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Thread: 500 Euro Bill as a Savings Tool

  1. #1
    242_fair
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    Default 500 Euro Bill as a Savings Tool

    The 500 Euro note has been a really good savings tool for me.

    Starting since 2006, everytime I made money, I would go buy a 500 Euro note. When I started they were traded at almost exactly $605 USD. Now, 14 months later, these same notes have a $685 USD value.

    That is a really good return on my investment!!

    The best part is that there is no percentages charged by anyone, unlike the slew of charges I find on my bank statement every 3 months.

    I think the Euro is far more stable in the next 5-10 years than the US dollar.

    It has also been practical for me, since it is (sometimes) possible to buy this note after 1 or 2 shifts, which gives me the instant gratification I need (ever heard the expression 'money burning a hole in my pocket? thats me).

    So Yay for the 500 Euro note, it paid off in a major way for me!

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    Banned Melonie's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ agreed on the Euro. In fact the Euro : US$ exchange rate hit a new record high today (actually the dollar hit a record low !).

    However, you can actually go one better than simply exchanging currency i.e US dollars for Euros. A few online banks offer Euro denominated CD's, as well as CD's denominated in UK pounds, Swiss Francs etc. Not only do these get the same increase on the currency exchange rate as Euro notes do, but they also pay 3% interest. One example can be found at

  3. #3
    242_fair
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    Default Re: 500 Euro Bill as a Savings Tool

    I didn't want my money in an 'institution', I wanted it in 'Cash-Money' as my Grandfather would call it.

    With this everbank thing, what happens when the cash-out term comes due at a bad time?

    Sometimes waiting a few months can make all the difference in the world bt profit or loss. (Jan-Mar 06 USD vs EURO)

    And the comapny site states as much

    I.e.:"However, if the selected currency loses value versus the U.S. dollar, you could experience a loss of principal"

    and they say

    "Dont invest more than you can afford to loose".

    Well I don't consider any money something I 'can afford to loose', excuse me??


    PS: If I buy at $604 and sell at $685 (for example), how do I calculate the percentage I gained? Do I divide one by the other or something?
    Last edited by 242_fair; 07-10-2007 at 10:04 AM. Reason: added math question

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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ as exchange rates can move in either direction, it's also possible to 'lose' on Euro notes. But as you point out, holding zero maturity cash makes it possible to flip the Euros back into US dollars at any time. This is not true of CD's with designated maturity dates. This is also the reason that the CD's pay interest.

    As to figuring your percentage of gain, in terms of the Euro you have gained nothing. In terms of the US dollar you have gained (685/604 -1) or 13.4% over 18 months which annualizes to 8.9%. In terms of 'purchasing power' you lost with the Euro, but would have lost much more with the Dollar.



    One of the great fallacies of many American investors is that we tend to think that the US dollar is the yardstick by which everything in the world is measured. This leads to assumptions such as a US dollar denominated 5% pay raise or a US dollar denominated 9% return on an investment actually being a 'positive' development. However, in today's global economy, one really has to measure the increase in 'purchasing power'. Over the last 18 months, just about every currency in the world has lost 'purchasing power' due to increases in the prices of energy, food etc. On the basis of 'purchasing power' The Euro has almost held its own, while the US dollar has slid badly.

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    Default Re: 500 Euro Bill as a Savings Tool

    Where are you buying the Euros? I like this idea as it would help me save up for my trip next summer. I know when I bought some pounds at the bank, it took a week, cost $20 and I had no choice in denominations, so I had to dredge around a bunch of 10 pound notes. Such a pain, but perhaps my bank sucks.

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    Veteran Member StuartL's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    I like your idea. Very prudent.

    If I may though, just a little word of warning - if you are planning to spend them in europe sometime, start getting smaller denomination bills. In most of Europe, literally NOWHERE accepts 200 or 500 notes. The possibility for copies is excellent, so really only a bank will take them.

    Get yourself a pile of 50s instead.

    Good luck with the plan all the same!

  7. #7
    242_fair
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    Default Re: 500 Euro Bill as a Savings Tool

    I am not planning to spend them, Stuart. It is just a way of saving.

    Rose I get them at the Currency Exchange booths in malls etc. I shop around for the best rate. Sometimes I get them from the black market.

