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

G

Guitaret

New Member
Yesterday night i asked someone i know that did a similar plan in BLOM.

He said that he is freezing with them $200,000 for 5 years ... divided into 2 accounts:

1. $100,000
and
2. LBP150,000,000

They are giving him 16% on the LBP and 9.5% on the USD.

@walidos @freemind @Daltony
This is weird, I went to BLOM today and they have never heard of this 5 years plan.

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.
shadow1 Your anecdote is well appreciated and I will make sure to remember it when making future decisions. The alternative for me would be an apartment as I can use it if ISKAN failed to give me a loan in the future. The problem is that owners are requesting prices that do not reflect the current situation and the ones that are "la2ta" are in locations outside of my personal preferences. Buying a land would be a really long-term investment because if I do get one in a good location I would be putting all of my money in one basket.

The plan that I am currently studying is a portfolio one:
50% LBP 5 years plan in a saving account
5% cash at home USD
20% bank saving account in USD
25% down payment on a place with monthly installment & ISKAN when available. The deal would be that I get a key to the place and the contract should be in LBP to be protected and if LBP went down I still would be able to cover the rest in cash.
 
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    LEBANESE-CIA

    Legendary Member
    Try to avoid long terms deposit.

    - gov formation is on hold. (even if they formulate the gov we are still on rocky water)
    - lira situation is stable as per BDL ( but if gov formation takes long time , the downturn will escalate)
    - 5 years term deposit is risky. ( you can't withdraw them , and their value depreciate if the lira devaluate)
    - to be on the safe side, 3 months term deposits still give you 9% on LBP and from (5 to 6)% in USD. ) depending on the amount.
    - wait until gov formation , this will give a indication of how things will be going onword.

    (just for informational purposes, some banks are giving 12% (1 year), 13% (2 years), 14%(3 years) - term deposit)
     
    S

    swissknife

    Active 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.
    Logical
    This is weird, I went to BLOM today and they have never heard of this 5 years plan.



    shadow1 Your anecdote is well appreciated and I will make sure to remember it when making future decisions. The alternative for me would be an apartment as I can use it if ISKAN failed to give me a loan in the future. The problem is that owners are requesting prices that do not reflect the current situation and the ones that are "la2ta" are in locations outside of my personal preferences. Buying a land would be a really long-term investment because if I do get one in a good location I would be putting all of my money in one basket.

    The plan that I am currently studying is a portfolio one:
    50% LBP 5 years plan in a saving account
    5% cash at home USD
    20% bank saving account in USD
    25% down payment on a place with monthly installment & ISKAN when available. The deal would be that I get a key to the place and the contract should be in LBP to be protected and if LBP went down I still would be able to cover the rest in cash.
    Not considering gold in your portfolio? price of gold is going down atm so should be a good buy soon..
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Staff member
    Achou héda? :(
    Fi menno b Libnen?
    Yes buy vanguard or blackrock...or ishares etfs s&p500 ...to oversimplify its stocks in the 500 biggest companies in the world
    Usually they tend to follow the market and distribute a bit of dividends. Any broker would have those and any respectable broker will have more choices in terms of etf
    I put a respectable chunk of my investment in sp500 and some other etfs ...and a smaller chunk on high dividend stocks if they are solid financially
    So back to the 100k if it is everything you have and asking what is sp500 i would not put it in the stock market but if you are looking to now the market is on a low cycle...(im hoping)
     
    Nonan

    Nonan

    Legendary Member
    Orange Room Supporter
    Yes buy vanguard or blackrock...or ishares etfs s&p500 ...to oversimplify its stocks in the 500 biggest companies in the world
    Usually they tend to follow the market and distribute a bit of dividends. Any broker would have those and any respectable broker will have more choices in terms of etf
    I put a respectable chunk of my investment in sp500 and some other etfs ...and a smaller chunk on high dividend stocks if they are solid financially
    So back to the 100k if it is everything you have and asking what is sp500 i would not put it in the stock market but if you are looking to now the market is on a low cycle...(im hoping)
    To be clear, S&P is US only, not Global. If you truly want to be diversified, you have to first figure out your asset class mix (stocks, like S&P, vs. Bonds, vs. Alternatives) then within each class, figure out an allocation: developed vs. Emerging markets, large vs. Small caps, etc.
    Dividend vs. Growth or momentum vs value, etc. is a complementary factor based portfolio construction technique that is more sophisticated and not to be played with “a la légère”...
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Staff member
    To be clear, S&P is US only
    yes i oversimplified is it the 500 listed in the US and are originally american as some have their headquarters in luxembourg, ireland or switzerland.
    For a real diversified portfolio i am not a person to give advice as this is not my field as i am just putting research effort and risking a small chunk of my disposable income at my own peril :).
     
