[quote=Jazzman]The only risk is exchange rates. If the bank will allow multiple currency accounts, you can switch back quickly if needs be. The problems I’ve run into is some foreign banks don’t allow US residents to open an account. As far are declaring interest, if the bank doesn’t provide US tax-filing docs, you can, in theory, use any exchange rate when converting back to USDs.[/quote]
The exchange rate can get you. For example in 2010 it was $1 = 45.74 rupees. Now it’s 62.07 rupees. So if you invested $100K in 2010 and got 9.5% per year you would have 6,575,861 rupees but converting that back to dollars now would be $105,942. So you got 9.5% interest per year but your net interest gain was a little over 1% per year because of the exchange rate change. Now obviously it could work in your favor rather than against you, but it’s impossible to know ahead of time.
The other potential problem is capitol controls. So you can get your money stuck over there. For example they just recently passed this capitol control.
[quote]
The limit on personal remittances has been cut to $75,000 per year, from $200,000 per year.
[/quote]
That would mean even if you saw things changing where it was a bad investment to be in India it would take you 3 years to get your money back out. A lot can happen in 3 years.
