How to calculate interest?

[ilikethai]

My friend sent me an info from Laos on some government bond or whatever it's called and the number is very tempting.  I'm pretty stupid when it comes to this type of thing. How do they calculate this.

[shadowofacloud]

Interest calculated (and paid) per annum, not capitalized.

 

You can also find USD term deposits that will pay around 7,5% pa for a 5y tenor. Much easier to liquidate. Check, for instance, what Indochina Bank has to offer.

[shadowofacloud]

*paid semi-annually, obviously, sorry.

[ilikethai]

5 hours ago, shadowofacloud said:

*paid semi-annually, obviously, sorry.

So If I buy 10,000$ how much?

[shadowofacloud]

On 12/5/2021 at 12:50 AM, ilikethai said:

So If I buy 10,000$ how much?

400 USD paid twice a year for the 10y bond.

[ilikethai]

4 hours ago, shadowofacloud said:

400 USD paid twice a year for the 10y bond.

Thankyou could please show me how to calculate it? Thanks

[ChrisP24]

11 minutes ago, ilikethai said:

Thankyou could please show me how to calculate it? Thanks

$10,000 x 8% (that is .08) per annum = $800 annual interest.

 

But they pay semi-annually so they pay $400 every six months. And then when your bond matures at the end of the 10 years you get your $10,000 back plus the final $400 interest payment.

 

It would be prudent to know in advance for certain what the penalties are for early redemption (cashing out) your bond.  Typically with bonds you give up some amount of interest, but there are also some that cannot be redeemed early, they can only be sold on the open market which can be a hassle.  I have no idea what method is customary with regard to redeeming Laotion government bonds.

 

There is also the issue of income taxes to figure out.

[ChrisP24]

3 minutes ago, ilikethai said:

I just had a chat with a guy from Laos and his farang wife.  I just found out something new I was told Laos calculate their interest differently and trickery. Lol.  anyway this is very confusing for my old fart brain but I really need to invest to guard inflation.

Are you in or from the U.S. ?  If you are then the I-bonds sure do appear to be very good for that purpose, the downsides being that the rates can go both up and down with inflation, and the annual purchase limit. 

[ChrisP24]

One additional note ilikethai as you consider investment options, and that is this, prompted by your mention of trickery:   if anyone tries to sell you an annuity, hide your wallet and run!   

[ilikethai]

18 hours ago, ChrisP24 said:

One additional note ilikethai as you consider investment options, and that is this, prompted by your mention of trickery:   if anyone tries to sell you an annuity, hide your wallet and run!   

Ok you got me scared.  I'll save up to buy myself beer and you know the rest.

[ChrisP24]

2 hours ago, ilikethai said:

Ok you got me scared.  I'll save up to buy myself beer and you know the rest.

Indeed, Beer does not lie, and that is a fact.

[metisdead]

Off topic posts with the intent to hijack this topic into a discussion about US Treasury bonds and the replies have been removed. 

[AventurasEnMadrid]

Despite 8%/year seeming high, this is not really a good investment due to the constant devaluation of the kip. Furthermore, if you do want to maintain some savings in kip as I have been doing for several years with a small part of my portfolio, an option that pays higher interest at 12% for a 24 month fixed deposit account is Ekkaphatana Microfinance Institute. They were started with support from the World Bank in 2005 and so I consider them quite safe and have been happy with the service. They can transfer your interest to your BCEL account every month also.