    F

    freemind

    Well-Known 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.
    What you are saying here makes sense but needs some fine tuning too, Lebanon is no more affected by geopolitics? true the explanation they are giving about the high interest rates on Lira is not realistic, but what is?

    Suddenly rivers will run dry? Is it as simple as that? Lebanon today is a major chip in the puzzle of the middle east, instability/stability is not a walk in the park. I suppose the real estate sector and the Lira are still standing for a reason, when any of those two crashes the whole country will crash along, you are talking of 100 armed militias here waiting to start at each other. For me you sound more like a negative fortune teller; Riad Salameh did say last week that everything is fine and they are covered from here till 2020, damn the man knows numbers, i couldn't keep up!

    We can come back to this your post in the coming months to see who's hitting and who's not, but If you care to elaborate more on the matter, why the Lira will crash, pls do so.
     
    shadow1

    shadow1

    Legendary Member
    Orange Room Supporter
    We can come back to this your post in the coming months to see who's hitting and who's not, but If you care to elaborate more on the matter, why the Lira will crash, pls do so.
    You must remember one thing that Lebanon is the only country in the world where people do not hold their elected officials accountable for anything. Corruption is too pervasive to be weeded out and the only ones capable of doing it are the ones benefiting the most from it. So really why should they care? What is striking is their greed is insatiable.

    IMO the lira will crash (In fact it should have already) is that debt is increasing at a pace there is no way to deal with it but to hit the printing button. Either that or allow the collapse of the banking system. This option gives the depositors the illusion that their money in LL is safe. Enough to tame them into willful submission like they always do. Printing money could halve government's debt.

    what will happen between now and the inevitable collapse is an opportunity for the rich to dollarise their assets or at least hedge them while the unwise opt for higher interest on their LL deposits.

    I wonder if anyone here could tell me how much of the foreign reserves the central bank holds is actually its own and not the banks'?
     
    Iron Maiden

    Iron Maiden

    Paragon of Bacon
    Orange Room Supporter
    You must remember one thing that Lebanon is the only country in the world where people do not hold their elected officials accountable for anything. Corruption is too pervasive to be weeded out and the only ones capable of doing it are the ones benefiting the most from it. So really why should they care? What is striking is their greed is insatiable.

    IMO the lira will crash (In fact it should have already) is that debt is increasing at a pace there is no way to deal with it but to hit the printing button. Either that or allow the collapse of the banking system. This option gives the depositors the illusion that their money in LL is safe. Enough to tame them into willful submission like they always do. Printing money could halve government's debt.

    what will happen between now and the inevitable collapse is an opportunity for the rich to dollarise their assets or at least hedge them while the unwise opt for higher interest on their LL deposits.

    I wonder if anyone here could tell me how much of the foreign reserves the central bank holds is actually its own and not the banks'?
    So shorting the lira eould beva good bet?
     
    shadow1

    shadow1

    Legendary Member
    Orange Room Supporter
    So shorting the lira eould beva good bet?
    The bank that asks you to bring in your dollar, convert it to LL and be paid 15% interest when you would be lucky to get 3% return on the dollars anywhere safe in the world, is effectively doing that. Better still if you go to borrow money in LL they charge you less than 15% so you ask yourself why is this happening? It can only make sense in the context that the bank expects a sharp drop in the value of the Lira.

    Shorting the lira entails dealing with a big interest rates differential and that could be prohibitive if you dont have deep pockets especially in a country where the currency is fixed by the central bank and not determined by the market. Besides the banks may not allow you to do it on margin. I do it in an easier way, Have your assets in dollars and your liabilities in LL.

