The Highest Yields on the Planet
By Dr. Steve Sjuggerud
June 6, 2007
I travel to the ends of the earth for True Wealth readers... and sometimes I bring them with me...
I'm in Iceland this week with 50 subscribers... checking out the investment opportunities and seeing the sights.
Investment opportunities? Sights? Do either exist in Iceland, you might ask? Yes they do... and both are as incredible as you'll find anywhere.
When it comes to investments, Iceland offers the highest interest rates of any developed country. Is Iceland a developed country? Absolutely – income per person is in the $45,000 range. Is it a safe place to put your money? As safe as anywhere on the planet... The government here has no net debt (it can pay off its debts with its income), and Iceland is traditionally ranked the world's safest, least corrupt country (see www.transparency.org, for example).
Interest rates in Japan are close to nothing... Interest rates in Europe are a little better. And U.S. interest rates, in the 5% range, are the best of the big three currencies, but they still aren't particularly exciting. Yet here in Iceland, unbelievably, short-term interest rates are a whopping 14%. Long-term interest rates are in the 9%+ range now.
Interest rates in Iceland are set to come down starting this year. This might not sound sexy to you... but the capital-gains potential here is ridiculous, and it gets bond investors very excited.
So far, it's been a great year for Americans investing in Iceland. For example, if you'd bought a boring Iceland CD issued by Everbank (www.everbank.com) that I recommended this year, you'd be earning double-digit interest rates... AND since the currency has strengthened by a double-digit percentage move as well, you're looking at around 20% so far this year... in a CD! And if you bought this, you didn't even have to send your money to Iceland.
As for the sights of Iceland, you won't believe this place!
After a fantastic dinner with Glitnir Bank (www.glitnir.is), we hit the road early yesterday morning for some sightseeing. Two of my favorites were the geysers and the Gulfoss waterfall. Pictures will be better than words here. And note, this is not America... you won't see any guardrails here... I guess Icelanders assume that most people are not idiots, and if they are, it's their fault!
We visited the geyser called "Strokkur." It erupts every few minutes. Watch your step. That water is hot!!!
This next shot is the waterfall called Gulfoss, 10 minutes up the road from Strokkur. This is only the first 20-30 meters or so. It bends one more time out of this picture, and falls another 70 meters. Incredible.
The landscape is like nowhere else you've seen on earth. You can't capture the full size of this waterfall in this picture.... You can't capture the glacier in the background... and you can't capture the thunderous roar as the waterfall wraps around the headland while you stand five feet from the edge.
Getting back to the investments, I think Iceland is an incredible opportunity. You can earn outrageous rates of interest, and you really have no default risk in my opinion. The biggest risk is the currency. As I mentioned, it's already up by double digits in percentage terms versus the dollar just this year. It could strengthen more, as investors are attracted to the high interest rates.
But the currency is really expensive already. My wife and two kids are here with me as well. A trip to Pizza Hut after the tour last night set me back more than US$50. For pizza and a pitcher of soda! I didn't realize I was so cheap... I haven't bought a single souvenir yet... as I can't bring myself to pay twice or more what I'd pay in the States!
Iceland is traditionally expensive. But I've been here a handful of times now, and it's as expensive as it's ever been. So the currency could (and probably should) weaken.
Don't forget though, you've got a nice tailwind... you've got double-digit interest rates that you can lock in for a few years. If you plan on holding two or three years, you'd likely earn 20-30% in interest.
I expect the currency will stay strong for longer than most people think. I think it's strong because people are borrowing money at cheaper interest rates elsewhere and investing it here to capture the higher interest rates. As long as the high rates stay here (and they should stay high for another year or so), I think the currency will stay strong as well.
Iceland might be the last place people think of to vacation or invest. That might have been what drew me here in the first place... One of the things I'm willing to do – that most others aren't – is consider that anything is possible when it comes to investing.
By being willing to consider that, my subscribers made a lot of money here a few years ago when I first recommended bonds in this place (I think it was 50%-60% in less than two years). Now the opportunity is just as good!
Open your mind, and consider visiting and investing in this place. For both visiting and investing, it is like nowhere else on this earth!
Good investing,
Steve Steve
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
Sign up today to read more investment ideas from Steve Sjuggerud.
|
|
| 
