I just opened an HSBC bank account in Brazil. I will start with the equivalent of 50 thousand euros in Reais. Via the account you can take a fixed rate product called CDB (Certificado de deposito Bancario) which gives up to a 98% (if you put a minimum of 100K reais) of the CDI rate (Certificados de Depósito Interbancário) very close to the Selic rate which is around 12% in Brazil. The CDI rate is the rate at which banks lend themselves money and is basically what you get by investing in Brazilian sovereing debt. You have to pay around 15% taxes on capital gains if you hold it more than 6 months and around 20% if less. So actually I get a 10% fixed return. Note that inflation here is 6% so in real terms that is equivalent to a real 4% gain in fixed rate. And the good thing is that you get paid daily. You do not have to wait 1 year or whatever to get paid. And you can add or take out money whenever you like you actually get paid based on the daily amount on the account. Another alternative is to take a fixed deposit 3, 6 or 12 months, or whatever you decide, it gives just a bit more but then you cannot move your money but it has the advantage that you lock the interest rate. So I am actually evaluating on locking it and taking a year deposit if I decide it is unlikely for the rate to go higher or if I think that inflation will not go higher.
I went to 4 banks today HSBC, Banco Do Brasil, Santander and Bradesco and ironically the best was HSBC which is not even Brazilian (but its a big bank in Brazil), the service was amazing, classy, with a woman that never in my life explained me better about bank products. Not with the ignorant employees looking like students that I met on the other banks. The HSBC products were better and tailored for wealthy people. It was more expensive but only if you did not put enough money, if you put 50K euros you pay nothing and you get the top account. You get the best type of account with unlimited services, like for example no costs when withdrawing anywhere in the world, almost no costs for international transfers (only 0.38% of the transfered amount) etc…
So instead of letting my cash sit on a Rabobank account in Belgium getting a shitty 2% which is less than inflation I am moving at least part of my cash here.
Here they pay a lot because they can lend the money at even higher rates. Risk is currency / political etc. The Real could lose all its value in case of hyperinflation etc… It has happened in the past, but I really think that it is now safer to invest in Reais than in Euros and definitely safer than dollars.
I see how Brazil is growing, since the 2 years I am here every day there is more real state built, more stuff in general, middle class is growing, services are better, people get more educated, health services are relatively cheap and good, internet is massifying, competition is huge. So I actually think that the real could even get stronger.
So basically now I have 60% in Euros 20% in Dollars and 10% in Reais. But I still evaluate to move more to Reais. I am really very happy with this rate. It took me a long time to be able to get it because it was super long to get the permanence visa, finally I got it they cannot throw me out anymore, and whats best, I can get into their finance system !
Changing subject to USG: I really have no idea why USG tanked so hard I was busy on the city the whole day opening the bank account if I had stayed home I am sure I would have bought more. Anyways I hope it keeps low because I want
to buy jan 2013 strike 7.5 calls at 4.8 or less this Monday. It fell so fast that I did not even have time to buy almost. I am really starting to get excited with USG!