    Rating agencies are neither idiotic nor sentimental. Lebanese offcials are steeped in deception and lying to them as mitl shorb l may, a second nature if you like. So who do you believe better? A lebanese official averse to to telling the truth or a respected rating agency?

    The president said the country is broke. The governor of the central bank said the Lira is safe "for now" and in some reports he said till 2020. The minister for finance proposed a hair cut to bond holders and even the Cyprus solution whereby bank depositors lose a portion of their deposits. And most importantly the country is run by thieves and crooks. Add all these things together and for god sake how many clues do you need?

    Some time can be bought with the funds pledged by the Cedar conference but once the politicians do with the money the same way they did with previous loans, what next? I wont say grants as those end up being stolen anyhow. wil balad ma byekhod min l jamal illa dayntou.

    Essentially the question is not if there is going to be a collapse in the Lebanese pound but when. Countries Like Lebanon are inherently doomed irrespective of who is in charge. The debt is simply too great to service and something has to give. And what the officials say about Lebanon not defaulting ever can still be valid but what's important in this statement is to know where the money is coming from to service the debt. The money you deposited at the bank most likely and not your taxes.

    Donor countries imposed restrictions on Lebanon to give it more loans. Bas those europeans mish abda2 min rjel l siyesseh 3inna. They'll give them the budget they want to hear. And everyone will pretend they are telling the truth and knows they are not.
     
    J

    joseph_lubnan

    Legendary Member
    You must remember one thing that Lebanon is the only country in the world where people do not hold their elected officials accountable for anything. Corruption is too pervasive to be weeded out and the only ones capable of doing it are the ones benefiting the most from it. So really why should they care? What is striking is their greed is insatiable.

    IMO the lira will crash (In fact it should have already) is that debt is increasing at a pace there is no way to deal with it but to hit the printing button. Either that or allow the collapse of the banking system. This option gives the depositors the illusion that their money in LL is safe. Enough to tame them into willful submission like they always do. Printing money could halve government's debt.

    what will happen between now and the inevitable collapse is an opportunity for the rich to dollarise their assets or at least hedge them while the unwise opt for higher interest on their LL deposits.

    I wonder if anyone here could tell me how much of the foreign reserves the central bank holds is actually its own and not the banks'?
    Sure. Right now it is simple.

    1. Borrow Lebanese pound, as much as you can
    2. By real assets for long term investments, like real estate, gold
    3. Invest in diversified highly rated mutual funds
    4. Invest in bonds outside Lebanon
    5. Convert all your liquid assets that you have to keep in Lebanon to dollars

    That's my advice to everyone, and of course, immigrate :)
     
    S

    swissknife

    Active Member
    Sure. Right now it is simple.

    1. Borrow Lebanese pound, as much as you can
    2. By real assets for long term investments, like real estate, gold
    3. Invest in diversified highly rated mutual funds
    4. Invest in bonds outside Lebanon
    5. Convert all your liquid assets that you have to keep in Lebanon to dollars

    That's my advice to everyone, and of course, immigrate :)
    Is USD in Lebanese banks safe? The worse that can happen in a crisis is that you will only have temporarily limited/no access to your money, right? right?? please say right..
     
    J

    joseph_lubnan

    Legendary Member
    Is USD in Lebanese banks safe? The worse that can happen in a crisis is that you will only have temporarily limited/no access to your money, right? right?? please say right..
    No that is not Right. This is not the worse that could happen. But that does not mean it will happen. The worse is the government shaves a % of your savings in USD, or a banking crisis affects savings as well. I do not think either these risks are in the horizon, but I wanted to answer your question :)
     
    F

    freemind

    Well-Known Member
    You must remember one thing that Lebanon is the only country in the world where people do not hold their elected officials accountable for anything. Corruption is too pervasive to be weeded out and the only ones capable of doing it are the ones benefiting the most from it. So really why should they care? What is striking is their greed is insatiable.

    IMO the lira will crash (In fact it should have already) is that debt is increasing at a pace there is no way to deal with it but to hit the printing button. Either that or allow the collapse of the banking system. This option gives the depositors the illusion that their money in LL is safe. Enough to tame them into willful submission like they always do. Printing money could halve government's debt.

    what will happen between now and the inevitable collapse is an opportunity for the rich to dollarise their assets or at least hedge them while the unwise opt for higher interest on their LL deposits.

