I currently reside in an EU country and earn a salary in EUR, the currency I primarily use for expenses. I have been researching ways to protect my emergency fund from inflation by keeping it in a high-yield savings account. However, I have found that the highest interest rate currently available in Germany is 1,75%. In contrast, I know that I can obtain an interest rate of 3,10% on savings accounts denoted in NOK in my home country of Norway. It should also be noted that I still have some recurring expenses that I need to pay in NOK anyway.

Given this information, is there a method to determine if the higher interest rate yield outweighs the risk of fluctuating exchange rates and foreign exchange fees?

Would appreciate any input people might have on this

1 Answer 1


It is presumably possible to get an estimate with monte-carlo simulation, but the simulation would have to include such things as domestic and international politics the details of the model, the exact countries involved, and your confidence that the future will at least vaguely resemble the past (or otherwise take a predictable shape).

I wouldn't have predicted either a pandemic or President "Trade wars are easy to win because I've never list one" Trump, for example.

But so far it looks like the model my advisor used has held up about as well as the market as a whole, and it does have a nontrivial percentage in first-world international shares. So whatever model they used hasn't broken down yet, though it certainly hasn't done better than expected either. But ifo course the details if their model are proprietary, so that isn't much help if you want to emulate their guesses.

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