Yankee certificates of deposits as an attractive foreign investment option
Yankee certificates of deposits are special certificates of deposits that are issued by banks in New York or America in general. These certificates can be issued by any bank which has foreign branches. In short, you will be investing in foreign certificates of deposits by buying a Yankee certificate of deposit.
Yankee certificates of deposits are types of certificates which are usually taken up by people who want to diversify their risk. This can be done when one wants to flatten out the risk in one’s portfolio when it is filled with high risk real estate investments which can be pretty edgy in times like the current economic crisis. The Yankee certificate of deposit or CD is an easy way to prevent yourself from being laden with a large amount of high risk investment instruments. These certificates can also be sold on the derivative markets when ever there is an urgent need to liquefy one’s portfolio. This is a very great advantage of these investments.
Usually all Yankee CD’s will have a minimum face value below which you cannot make an investment. This face value is usually around $100000. And also there will always be a minimum time duration for which you need to stay invested in the certificate. Like any traditional certificate, if you withdraw your cash before the term of maturity you will end up paying a penalty. If you want to ensure maximum returns from your certificate of deposit, it’s always better to plan your investment way in advance.
The Yankee CD is a low risk and low returns investment option. But in the current economic scenario, it’s always better to have guaranteed returns which you can bank upon rather than have returns which are varying in magnitude and certainty. The Yankee CD is also backed by insurance and hence is a low returns investment instrument. And it offers only a nominal rate of interest on the premium. The rates can either be adjusted or fixed at times depending on the terms and conditions. You can find the rates of the CD from the bank which is giving out the certificate or even financial institutions that are not traditional banks. You can also look at the derivative markets where these CD’s will be listed to find out how much they are going to pay you.
Always make sure you study the bank which is offering the investment option. The foreign banks may be of a kind that you might not have heard of before. And hence it pays to study the bank before you go about investing your hard earned cash in the bank. Also understand that there will be a lot of geo-political complications when you invest in overseas accounts. You need to find out whether the bank is from a country that is friendly with your country. You need to understand the implications of trade agreements and mutual cooperation agreements before you make an investment. Hence it is important to also find out if there are active secondary markets for you to sell your investment option if the going gets tough. You need to be able to make a quick exit without taking too much of a hit. May be a person from the country where the certificate is issued will be more than willing to buy it from you in case the relations between your countries turn sour. But again, you will need to do a lot of research to understand this well before you invest in the option.