    I wonder if anyone here could tell me how much of the foreign reserves the central bank holds is actually its own and not the banks'?
    Bank deposits are being used to pay the country’s debt, and external reserves are not really the central bank’s?

    I don’t know much just a little, true real estate prices have been stagnant, true the high interest rate on LBP is fishy, but until the doing is done its all rumor. Politicians are saving water to face, KSA, Iran, and israel will not allow a collapse of the lebanese economy, it might affect the geopolitics, they can simply inject a few billions and revive what they will revive.

    Banks will go bankrupt, government will decide to cut from your deposits to cover for the debt thats a very dark view of things?? people reading here might beleive you shadow1, its easier for us to depreciate the LBP than to go into such a catastrophe, at least something we know how to do.

    You know many expats around here try to brand a negative image of the country, maybe trying to cover for a self inflicted guilt, or a void leaving their country has left them with. Remember no matter how far you go you will allways be refered to as Lebanese, wherever you go you will allways face this fight between the natives and the immigrants. Your compass will always show Lebanon.

    So, real estate the major sector of the economy is a no go, bank deposits are risky business, banks might go bankrupt, LBP might crash.

    Good

    There remains one, Land. Buy land, even if you had to put up debt, even when people change and the landscape changes, heck even if tectonic plates decide to move again, there will remain land. A stable asset that is bound to become scarce.
     
    shadow1

    shadow1

    Legendary Member
    Orange Room Supporter
    Bank deposits are being used to pay the country’s debt, and external reserves are not really the central bank’s?
    The government is borrowing money from the banks (sanadet 5azineh) to service its debts so yes it's your deposits at the bank paying for it.

    I don’t know much just a little, true real estate prices have been stagnant, true the high interest rate on LBP is fishy, but until the doing is done its all rumor. Politicians are saving water to face, KSA, Iran, and israel will not allow a collapse of the lebanese economy, it might affect the geopolitics, they can simply inject a few billions and revive what they will revive..
    I am the wrong person to talk about Lebanon's value to other countries beyond the obvious. And I doubt the countries you stated above give a damn about Lebanon's finances. Its economy is way too small to matter. Should there be any financial problems, the consequences can easily be channeled into a civil war as each party and its groupies will blame the other parties just exactly as the politicians would want it.

    Ksa and some other gulf countries might inject few billions yes but as Qatar did it will be in the form of loans which still have to be repaid.i.e delaying the inevitable. With the country being corrupt beyond redemption it's throwing good money after bad. Few people will benefit from it, the politicians and their cronies will. As it is, servicing the debt now eats up more than half of government revenues. the rest of the revenues dont even cover the salaries of govt employees. Therefore any expenditure on services of any sort would have to come from more borrowings. Where does it end?
    For those awaiting a biblical collapse I say you are living it in education, health, security, environment, roads, jobs, electricity services. All sub standard but luckily we have adjusted our expectations accordingly.


    Banks will go bankrupt, government will decide to cut from your deposits to cover for the debt thats a very dark view of things?? people reading here might beleive you shadow1, its easier for us to depreciate the LBP than to go into such a catastrophe, at least something we know how to do..
    Let me clarify one thing. I have been writing in this forum on and off for 15 years and I doubt more than a handful people ever read my postings.
    The banks will go bankrupt because their loans to government is bigger than their capital. So If the government defaults on its loans the banks have no money to pay their depositors. I doubt though this will be allowed to happen even by self-indulgent indifferent politicians. They still need subjects to rule over and screw. Not to mention what that might do to the willingness of expats to deposit money in Lebanon for tax evasion purposes. Whether you like it or not Lebanon survives because of its expats. It always has. Once you lose this you might as well turn off the light and go smoking your arguileh in moonlight. It cant even pay for the food it needs. Its import bill is seven times that of its exports. The money to pay the difference comes from either handouts from countries that feel sorry for us or our expats. There could be international drug dealers also which our banking system also caters for.

