Background is I am from Pakistan and living in Germany. I am looking to park my extra money into ETF or HYSA. Though I don't have experience with any of these previously.
Now, I have come across another instrument called a "naya pakistan certificate" which many banks issue in Pakistan which is probably a government bond? These are available for 3/6/12 months and 2/3/5 year periods. The yearly interest paid is following:
USD (8.5%)
GBP (7.5%)
EUR (6.5%)
PKR (22%)
As you can see the local currency is offered with highest interest but it always carry a risk of devaluation/inflation as happened a year or so ago (example: a car my family bought back home in 2020 is selling for 50% more now ..)Also, if I need money back in Germany, conversion rates might eat up a bit of profit at the end. Or should I just invest in USD or EUR. I can use Revolut to send money in USD so I will get a good rate.
The withholding tax at the end is 10%. There is a tax treaty b/w these two countries. However, I am not sure if I need to pay more tax when i bring back money to DE since here the capitals gains tax is 25%.
Is it even worth investing in this thing considering the risks associated with Pakistan. I have heard similar schemes were offered in Argentina and Lebanon with a not so good result at the end. I also have fear that in the end, Pakistan govt is short of foreign currency and just pays out in local one. Already happened one time back in 1997 I think. Every year or so Pakistan has talks with IMF for loans and there are rumours of default. However, it gets bailed out until now.
It it all even worthy the hassle or I should just park my savings in an ETF like VWCE?
Now, I have come across another instrument called a "naya pakistan certificate" which many banks issue in Pakistan which is probably a government bond? These are available for 3/6/12 months and 2/3/5 year periods. The yearly interest paid is following:
USD (8.5%)
GBP (7.5%)
EUR (6.5%)
PKR (22%)
As you can see the local currency is offered with highest interest but it always carry a risk of devaluation/inflation as happened a year or so ago (example: a car my family bought back home in 2020 is selling for 50% more now ..)Also, if I need money back in Germany, conversion rates might eat up a bit of profit at the end. Or should I just invest in USD or EUR. I can use Revolut to send money in USD so I will get a good rate.
The withholding tax at the end is 10%. There is a tax treaty b/w these two countries. However, I am not sure if I need to pay more tax when i bring back money to DE since here the capitals gains tax is 25%.
Is it even worth investing in this thing considering the risks associated with Pakistan. I have heard similar schemes were offered in Argentina and Lebanon with a not so good result at the end. I also have fear that in the end, Pakistan govt is short of foreign currency and just pays out in local one. Already happened one time back in 1997 I think. Every year or so Pakistan has talks with IMF for loans and there are rumours of default. However, it gets bailed out until now.
It it all even worthy the hassle or I should just park my savings in an ETF like VWCE?