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What's the best way to invest $100,000?

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  • G

    Guitaret

    New Member
    In Lebanon best thing is to freeze your money in a USD account for 2 years or more.
    I did it and getting 7% per year without any worries.
    Also buying a real estate that you can easily get it rent is an option, although considering the high real estate prices the monthly rent will not cover your invested money but still you will have a property at the end of the day; I did it for a small shop on Jounieh highway and it is rented now.
    Above 2 options are the safest less worries investment in Lebanon right now.
    The renting thing is a great option, and it is highly recommended by financial experts worldwide as you get some monthly return while your investment is beating the inflation (to say the least) throughout the years.

    But you need to account for other variables, I will put this in an example perspective:

    Buying a new place will cost you extra 8~9% instantly on registration tax fees, please be alarmed that there are new taxes being made every day in Lebanon behind our back. This 8~9% could go up as we speak for all we know and the government is like a tiger lurking in the dark to tax people who have cash. For example, last year I was charged 90$ for a foreign worker contract but yesterday I paid 135$. Don't get me started about the taxes/process you go through for building permits.

    The fill rate for your property will never be 100%, even if you have the best location. Some shops in a prime location I know spend 6 months unoccupied between renters. Moreover, some taxes you pay (ex Municipality) will not get exempted if you are not renting the place.

    Another thing, renters will always come up with excuses not to pay on time and sometimes the rent build up and you will be forced to make a deal for the unpaid rent because the other option is going to our useless legal system.

    Last but not least, rent will get you 4~5 % annual return but banks are offering a much sexier return (I got offered 17% yesterday). The difference between those investments are too big to be ignored and you need to remember that a bank account is a liquid asset and cash is KING.
     
    Dark Angel

    Dark Angel

    Legendary Member
    The renting thing is a great option, and it is highly recommended by financial experts worldwide as you get some monthly return while your investment is beating the inflation (to say the least) throughout the years.

    But you need to account for other variables, I will put this in an example perspective:

    Buying a new place will cost you extra 8~9% instantly on registration tax fees, please be alarmed that there are new taxes being made every day in Lebanon behind our back. This 8~9% could go up as we speak for all we know and the government is like a tiger lurking in the dark to tax people who have cash. For example, last year I was charged 90$ for a foreign worker contract but yesterday I paid 135$. Don't get me started about the taxes/process you go through for building permits.

    The fill rate for your property will never be 100%, even if you have the best location. Some shops in a prime location I know spend 6 months unoccupied between renters. Moreover, some taxes you pay (ex Municipality) will not get exempted if you are not renting the place.

    Another thing, renters will always come up with excuses not to pay on time and sometimes the rent build up and you will be forced to make a deal for the unpaid rent because the other option is going to our useless legal system.

    Last but not least, rent will get you 4~5 % annual return but banks are offering a much sexier return (I got offered 17% yesterday). The difference between those investments are too big to be ignored and you need to remember that a bank account is a liquid asset and cash is KING.
    the high interest rates on the LL are very abnormal and constitute a very high risk on the long term especially when taking into consideration the combined effect of the economical stagnation, the local political stagnation, and the regional geopolitical scene. it is a much safer approach to go for the lower rate on USD, and it is even a much better approach to go for the real state option if available, especially when taking global inflation into account and the fact that real estate value on the long run increases at a rate that beats inflation.

    but that said, there are always unforeseen events that could possibly occur and mess up that analysis. we could suffer a burst in the real estate bubble and the markets would correct themselves accordingly. we could also suffer a security issue, or be subjected to some israeli warfare, and that would send quite a scare into our financial markets and could impact the LL value vs the USD. the banks could also for one reason or the other not allow you to withdraw more than 100K usd or 50K usd at a time. there is a risk factor no matter in which direction you turn.

    but the reality of the matter remains that at the moment, the safest approach is a mid term (6 months to 2 years) saving accounts in USD in strong banks. the very long term (5+ years) is safer and more beneficial in real estate investments.

    it is also worth noting that you should inquire what kind of accounts you are being offered in USD, some of these accounts are backed by Lebanese treasury bonds, the banks usually present that a sign of security, while in reality it is not the case as the Lebanese government reserves the right to decide when to pay you back and can choose to repay you in long term treasury bonds, in case of a financial and monetary crisis that is. but in general this is the type of saving accounts in USD that the banks are offering high rates for.

    all in all, despite, despite people benefiting from the high interest rates, it is not a healthy sign at all; and i cannot help but wonder why the banks are competing to give such high rates??? it appears as though the government will be borrowing money from the private sector at even higher rates than what the banks are giving, and the more cash they have on their hands the bigger loans they can provide and the more they stand to benefit. that is just a guess, but who knows. it is quite alarming for our banks to offer such high rates.
     
