Because the fixed deposit would be indian currency. But if we want to do fixed deposit in Pounds then the rate of interest will be lower.
3. Its not about cheating anyone, because I am trying to get a loan in my name following all legal procedure.

niser

TBeckett100 wrote: »

This is what banks/financial institutions do, borrow money from Japan and buy Australian/US debt.

The problem with small scale investment is exchange rate fluctations. The 5% margin you will make could be wiped out or go negative if interst rates go the wrong way. This is what hedge funds do and many of them have underperformed this year as there is little margin.

Thanks for the information. What do you mean by interest going the wrong way. The interest rat is fixed for 1 year. i.e 9%

niser

macca1974 wrote: »

Interesting idea....if you are in another country with much higher interest rates, then presumably the fixed rate deposit would be in the currency of the country that you are in? Therefore this isn't at all risk free as you are also speculating on the currency. If inflation is high enough that the interest rate is so high then it is likely that the currency is weak and you may end up losing out (or gaining who knows). I suspect that the bank is unlikely to think this is a good idea.

So as an example

You can get 8.3% 1 year fixed from a bank in Russia (just googled it as an example), but its in Roubles. So if you'd done the same this time last year, £10K GBP would have brought you 514,300 roubles (51.43 roubles to the pound), interest over a year at 8.3% would have brought that up to 556,986. However, roubles are a lot weaker to GBP now (65.72 roubles to the pound) so if you converted it back, you'd only get back £8,475 ish.

So if I was a bank and wanted to speculate on currency risk / foreign exchange rates etc, I'd probably get my investment banking division to do it rather than a speculating student (no offence) and thanks for an interesting question whilst i was having a coffee.

Thanks for the information. I will think about it. I am a PhD student(very mature student) and also a priority customer of many banks in India.This Idea was given to me by my bank(Axis Bank) in India. And so I asked here for advice. But the good thing about India is, the Indian rupee is becoming stronger compared to UK.

So please advice me. I am looking to invest my own money(not trying to cheat anyone)

niser

bris wrote: »

It doesn't work, it may very well be a scammer looking for someone to take him up on his get rich quick scheme, there is always someone willing to fall for things like this.

Hi,
I am not trying to scam. I would follow all legal procedure and get the loan by following legal rules of UK. I would get the loan in my name. I just wanted to have your advice, as I am new to the place.
Thanks

Clive_Woody

niser

bargainbetty wrote: »

The OP seems to have forgotten that repayments would need to be paid each month, and the currency transfer fees on that alone could wipe out any profits. You don't get a loan and pay it all back at the end - you pay it back in instalments.....

Yes I had forgotten that. Thanks.