Is this a safe Investment?

Question

Millennium Bank Cd

fdic insured? no

headquarters central America

interest rates near 8 percent

It's not necessarily unsafe just because it's not in the U.S., right? it's probably safer than American based stocks

Answer 1

It is highly risky for 8%. No insurance to Central America CD means if anything happens you will get a letter of apology. If that bank loses on it's investments, then they pass the loss on to you. It's not safer than American stock because you will invest under the laws of that country. For example if the law says that if a persons house burns down...the bank has to excuse the debt, then it's your debt they excuse. And say this all came about last week when the Partido Nacional ceased control. That can easily replace a FDIC/ insurance for buying bad housing from a bank?

Answer 2

I recall a time not too long ago when norte americanos were putting their money in Mexican banks for the very same reason.  Then guess what happened?  Mexico devalued the peso--a lot.  

Answer 3

First of all, FDIC insured doesn't mean squat these days. They have 1/10 of a cent to cover every dollar on deposit. Not much. Secondly, there are some good banks in Central America and in other parts of the world. What country and what bank does make a difference in your evaluation. Central America is known for privacy but it is not know for security. For a secure and safe bank, you need Europe. Of course, it's not as private. A good solution is to have one in Central America and one in Europe. Make your initial deposit in Central America and have a transfer done from there to Europe. That way, you have your privacy and your security. Hold the account in Euros and you have a hedge against inflation in the States.

Answer 4

I would be more comfortable with a Brazilian bank than Central American. The market is hot, banks are well capitalized, and typically more information/investment pool/shared risk is available.  

Answer 5

Millennium Bank is in fact Swiss, but its headquarters is on St. Vincent, a small island country in the Caribbean. I would say purchasing a CD from them is far safer than investing in a US stock right now. Though your money would not be FDIC insured, Millennium Bank is highly regulated; so while a loss of principle is possible, it is very unlikely.

Edit: For the peso reference above, I'll quote the bank's website since I seem to be the only person so far even vaguely familiar with it:

"You can now invest your funds in Millennium Bank in the six following currencies: US Dollar, Euro, Swiss Franc, Canadian Dollar, Japanese Yen, and British Sterling."