    Jorje

    Jorje

    Legendary Member
    What would be the risks for freezing this amount of money in a USD account? I mean 8% is insane and may beat the average you get from the stock market. Is it compounded interest too?
     
    S

    swissknife

    Active Member
    What would be the risks for freezing this amount of money in a USD account? I mean 8% is insane and may beat the average you get from the stock market. Is it compounded interest too?
    where did you get 8%?! I found 6% for 1 year at SGBL
     
    !Aoune32

    !Aoune32

    Well-Known Member
    That number is floating in this thread. 6% is excellent for 1 year too.
    Even this rate on the US is alot. The only reason I can see why the rate on the LL is so high is that the gov needs to borrow money from the banks. It is broke. The gov is so stupid. They are not able to even pay the debt that is arising from all this spending.
     
    Jorje

    Jorje

    Legendary Member
    Even this rate on the US is alot.
    Yes, on the flip side though, it makes more sense in the US to invest in stocks if you don't care about immediate liquidity. Invest in a total index fund (basically you're betting on the US economy over the long term, which is a pretty safe bet) and expect an average of 10% compounding interest yearly return over a decade. These are very good numbers. You can take a little more risk and invest in index funds that target particular industries like the biotech, internet or pharma industries, and then you may get closer to 15%. The risk is a little higher but these industries are going to be the backbone of the economy +/- renewable energy. Stocks are a great way to invest money in the US over the longer term (5 years at least). And I think in general they make more sense than real estate if you aren't a multimillionaire (you don't have to worry about taking care of the property, finding renters...etc).
     
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    !Aoune32

    !Aoune32

    Well-Known Member
    Yes, on the flip side though, it makes more sense in the US to invest in stocks if you don't care about immediate liquidity. Invest in a total index fund (basically you're betting on the US economy over the long term, which is a pretty safe bet) and expect an average of 10% compounding interest yearly return over a decade. These are very good numbers. You can take a little more risk and invest in index funds that target particular industries like the biotech, internet or pharma industries, and then you may get closer to 15%. The risk is a little higher but these industries are going to be the backbone of the industries +/- renewable energy. Stocks are a great way to invest money in the US over the longer term (5 years at least). And I think in general they make more sense than real estate if you aren't a multimillionaire (you don't have to worry about taking care of the property, finding renters...etc).
    The country is gone my friend. There is no money. They are giving high amount of rates to customers just so they can keep on placing money into the banks. The banks want to loan the gov. Country is on the verge of ending economically. No one has the balls to say it thats all.
     
    الحرس الجمهوري

    الحرس الجمهوري

    Legendary Member
    Orange Room Supporter
    The country is gone my friend. There is no money. They are giving high amount of rates to customers just so they can keep on placing money into the banks. The banks want to loan the gov. Country is on the verge of ending economically. No one has the balls to say it thats all.
    Lenanese companies are laying off people by the droves. 2200 firms have already closed down since the start of the year :(
    And you have people like Hizbullah obstructing government formation so that they can elect "Sunni cover".
     
    !Aoune32

    !Aoune32

    Well-Known Member
    Lenanese companies are laying off people by the droves. 2200 firms have already closed down since the start of the year :(
    yep I agree. The situation is beyond repair. What does one expect exactly when it takes over 6-7 months to form a gov? I remember in Presidents Sleiman term there was like 3 years of no gov.
     
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    !Aoune32

    !Aoune32

    Well-Known Member
    Lenanese companies are laying off people by the droves. 2200 firms have already closed down since the start of the year :(
    And you have people like Hizbullah obstructing government formation so that they can elect "Sunni cover".
    Just to comment on the second line. :)
    It is not only HA (eventhough we know exactly what they are after) but all forces are to blame. This economic disaster is going to affect everyone if we don't act soon. There is no way in the world one can get 16% on local currency and expect everything to be ok.
     