    So based on my analysis the less painful option is to depreciate the currency. It saves the banks, cuts govt debt in dollars, and you can do it with impunity. Should the people complain the politicians will hang the sword of civil war over their heads and leave them with no option but to submit. I have zero faith in all political parties and much less in the people of the country.
    You know many expats around here try to brand a negative image of the country, maybe trying to cover for a self inflicted guilt, or a void leaving their country has left them with. Remember no matter how far you go you will always be referred to as Lebanese, wherever you go you will always face this fight between the natives and the immigrants. Your compass will always show Lebanon.
    I may disagree with most of this assessment. IMO the expats dont hold more negative opinion of the country than you do. The difference is they are not as sentimentally attached to it. Their diminished sentimentality can make them see things more clearly (if they want) and admit them openly. You are right they will be referred to as Lebanese wherever they are but so what? Let me give you a personal example, simple but telling. Two of my nephews graduated from Unis overseas where they live. I asked them to locate Lebanon on a map they didnt even locate it in the right region. Both of them didnt know what Lebanon's capital was. And yes they are proud lebs. To me the Lebanese and their pride has always been a topic of delicious yet nefarious interest. How could you be proud of a place that is continually going backwards?

    So, real estate the major sector of the economy is a no go, bank deposits are risky business, banks might go bankrupt, LBP might crash.

    Good

    There remains one, Land. Buy land, even if you had to put up debt, even when people change and the landscape changes, heck even if tectonic plates decide to move again, there will remain land. A stable asset that is bound to become scarce.
    Land is the safest option but if you are a christian living outside the christian ghetto your land can be confiscated in a heartbeat (should a civil war break out) and there is no legal and effective recourse available to you but to grovel to the local lords to get it back . You may not get your land back for twenty years and you still have to pay the local occupier to vacate it. It happened to us. As a Christian living outside the ghetto in mixed areas you are a third class citizen not second. A certain degree of Dhimmitute has to be incorporated in your thinking and you pay the Jizya indirectly. Ask the darak and the electricity companies who they fine and impose their corrupt ways on.

    BTW your posting on Damour is absolutely true. Same as in my hometown. Those living there are just waiting for god. No bright future or really any future to look forward to. The elderly die, the young people find expat spouses. Our neighbours are not happy with whoever they replaced us with but they did what they had to do and it's now up to their god to reward or punish them.

    Listen, it's better to deal with facts and numbers than sentiments. I base my judgement on a deep belief that the country's ruling class is beyond reform and the voters made sure of that the last time they had a chance. Now if they form a government tomorrow to slash govt employees numbers and the pension system given to them (with unimaginable pain and sectarian squabbling), if government can produce a genuinely balanced budget, If the politicians tackle corruption in all govt departments, my assessment will change. None of this is even remotely possible. So no matter what, you will end up with a mushrooming debt that will become too big to service without depreciating the Lira or taking the measures the Finance minister talked about.

    If You have any ideas how the debt problem can be solved based on what's possible and available, do share it by all means. BTW I dont believe in divine miracles.
     
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    J

    joseph_lubnan

    Legendary Member
    The banking system in Lebanon is very intertwined with the government, and the interests of politicians and tribal lords, they will not allow it to collapse, what they will do however, is devalue the Lebanese pound and give depositors in foreign currencies a haircut. If done correctly the banks will emerge even stronger and recoup any losses in no time. It is the average depositor that will get screwed, and the one who is still holding Lebanese pounds will get screwed royally. If you really want to protect your money get it out of the country. I am not saying this will happen for sure, but things are getting worse not better.
     
    S

    swissknife

    Active Member
    The banking system in Lebanon is very intertwined with the government, and the interests of politicians and tribal lords, they will not allow it to collapse, what they will do however, is devalue the Lebanese pound and give depositors in foreign currencies a haircut. If done correctly the banks will emerge even stronger and recoup any losses in no time. It is the average depositor that will get screwed, and the one who is still holding Lebanese pounds will get screwed royally. If you really want to protect your money get it out of the country. I am not saying this will happen for sure, but things are getting worse not better.
    A"haircut" comes with shares in the banks no?? so if they will emerge stronger then it is not all bad news for the foreign currency holder is it? (trying to be optimistic here)
     
    J

    joseph_lubnan

    Legendary Member
    A"haircut" comes with shares in the banks no?? so if they will emerge stronger then it is not all bad news for the foreign currency holder is it? (trying to be optimistic here)
    No it does not come with anything, not even Aspirin :)
     
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