Investing in Turkey - Garanti?

[sue mac]

After six months of deliberation, warnings, thoughts, encouragement,.....we have decided to invest between 10 and 20k into a high paying interest account.  We already have a small savings account with Garanti, (nothing in it)  but are now considering a bank account to pay our bills in Turkey, and also something to give us a decent interest that will fund some of our summer holiday spends. At present in the UK, we earn around £38.00 on £60000.00 (Santander 3% gross current account)  I know there will be lots of people who will scream at us not to invest in Turkey...lira rate may go higher, not safe etc etc....but this is a small portion of a large amount of cash we currently have in a bank account; and we feel happy to take a chance with this amount.  My enquiry is simply regards howI go about opening the account....i.e. what will we need? do I need cash to start it up or can I arrange a bank t/f from the UK when it is open? How do I get my money out when I arrive next Summer? is it easy to t/f money from UK or to change it back to sterling (if lira rates reduce)....and do Garanti do internet banking? And finally, is Garanti a recommended one or does anybody else know of any better interest paying accounts, or easy accounts to operate? Thanks in advance for all information.

[karaokemark]

The interest rates vary very little between banks, we use Garanti as one of our banks and find there internet banking easier to use than most. You do not need money to open the account, you can open a tl daily account and a GBP account then send money direct from the UK via Swift transfer to your GBP account. Then change it to TL and open a E account online for any period ie 32 days about 9.5% interest. You can do all future banking from the UK by registering your UK mobile for the pin code, changing money either way, opening new accounts, paying bills, sending money to and from the UK etc.
Alper at the branch in Fethiye speaks excellent English and will set everything up for you.
If you set 2 direct debits up from the daily account you will not get any bank charges.
Mark

[JohnF]

I know there will be lots of people who will scream at us not to invest in Turkey...lira rate may go higher, not safe etc etc....

Nobody's screaming (yet anyway) but you couldn't have picked a worse time to buy lira.  It's a relatively safe currency, however the political instability and current security situation are making it extremely volatile - if the current slide can't be halted medium term then it wouldn't be the first time an overnight devaluation is thrust on it.

If it were me, I'd hang back for a couple of months and see what pans out in November.  If an election does take place, and if it ends up another hung parliament with no realistic hopes of a coalition, the value of the lira against hard currencies will fall even further.

The knock on effect will be an increase in inflation - which will devalue the larger amount of interest you are receiving on a lira investment.

On the other hand, the lira could be back to 2.5 to the pound by Christmas...  who knows!

The actual set up of the accounts as Mark says are easy.  Once you've got the online banking you can move money about till your hearts content.

JF

[JohnF]

After six months of deliberation, warnings, thoughts, encouragement,.....

Just a small thought...

If you'd invested in lira six months ago, your original investment (minus any interest accrued) would now be worth 20% less (against the £) than when you started.

If the lira hits 5 to the pound, you'd have lost 29% of the value.

Factor in inflation (August is expected to be 8.2%.), and that's your interest pretty much gone - it sounds like you dodged a bullet by dithering for six months!

JF

[Colwyn]

I can't understand why you are only getting £38 interest on a £60k in Santander. A assume you have three £20k accounts and that should deliver £1800 gross, £1440 after 20% tax. Then you can add on your cashbacks on direct debits. I get better than £38 per month on one Santander account. You ought to be getting 36 times that annually.

[usedbustickets]

I know there will be lots of people who will scream at us not to invest in Turkey...lira rate may go higher, not safe etc etc....

Nobody's screaming (yet anyway) but you couldn't have picked a worse time to buy lira. 

I'm with John on this, you couldn't pick a worse time.  Hold onto your sterling until the election is well over and you have had a better chance to see what is happening, both politically and economically (yes there is a link between the two!).  Besides you might well find that you are getting a far better rate by then.  You'll find that most Brits have been exiting the lira, other than for general daily use ofr shopping and bills etc.,

[Colwyn]

I think sue mac was clear that she had heard all these warnings before and just wanted to go ahead and do it anyway. Perhaps waiting until November's turmoil is over is a compromise worth considering. It might save some of the money from being lost. Or gained in the event that everything comes up roses for Turkey.

[Yoshi]

We have recently looked Finans offering 12.5% as a welcome for 49 days then drop to potentially to 11% which has been pretty static for a while or fix for a year and with the reduced tax liability is 11.15%.
TEB offer 12% for a 3 month account but likely to be <10% after.
Garanti is 11%
Your not alone we are investing too, we figure there's a lot of interest lost waiting for November when it could also be worse. I guess the uncertainty also greatly depends on whether you will convert back to GBP we hope not to.
Good luck

[JohnF]

Your not alone we are investing too, we figure there's a lot of interest lost waiting for November when it could also be worse.

It's fortunate the OP didn't take that viewpoint back in March...

The gap between interest rates and inflation is narrowing, again.  After tax, and taking into account the actual buying power of what you're left with, those "high" interest rates aren't really that high after all.

I guess the uncertainty also greatly depends on whether you will convert back to GBP we hope not to.

If I had a lira for every time I've heard that remark...

JF

[sue mac]

Ok. A compromise then ...I Can only get there in October to sort things. Could I open with just a couple of thousand then further online after November? That way risk is only on 2k?

Thanks for help