Investing Superannuation

Hi fellow Oz Bargainers,

Can you invest your SMSF overseas in say a bank which i recently seen one in India offering 8.25% fixed term from 1 year up to 5 years. Nice earn without the stress of stock market volatility.


    • Thanks i'll have a read.

  • +1

    If you look back 15 years, the Indian Rupee has halved in value compared to our local currency. You'll be earning more rupees (interest), but their value (to exchange for goods etc), will be less and less every year. This is assuming you want to move back to AUD at some point.

    • +1

      Op, there are no free lunches. It seems complex, but worth reading about and trying to understand interest rate parity.

      • Are you suggesting hedging against unfavourable interest rate movement?
        Would the cost of the hedge outweigh the interest gains?

        • I'm confirming the general theory with @idjces comment about higher interest rate offset by depreciation of the local currency. Hedging against exchange rate movements should neutralise interest rate differentials.

  • I am pretty sure, 8.5% rates you see is for domestic deposits. In your case you will end up NRE account FCNR (non-resident foreign currency) account. Different interest rates are applicable for these accounts, which you will find aren't as attractive. Most Indians know there stuff when it comes to money. They don't put much fixed deposits in India, unless they live in countries where they don't settle down, then their deposits are made with a view to provide for building houses and retiring back in India. So reconversion of INR deposits into convertible currency is not a consideration.

  • Investing in term deposit is generally low risk, low return. For your case, the interest rate of 8.25% normally reflects the inflation rate of Indian Rupee (at the moment is about 6%), so you are not better off than investing term deposit in Australia. Also make sure the government guarantees the capital up to a certain amount, not a lot of banks are immune to economic collapse.

  • Similar question. Can you tell your super to invest in certain stock? Rather than a growth/Australian/ housing option.

  • Thanks all for your comments.
    I personally would like more options than on offer with Super Funds. Amazing how we are in some way dependent on stock markets for our retirement.

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