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    Banned Katrine's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    Wow, that's not a very smart way to save long-term. Currency risk, exchange rate risk, political and economic risk. Plus its still cash, so INFLATION risk. Its not bad for some short-term savings. I keep a bunch of Euros around that I never traded in from previous Europe trips when the Euro was new and cheap. But I wouldn't put all my eggs in that EU basket.

    But if you don't believe in keeping your money in institutions, I can't argue with that. To me its foolish. Is the Euro still backed by gold? I forget....

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ Popular perception is that the Euro has fractional gold backing, but in reality this is merely a perception not a fact.

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    Banned Katrine's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    Quote Originally Posted by Melonie View Post
    ^^^ Popular perception is that the Euro has fractional gold backing, but in reality this is merely a perception not a fact.
    Yes, that's right!

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  11. #11
    242_fair
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    Default Re: 500 Euro Bill as a Savings Tool

    Quote Originally Posted by Katrine View Post
    Wow, that's not a very smart way to save long-term.
    Just for a couple years.

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    Veteran Member StuartL's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    The euro is backed by something better than gold!!!! It is backed by hardworking and caring taxpayers across this continent.

    Oh hang on, the US is like that too isn't it???

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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ to be perfectly accurate, both are backed by the hardworking and caring children and grandchildren of present taxpayers who will be saddled with incredibly high tax rates in the future to cover the gov't debts being incurred and gov't promises being made today !!!

    along those lines, here is some professional opinion re the long term prospects for the Euro ...

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    Default Re: 500 Euro Bill as a Savings Tool

    Man... you really need to be careful.. Forex investing is where the big cats play. Besides, you will pay a fee when you convert the euro's into dollars. If you like the idea of foriegn currency, set up an etrade, scott trade, etc account and buy ETF's which hold secured foriegn debt. That, and READ READ READ. Seriously, its great you have done well with the euro's, but its hard to see the risk you took playing currencies.

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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ yes 'playing' currencies does involve an element of risk. However, that actual degree of risk in the short term is far less than 'playing', say, hedge funds or tech stocks. Currencies rarely move more than one percent in a single day, making it fairly easy to limit your losses on Euro notes. The 'big cats' you speak of create and amplify the risks they take by, for example, borrowing 20x their initial investment in a foreign currency and reinvesting it in the US, or by buying highly leveraged futures contracts on a foreign currency - which magnifies a 1% currency down move into a 20% loss (but also magnifies a 1% currency up move into a 20% gain).

    Also some of us do like the idea of having the 'real goods' in our hands, as opposed to an electronic ledger entry at an online brokerage which gets valued daily by an electronic info transfer from worldwide futures exchanges and which must then pass through an electronic funds transfer to a local bank in order to actually turn into 'real goods'. As those of us who have endured 9/11 or even a lengthy power outage can tell you, if any of the sophisticated systems break down it doesn't matter a bit how much your electronic ledger entry or even your credit card credit line is supposedly worth, the stores, restaurants and cabbies only care about the 'cash' you have in your pocket ! Holding Euro notes (or gold bars, or silver coins) is the 'real goods' ... although they will be a bit more difficult to 'spend' than US greenbacks.

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    Default Re: 500 Euro Bill as a Savings Tool

    This doesn't really apply to the Euro, but if you plan a trip to Great Britain I've been told not to carry around the 50 pound note. There were alot of fakes going around and they are scrutinized or not accepted at all.
    I've got a 30 day trip planned in a few months and this is what my UK friends have told me.

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    Default Re: 500 Euro Bill as a Savings Tool

    Well, if you consider any paper based asset 'real' more power to you. I'd like you to take a step back and ask yourself why you feel there is more safety in holding hard currency, than there is having it in an interest bearing account. If some short term catastrophy happened, good luck trading those euro's or dollar bills for that matter for some thing possibly life sustaining like food, or bullets. Fear makes people do stupid shit all the time. Having anything more than say a few thousand in hard cash in a non interest bearing account is foolish, and wasteful. If something happens to it, fire, robbery etc there is no claim. If you like holding euro paper because you think its cool, and fancy being a currency speculator, thats one thing... If you are claiming its sound investment advice, you should do some more reading and research.

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    Banned Melonie's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    ^^^ if you'll carefully re-read this thread, you'll see that the original poster's total investment in Euro notes easily falls within your range of 'a few thousand in hard cash'.

