November 2009 - The International bank of Azerbaijan (IBA) Ganjlik 10-year deposit is 25% flat annual, ie. 13.35% compounded for USD and 19% flat annual i.e. 11.24% compounded for EUR / GBP.
The average house price in the USA was US$8,500 in 1950. As an indication how high this deposit rate is, if house prices rose the same rate since 1950, the average house would cost US$15.7 million today.
If the DOW JONES index rose by that rate from today, it would surpass 800,000,000 in the year 2100. (no mathematical error there!)
Ford paid his assembly line workers US$5 a day in 1914. If wages increased at the same rate of the IBA deposit rate, those workers would be receiving wages of US$740,000 per day.
In May 1626, the Dutch bough New York from the Indians for goods worth 60 Guilders, generally converted to US$24. Had those dollars been invested at the IBA ganjlik deposit rate, it would mature today for 1.7 billion trillion. Consider the global GDP is less than $70 trillion.
Even recent examples reflect how high the IBA deposit rate is. In November 1972, the Dow Jones reached 1,000 for the first time. Had it increased by the same rate as the IBA deposit rates, today it would exceed 103,000.
A main advantage of this deposit compared to other fixed income investments such as bonds is there is zero volatility, an unheard of measurement in other fixed income investments. Also absolute returns are ensured whereas absolute return funds often produce negative periods. The returns on this deposit outperform the 5-year performance of any bond index, even high yield benchmarks.
It's unlikely that many investments will outperform the IBA long term deposits unless hyper-inflation returns in the next 10 years.
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That's fine as long as their money does not depreciate. Then you make no money.
ReplyDelete"Their money"? The deposit is for US Dollars. It has nothing to do with "their money"... The principal and interest and repayment is all in USD.
ReplyDeleteAs an aside, "their money, the MANAT", which has nothing to do with this deposit, has continually appreciated against the USD since independence in 1992.
...and what are they doing with deposits upon which they are paying 25% interest, lending them at 50%? OR, more likely, is this a Ponzi scheme, whereby they are paying off old depositors with new depositors money, and the new depositors will evenutally be too few, and the walls will all come tumbling down, with the perpetrators in flight.
ReplyDeleteTo Anonymous..
ReplyDelete25% flat is 13.4% compounded. Overdraft and credit card rates in Azerbaijan are 20% per year or more.
International Bank of Azerbaijan is a State Controlled bank of a very oil rich nation. Would be the first State controlled bank to be doing a ponzi scheme.