MFI/FTD rates?

samrong01 · Post by **samrong01** » Thu Dec 17, 2020 8:30 am

OK so you have land as collateral. The debtor fails to pay. What will you do? As a foreigner you can not own land. So you go to court to prove your claim - this could take months or years. Lots of scenarios: the land was mortgaged with others, the land did not really belong to the debtor, the court sides with the debtor because he is Cambodian and you are foreigner, the debtor has powerful friends who make sure he wins etc.

Direct lending results in higher returns because it is higher risk. Personally I would not recommend it in Cambodia but each to his own.

Cooldude · Post by **Cooldude** » Thu Dec 17, 2020 8:41 am

You have to remember that they don't compound interest for longer -term deposits which lowers your returns. If you only tie your money up for a year at a time, each additional year compounds your investment if you reinvest your principal+interest each year.
Downside is if interest rates drop. If you locked your money in for longer than one year, you might come out ahead. Maybe not.
Had a 3 year term before at 8.4% which didn't compound. The lack of compounding lowered my return to 8%.

daeum_tnaot · Post by **daeum_tnaot** » Fri Jan 01, 2021 10:59 pm

Cooldude wrote: ↑Thu Dec 17, 2020 8:41 am You have to remember that they don't compound interest for longer -term deposits which lowers your returns. If you only tie your money up for a year at a time, each additional year compounds your investment if you reinvest your principal+interest each year.
Downside is if interest rates drop. If you locked your money in for longer than one year, you might come out ahead. Maybe not.
Had a 3 year term before at 8.4% which didn't compound. The lack of compounding lowered my return to 8%.

You mean they only paid 8.4% at the end of three years? That's funny, I just assumed they would only pay out the interest every year.

They also have the ones that pay interest every month, so that would compound whether you had it in for one year or 3.

Cooldude · Post by **Cooldude** » Sat Jan 02, 2021 8:46 am

You're correct. They paid the 8.4% at the end of the three years. I also ASSUMED they would compound the interest at the end of every year after I knew much better than to assume anything in the KOW.
Having the interest paid to you each month wouldn't help much because those deals pay less interest than getting your interest in a lump sum at the end of the contract period. Also, when they pay the interest at the end of the month, the interest is swept into a savings account which pays very little interest. You would have to go there the first of every month, get your interest money out of your savings account and reinvest it in another certificate. If you did that for three years, each time you did it, the interest rate would be lower because the time frame to maturity would be shorter.

daeum_tnaot · Post by **daeum_tnaot** » Wed Jan 06, 2021 11:08 pm

Cooldude wrote: ↑Sat Jan 02, 2021 8:46 am You're correct. They paid the 8.4% at the end of the three years. I also ASSUMED they would compound the interest at the end of every year after I knew much better than to assume anything in the KOW.
Having the interest paid to you each month wouldn't help much because those deals pay less interest than getting your interest in a lump sum at the end of the contract period. Also, when they pay the interest at the end of the month, the interest is swept into a savings account which pays very little interest. You would have to go there the first of every month, get your interest money out of your savings account and reinvest it in another certificate. If you did that for three years, each time you did it, the interest rate would be lower because the time frame to maturity would be shorter.

Actually even though the interest rate is lower, you would still get about the same amount in payout if the interest was swept into the same fixed term. I calculated it once and there was only a slight difference.

I assumed they would sweep the money into the account every month and add it into the fixed term. There’s no option to do that?

Different subject: so Prasac and LOLC are the best deals and their rates are 7.25%?

Cooldude · Post by **Cooldude** » Wed Jan 06, 2021 11:36 pm

It's not swept into another certificate. It's swept into a low interest bearing account. You have to physically go to the institution and put the money in a new account.

daeum_tnaot · Post by **daeum_tnaot** » Wed Jan 06, 2021 11:47 pm

Cooldude wrote: ↑Wed Jan 06, 2021 11:36 pm It's not swept into another certificate. It's swept into a low interest bearing account. You have to physically go to the institution and put the money in a new account.

Right. I guess this is for people who want to use the interest money throughout the year.

By the way, good deal about LOLC I remember. Even if you withdraw some of your money during the term of your deposit (but only after one month), you will still get 5% interest on the remaining amount.

That was last year so not sure if it still holds, and if it does, it may be less than 5%.

MFI/FTD rates?

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