Tip 33: Opening a multi money currency deposit

I believe long gone are the days where a daddy just ploughs the fields and bring home daily wages for the family and save them for the future. We live in a world where financial literacy continues to be a necessary survival kit for a volatile and bumpy economic ride till at last the world taste a one world currency regime to bolster optimal globalization. And this further paths the way for the prophecy in the bible of a one world government to be fulfilled. Needless to say, life and medical insurance are an important tool to secure daddy's income as well as unexpected medical costs. But, these days the economies are less stable - thanks to the central banks of large economies who think they are smart enough to give an illusion of a good economy to its citizens. With big disparities in interest rates between countries, big disparities in growth rates between countries with an ever strong ambition to propel growth further in every country, we are seeing a perfect storm building up in the financial markets. Hence, a daddy needs to at least be aware of currency fluctuations and interest rate yields for his savings deposits. More so, when you are living in Japan with a 0.5% savings deposit yield and hence this tip may be more applicable in Japan - but never too early to be prepared for more volatility in your own country.

In Japan, due to an excessive savings culture and a slower growth due to it being a developed country (yet having the third largest GDP in the world - where even a small growth rate results in big income), the central bank kept reducing interest rates to encourage people to lend and now there are stuck in a situation where they can not reduce rates further. Yet, if they increase rates, it threatens to stop growth. So, many Japanese look outside Japan for better yields. This is what is termed as carry trade. Many experts would advise of the situation of the end of carry trades and the yen is indeed increasing in value but not its interest rates. Hence, there is still a need for Japanese to be depositing their savings elsewhere, where the interest rate yields are higher such as 6-8%. To do this, one needs to open a savings account that is linked to foreign currencies. This comes with risk as foreign currencies are very volatile but if you carefully evaluate rates, you will be able to secure yourself against the risk. Not doing anything at all puts you at risk as well, since the currency you are saving at has a chance of reduction in value too. And if the interest rate yields are very low - you end up having low savings when you leave the country. Hence, I have been following the trends of the AUD Australian dollar. It has strong fundamentals with Australia being an exporter of commodities, metals and minerals and the interest rate yields are one of the highest in the developed world. Its true that the carry trade may end some day but for now, there is still a strong reason to be putting your deposits at countries offering good interest rate yields and for now its Australia. Of course, I observe the exchange rates daily and only renew my AUD term deposits at good exchange rates and if the AUD strengthens too much, I begin to make shorter term deposits with a likelihood of redeeming the deposits back to yen at the right time. Else, I will just use the Aussie dollars when I do move over to Australia since their homes have bigger land than small crampy Tokyo. What do we have next? A hedge against oil prices?