    I also immediately suggested that a Euro denominated CD from a US bank, which accrues interest as well as currency exchange rate gains (or losses), and which also has FDIC insurance on the US$ equivalent value, is a far better way to get involved in currencies on a larger scale ( $10,000 minimum buy-in).

    As to sound investment advice, at this particular moment in time the US dollar has already fallen significantly against the Euro (and many other currencies). Most indications are that it still has farther to fall. As such, any would-be Euro investors have missed a fair portion of potential gains already, but probably could capture another 10% based on various projections from the big financial houses. All of this of course is also dependent on future changes in US FED policy, Iran, China, the EU central bank, and a host of other variables that could contribute to additional gains on the Euro as well as losses on the Euro.

    And yes the Euro, the US dollar etc. are in fact paper based assets ... but banks / stores will readily accept them. But this is opposed to actual hard assets like gold and silver which banks / stores will NOT readily accept.

  19. #19
    242_fair
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    Default Re: 500 Euro Bill as a Savings Tool

    Wow Zach69, welcome to SW and you should go over to the Coming Out secton to introduce yourself.

    Regarding foolish and wasteful, I made money off these Euros. (also it was better than buying another Gucci purse, which is what I felt like doing.)

    I don't plan on buying any bullets.

    But according to my sister, who was in Manhattan on 9/11, and who found herself in a very difficult position WITHOUT CASH on 9/11 and 9/12 in New York, when the bank machines were either emptied or stoped working, and when she needed a train or bus ticket back to Niagara Falls so I could get her home, Cash actually IS king in these situations, and there is nothing stupid or foolish about it.

    (As has been noted before...) It is also vital for a dancer to have $5000 minimum for bail money incase any raids or busts on her club. If I wan't hoarding Euros, I would never have held onto that money longer than a week. (re gucci purses etc)

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    Default Re: 500 Euro Bill as a Savings Tool

    242:
    I hear you, and I'm going to respond. I just want to spend a little time and break down my next relpy responding to a few of the things you mentioned. But really quick, I think your head is in the right place and you should be applauded for your dicipline to save. It's hard in today's world where savvy advertisers basically do their own hustle to get most people in hock (paying 20% on their credit cards) to buy the latest and greatest. If you can save 10-20% of your take home in this country, i believe you have the will power to do anything you want.

  21. #21
    242_fair
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    Default Re: 500 Euro Bill as a Savings Tool

    Well zach, "really quick", my first instinct is to give you a preemptive 'fuck off' since you seem to be

    a) a man
    b) not a stripper
    c) a know-it-all [and we already have a better member for that role]

    But most importantly, you use buzz talk like

    "your head is in the right place"

    and

    "to break down my next reply"

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    Veteran Member StuartL's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    Quote Originally Posted by zach69 View Post
    If some short term catastrophy happened, good luck trading those euro's or dollar bills for that matter for some thing possibly life sustaining like food, or bullets.
    Food or bullets? Are you serious? Not food or shelter, water, warmth, clothes, transport or the wellbeing of my family and friends?

    I don't mind admitting that I find that pretty scary. If it hits the fan, I hope we are a long distance apart.

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    Default Re: 500 Euro Bill as a Savings Tool

    242,

    Interesting you seem to have some disdain for men and non strippers, (sprinkle some defensiveness on top). Seems kind of ironic that you'd be living up to stereo types that many in your profession work hard to dispel, but I'll chalk that up to immaturity and my possibly having rubbed your fur the wrong way. Sorry about the financial responsibility complement, I won't let that happen again. All that aside, lets try to keep this civil and forego our gender and professional differences for the good of determining what makes the most sense.

    When you first decided to jump into the FOREX market in lieu of buying in your words gucci bags, what kind of analysis/research did you do to ensure you were making a sound financial decision? If you wanted to get the money out of your hands so you wouldn't be tempted to spend it, you easily could have purchased a time deposit (CD, t-bills) so what pushed to you to the Euro? That's a fair question, I'm not attacking. Sharing the fact that first and foremost, you spent hours researching the US/Euro exchange rate will highlight the extreme relevance of due diligence before any financial decisions are made. All stock prospectus usually includes the disclaimer past performance is not indicative of future results. Therefore, the premise "I did great in Euro's" is not sound advice unless you follow it up with the reason why (outside past performance), and some evidence to support that. Evidence preferably aside from a cheesy online financial news letter that purports you can make a fortune trading Euro's.