    Mrsrx

    Mrsrx

    Not an expert!
    Staff member
    If you are looking for beyond 6% other than "la2ta" real estate lebanon seem like a bad idea. when companies are near getting bankrupt they shoot dividents extremely high (through loans) as a last resort to lure investors in while killing their cashflow.
    That is what is happening in lebanon now it is a last resort before official bankruptcy ...probably you are better off taking high yield mutual funds that are pretty risky but will also give you 8 to 12% on your cash and allow you to compound it...it is nothing more than a poker play anyway by now
     
    shadow1

    shadow1

    Legendary Member
    Orange Room Supporter
    you must remember that a large chunk of the banks deposits are invested in Lebanese govt bonds. If the government defaults on its interest payment the banks will have no money to pay you and there might be a run on the banks with disastrous effects. It will make no difference having your deposits in USD either but still a bit safer than a worthless currency.

    The only option left to avoid a catastrophic effect (And believe me the politicians dont give a flying **** if that happens, their money is already offshore and their re-election is a sure bet) is to print money. The dollar will go through the roof. Do not be tempted by the higher interest offered to you and get your money out of the country as soon as you can. The president has already told you the country is bankrupt so that was your first clue. Mr Salameh has also said the LL is safe "for now" without defining the time frame on "now" so that was your second clue.

    Will Aoun preside over a collapsing country? I doubt he really cares a bit about Lebanon and why should he? If I were him I wouldnt either. At the end of the day the parties who have miserably failed in governing this sorry state, have been democratically elected by no fewer than 97% of the voters. They, the people, made their bed, let them lie in it.

    As for those who cant get their money out of the country, convert it to dollars and hide it in your homes. Next year you might get 25% or 30% interest on LL . It's all logical.
     
    G

    Guitaret

    New Member
    you must remember that a large chunk of the banks deposits are invested in Lebanese govt bonds. If the government defaults on its interest payment the banks will have no money to pay you and there might be a run on the banks with disastrous effects. It will make no difference having your deposits in USD either but still a bit safer than a worthless currency.

    The only option left to avoid a catastrophic effect (And believe me the politicians dont give a flying **** if that happens, their money is already offshore and their re-election is a sure bet) is to print money. The dollar will go through the roof. Do not be tempted by the higher interest offered to you and get your money out of the country as soon as you can. The president has already told you the country is bankrupt so that was your first clue. Mr Salameh has also said the LL is safe "for now" without defining the time frame on "now" so that was your second clue.

    Will Aoun preside over a collapsing country? I doubt he really cares a bit about Lebanon and why should he? If I were him I wouldnt either. At the end of the day the parties who have miserably failed in governing this sorry state, have been democratically elected by no fewer than 97% of the voters. They, the people, made their bed, let them lie in it.

    As for those who cant get their money out of the country, convert it to dollars and hide it in your homes. Next year you might get 25% or 30% interest on LL . It's all logical.
    That is the positive spirit I need right now :p
    The worst & funniest part about this is that the currency may collapse before real estate does and so people with cash will probably not have the chance to escape to real estate at good prices before it is too late. Checking up apartments I am interested to buy in cash right now did not have the prices that reflect the current situation, in fact, some owners were not fully aware of how weak our currency is right now.
    Converting your money to USD and keeping it at home seems like a logical choice but I doubt people will resort to that as the situation will not be this bad unless it suddenly is. Never the less, I was tempted to buy gold ounces from this site: gold-ounces - Lebanor as a way to keep some assets safe.
    Blessed are the poor right now :p
     
    shadow1

    shadow1

    Legendary Member
    Orange Room Supporter
    That is the positive spirit I need right now :p
    The worst & funniest part about this is that the currency may collapse before real estate does and so people with cash will probably not have the chance to escape to real estate at good prices before it is too late. Checking up apartments I am interested to buy in cash right now did not have the prices that reflect the current situation, in fact, some owners were not fully aware of how weak our currency is right now.
    Converting your money to USD and keeping it at home seems like a logical choice but I doubt people will resort to that as the situation will not be this bad unless it suddenly is. Never the less, I was tempted to buy gold ounces from this site: gold-ounces - Lebanor as a way to keep some assets safe.
    Blessed are the poor right now :p
    " Unless it suddenly is?" why does it have to happen suddenly when it is all clear before your own eyes. in The first 9 mo of the year the budget deficit came way higher than the budget predicted. Not that anyone should ever take seriously any figures corrupt and incompetent politicians give.

