Saving advice for an amatuer

[gabeltron]

Hello:

I was hoping that someone might be able to give me some advice about saving money.

I'm a US citizen currently living in China. I work as an English teacher and don't make a whole lot of money, but I come out of every month with about 2000 USD to save.

My goal is to save money for about 3-5 years to purshase a home in the US. I'm wondering what my best options would be for saving/investing. I am willing to take a little risk.

Things I'm considering are regular savings accounts in the US, CD's, offshore banking, and just keeping my money in a Chinese Bank of China account.

Any insight would be helpful.

[Inkstain82]

Originally Posted by gabeltron

Hello:

I was hoping that someone might be able to give me some advice about saving money.

I'm a US citizen currently living in China. I work as an English teacher and don't make a whole lot of money, but I come out of every month with about 2000 USD to save.

My goal is to save money for about 3-5 years to purshase a home in the US. I'm wondering what my best options would be for saving/investing. I am willing to take a little risk.

Things I'm considering are regular savings accounts in the US, CD's, offshore banking, and just keeping my money in a Chinese Bank of China account.

Any insight would be helpful.

If you are planning to use the money in 3-5 years, risk isn't the best idea. CDs and MMAs are the right direction.

[maat55]

Provident Direct pays 3.75% on savings. No minimum, maybe 100.00. You can have it drafted online.

[simpletron]

do you get paid in dollars or yuans? if you get paid in yuans and save most of your money in yuans then you will have to worry about the exchange rate, which can completely overpower the interest you earn.

for example in the last two months the austrailian dollar has fallen ~30% versus the US dollar. if this happen to you right before you exchanged yuans to dollars, it could completely mess up your plans. note: it is not normal for this large of a change to happen in a short period of time(yuan is down ~6% ytd). I'm just trying to make you aware of this risk and it is not just the simple task of going with the bank with highest interest rate.

[MaskedMarvel]

Have you checked with Chinese banks? Maybe they offer high interest rates for yuans.

[gabeltron]

Originally Posted by simpletron

do you get paid in dollars or yuans? if you get paid in yuans and save most of your money in yuans then you will have to worry about the exchange rate, which can completely overpower the interest you earn.

for example in the last two months the austrailian dollar has fallen ~30% versus the US dollar. if this happen to you right before you exchanged yuans to dollars, it could completely mess up your plans. note: it is not normal for this large of a change to happen in a short period of time(yuan is down ~6% ytd). I'm just trying to make you aware of this risk and it is not just the simple task of going with the bank with highest interest rate.

Wow!! I didn't think about this. I just use XE currency converter and assume this is what I'll get when I transfer. I'll also lose $30 USD from my bank and the Chinese will charge me about the same amount on their end. I wonder what the best way to deal with this is. There has got to be an easier solution. I haven't noticed the Yuan going down against the dollar. When I look at the rate it's still pretty much the same as it was 5 months ago.

[Car Insurance Guy]

Currencies are tricky. I used to trade Forex on the short term, which wouldn't help you a lot with this sort of time horizon.

I'm inclined to agree with MaskedMarvel. You could check out Chinese banks for their equivalent to CDs. The only problem (which is significant) is the trust factor. What happens in a financial crisis in China? In the U.S. we have the FDIC. What sort of backstop do the Chinese offer - and can you trust it?

Everbank (dot) com offers foreign currency CDs, but I did not see the yuan on their site. Everbank is US-based.

By the way, you're doing great by saving $2K a month in China. Keep it up!

[asianpear]

If you want to come back to the states and get more bang for your buck, move to a southern city because property is much much less expensive there. A house that is 150,000 there would be in the 1 million range on the west coast or in new england because of land being more plentiful.