    Secondly, I'd like to defend myself against being called a know it all. I have no ill will for anyone who posts or reads here. I have no real agenda other than discussion of financial matters with professionals coming from a vantage point much different than my own. Knowledge speaks, wisdom listens. It's quite easy to be a parrot and regurgitate other peoples thoughts and sentiments, its another thing entirely to formulate your own ideas and substantiate them in logical concrete fashion. I share my knowledge and opinions for others to take or leave. I hope they are useful to somebody.

    I hesitate to say this at the risk of sounding agreeable or complementary but I glad your savings ave done well, and hope they continue to do so. That said, let me itemize for you why there are MUCH better options than Euro's as a savings vehicle.

    1) Inflation

    Even though your Euro's have been growing as a function of currency exchange differences, there is no real inflation hedge since you are not earning even the risk free level of interest on your savings. You lose value everyday you hold any currency without earning interest.

    2) Safety

    Currency cannot be insured. It can be stolen, ruined in fire, lost, and there is no recoverability.

    3) Liquidity

    If you were really keeping these Euro's because you were worried about a 9/11 type disaster where you had no access to your electronic funds, good luck trading euro's for a cab ride. No one would be able to make change for it, and you surely would get ripped off in the exchange where some one decided to take them from you.

    4) Hands off savings

    You said these Euro's keep you from binge spending. Timed deposits (CD's) will also do the same thing while paying you interest, and keeping your money safe and insured by the FDIC. You can have CD's roll over automatically. If you really need the cash, you can bust a CD for a fee. You don't need to be a currency expert, with CD's its buy and forget about it.

    5) Risk/Uncertainty

    Lets assume you read the WSJ everyday, and stay current on the latest European economic developments. Lets say your boyfriend or husband is a currency trader and gets reasonable trading information from i-banks. Assuming you are saving for a rainy day, do you really want to have to keep up on such things to know how much your savings are worth or will be worth assuming you have to liquidate into cash to take care of some unforeseen event?


    I'm not offering this as advice to you. Not to sound callous but I don't really care about you at all, (I'm quite certain the feelings are mutual,) perhaps our first agreement? I'm offering it to people who read your advice and may not have much a tangible understanding of the risks involved. If after understanding the downsides, some one still wants to buy Euro's, be my guest really. If thats the route you decide to go, make sure you don't get raped at the exchange when you buy them. Purchasing FOREX in small denominations (yes $1K at a time is peanuts in this game) will cost you anywhere from 5-15% round trip (US to Euro back to US) some times more. I would suggest not paying more than a 2.5% fee for each currency swap. Make sure you know exactly what those fee's are, and shop around for a the best deal.

    Using buzz talk "your head is in the right place" and "to break down my next reply". That gets a big old LOL, I've never been accused of this before, I'm not quite certain how to respond.

    Umm by your head is in the right place I was only trying to imply that saving is very smart thing to do, which most people don't do. The fact that you save illustrates a commitment to financial responsibility. That said, there are probably more more effective ways to save than you prescribe, therefore you have the right mind set, you just need to apply some critical thinking before you act or give advice. You can call that buzz, I call it my opinion.

    Breakdown my next reply, well.. firstly, I like to think before I speak. Secondly, I really wanted to make sure I could have an impact on some one before they decided to go this route. If all I do is make one person stop and think before they making any important financial decision, then I can feel good about myself and sharing my insight. At the end of day, thats all that really matters.

  24. #24
    Banned Katrine's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    ^242_fair

    Zach=FOREX pimp. Speaking of, a pimp on MySpace was trying to butter me up and told me about his adventures trading forex.

    Since foreigh currency options were once my speciality, I'm pretty knowledgeable about the matter. But I just don't see the point in playing any longer because you need significant lots of cash to really make actual money.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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    God/dess Embyr's Avatar
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    Default Re: 500 Euro Bill as a Savings Tool

    Quote Originally Posted by StuartL View Post
    Food or bullets? Are you serious?
    perhaps he meant the proverbial economic "guns or butter" tradeoff...

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