    Let me quote to you an allegory given by Warren Buffet after the burst of the dot.com bubble. He said everyone knew the party will end at midnight, they were all gathered at the exits staring at the clock and waiting for it to strike midnight so they can make a run for their lives. Except the clock had no hands.
    the same thing is happening right now. If you read what people said in this thread, nearly all expect a collapse when the clock strikes midnight yet the clock has no hands.
    Now is not the time to be greedy but to protect your capital. Apartments in lebanon are not a good investment especially as a civil war is forever looming. Land is better. The reason banks are offering high interest is that they know something you are hesitating to acknowledge. Don't buy into the rumours that they have a liquidity problem. They are trying to suck in the small depositor with attractive interest so the big ones can have the dollars.



    Think about it: if government stops paying wages, and companies go on laying workers off, what will happen to the real estate market? Massive defaults and flats as cheap as chips. Good for the expats but quite of few of them will be burnt badly and they may never deposit a cent in Lebanon.
    Getting your money out of the country is the best option you have. Wait out the storm and come back in a year or two and sell your USD at 5000LL if not 10000LL and deposit it at 30%.
    Having said all of that if you can afford to lose your capital the risk is worth taking but I'd take it on Syria or Turkey but not Lebanon. The country is simply too hopeless.

    BTW The poor are not blessed at all. God cursed them and they have proven they deserve it.
     
    NAFAR

    NAFAR

    Legendary Member
    I don't think you need to take your capital outside the country if it is in USD.
    When the financial collapse comes the LBP will loose its value and the USD will shoot up; the real estate sector will collapse- it is already collapsed but the owners are not admitting it.
    During this time you won't be able to withdraw your cash from Banks but it will still be there (on paper) in USD.
    Then the international bank will interfere to save the day- after imposing Palestos (and some Syrians) naturalization.
    The LBP value will be fixed at much lower exchange rate than now and life will go on.
    During the crisis you may still get the monthly interest from Banks, or you will get it later when things come to normal.
     
    Indie

    Indie

    Legendary Member
    Orange Room Supporter
    he keeps insisting the Lira is at no risk.
    They were insisting the lira was at no risk right before / during the civil war as well...while converting / pulling out their own money.
     
    Mrsrx

    Mrsrx

    Not an expert!
    Staff member
    I don't think you need to take your capital outside the country if it is in USD.
    When the financial collapse comes the LBP will loose its value and the USD will shoot up; the real estate sector will collapse- it is already collapsed but the owners are not admitting it.
    During this time you won't be able to withdraw your cash from Banks but it will still be there (on paper) in USD.
    Then the international bank will interfere to save the day- after imposing Palestos (and some Syrians) naturalization.
    The LBP value will be fixed at much lower exchange rate than now and life will go on.
    During the crisis you may still get the monthly interest from Banks, or you will get it later when things come to normal.
    Sadly it is not always the case: Bank of Cyprus depositors lose 47.5% of savings thats less then 200Kms away...granted they are on Euros that they cannot devalue but in the USA and Cyprus people lost their savings...the scenario is not automatic
     
    !Aoune32

    !Aoune32

    Well-Known Member
    I don't think you need to take your capital outside the country if it is in USD.
    When the financial collapse comes the LBP will loose its value and the USD will shoot up; the real estate sector will collapse- it is already collapsed but the owners are not admitting it.
    During this time you won't be able to withdraw your cash from Banks but it will still be there (on paper) in USD.
    Then the international bank will interfere to save the day- after imposing Palestos (and some Syrians) naturalization.
    The LBP value will be fixed at much lower exchange rate than now and life will go on.
    During the crisis you may still get the monthly interest from Banks, or you will get it later when things come to normal.
    There is no naturalization :)
     
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