Countries with high interest savings rates and low inflation
Persons wishing to increase their savings may find it worth their while to look into establishing an off-shore savings account. Generally speaking, nations offering high interest savings rates will also offer low inflation. The principle is explained first, and then the nations offering higher savings rates are addressed, second.
What causes lower inflation?
First off, before addressing the question above: it is necessary to understand the concept of interest. By definition, interest is the price you pay for money. Lenders will state what interest they are willing to charge you, for example, when you are borrowing money. You in turn will think about what rate of interest you are willing to pay in order to borrower it.
The law of supply and demand:
Just like anything; if the price of attaining money (the interest rate) is high then currency is in short supply; however, if money is relatively inexpensive to attain then its supply is plentiful. In other words, money that is scarce causes interest rates to increase. In turn, prices everywhere decrease and inflation is low. When money is in abundant supply, the interest rates prove low and prices everywhere go up causing high inflation.
Countries which offer high interest rate savings accounts are numerous:
Countries offering high interest rate savings and relative low inflation are in abundance nowadays. Compare their rates of interest to that of the United States and it may seem well worth your while to place your savings in an overseas account. The United States currently offers a three and one-half percent interest rate which is one of the lowest annual percentage rates world-wide. Savings Account Calculator lists the countries as having considerably higher rates than that offered by the United States:
Australia offers a seven to eight percent interest rate;
Germany’s rate is around five percent;
France has a seven percent rate;
India is at an incredible ten percent rate;
Italy’s rate is four and three-quarters; and
The U.K. edges above the State’s interest rate at five percent.
When it makes sense to go overseas:
Due to international banking regulations; and banking laws in certain countries, it is not all that easy to just open up an overseas savings account. In many instances, the overseas venue may require residency or citizenship. However, in lieu of a savings account, you may try investment in overseas bonds. However, the drawback in investing in bonds is that they are certainly not very liquid; or as liquid as an overseas savings account.
Persons who have over fifty-thousands dollars in way of a total nest egg probably are the best candidates when it comes to placing their monies in an overseas savings account. A great deal of trouble is attached if the total amount in savings proves lower. Due to the time and trouble involved in placing money in overseas savings accounts; inclusive of attaining off-shore residency, it probably makes the best sense that the candidate’s nest egg is considerable.
It all depends on your own unique set of financial circumstances; and there is a great deal of factors pertinent too with regard to international banking law. In other words it is not wise just to make a broad-brushed assumption that an overseas account is the way to go. Consider too: although the United State’s rate proves lower than some; the account is not FDIC insured. In other words, if you try transferring funds back to the United States; you may run into a situation wherein those funds are not securely backed.
In summary, consultation with a reliable financial adviser is probably the best route to take if you have an amount well over $50,000 to place in a higher yield interest savings account within an overseas banking venue.