In a previous post, I compared Everbank's WorldCurrency "Certificates of Deposit" to foreign currency exchange traded funds (ETFs). Foreign currency ETFs are far superior investments, in my opinion. When you invest in a foreign currency ETF, you can specify a rate of exchange (by way of a limit order) and move in and out of the ETF at will, since it trades like a stock. When you invest in a WorldCurrency "CD", Everbank decides the rate of exchange and your investment is locked in for the term of the "CD".
Moreover, the foreign exchange ETF pays a higher interest rate than Everbank. For example, the rate the CurrencyShares euro ETF currently pays is almost three times the rate that Everbank pays for its euro "CD". You read that right, the euro ETF pays about 300% the interest that the WorldCurrency euro "CD" does. In fact, in every case where an interest rate is paid, the CurrencyShares ETF pays a substantially higher rate than the comparable Everbank WorldCurrency "CD" rate.
Compare for yourself:
Everbank rates:
http://www.everbank.com/001CurrencyCDSingle.aspx
CurrencyShares rates:
http://www.currencyshares.com/home/CurrencyShares.rails
Thursday, January 1, 2009
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1 comment:
In 2007, when Everbank was aggressively touting the ISK CDs, I do not remember them making customers sign this Emerging Markets Risk Disclosure agreement (accepting the risks of trading in emerging market currencies)?
Link: http://www.everbank.com/documents/forms/wm_EmergingMarkets.pdf
They advertize their FDIC insurance, but caution the investor is responsible for anything short of Everbank insolvency.
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