Deposit Investment Strategies

This section presents various strategies to enhance income using high interest deposits. Additional risk may be incurred using some of these strategies...

Arbitrage Spread
Borrow locally and place loan proceeds into same currency high-yield Eurocurrency deposit of e.g. borrow USD at 7% and place loan proceeds into 15% Eurodollar deposit. This strategy incurs credit risk but has no currency risk.

Carry Trade
Borrow a low interest currency such as Yen or Swiss Franc, placing the loan proceeds on high-yield Eurocurrency deposit. Although this strategy incurs currency and interest rate risk, this is compensated with excess deposit rates. This strategy has lower currency risk than normal carry trades which are usually placed into volatile currencies such as Iceland Krona or New Zealand Dollars.

Structured Deposit
Create your own capital guaranteed structured product but with substantially higher returns. Placing less than half the initial investment in a 5-year Eurocurrency 19% deposit and the balance in derivatives will return much more than similar structured product on the market.

Laddered Deposits
If you require annual income but prefer the higher 5-year term deposit rates, one could:

• Split the total savings equally into 1-year, 2-year, 3-year, 4-year and 5-year term deposits with interest paid at end of each term.
• As each deposit matures, roll over the proceeds into a 5-year term deposit.