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Living or moving overseas? Tips to save money when transferring funds.

by Chris Lang on November 7, 2009

Cash MoneyThe following is an article contributed by World First, a trusted company specializing in foreign exchange.

If you are planning to live or work overseas, there are a number of things you need to think about before you move. If you are already living abroad then you will know firsthand how much a move in the exchange rates can affect you.

As an example, the current weakness of the Pound has proven extremely beneficial for those moving into the UK, however those moving out of the UK have seen a noticeable and negative impact on how far their Sterling will take them. In October 2007 a €500,000 property in Europe would have cost a UK citizen around £348,000. 2 years later, the same priced property will cost you £463,000- an increase of £115,000. This outlines the true extent to which people living or moving abroad can be affected by volatility in the currency markets.

Regardless of this, people still need to make overseas payments and it is therefore crucial that they secure the best possible exchange rate for their transaction. Many people assume their bank to be the best place to exchange currency, unaware that the banks usually offer fairly uncompetitive exchange rates, slower transfer speeds, increased transfer charges and limited access to the various foreign exchange products available.

By using a specialist currency broker you can significantly improve the financial efficiency of your overseas payments, and gain access to products that may be hugely beneficial to you.

Benefits of Brokers

  • Usually save clients between 0.5% and 4% on the amount they transact
  • Faster international payments (same day in many cases)
  • No commission and no bank receiving charges
  • Bespoke and professional service with a dedicated broker
  • Free rate and market watch service
  • Access to products that the banks may not offer

Foreign exchange products available

Spot contracts
If you already have the funds in place, you could arrange a spot transaction. This is simply the exchange of one currency for another at the current market price where the settlement happens within two working days. A broker should be able to get you a significantly better exchange rate for this transaction.

Forward contracts
A forward contract allows you to fix a rate now for a date in the future (up to 2 years ahead). This means the rate is fixed regardless of exchange rate moves, thereby protecting you if the exchange rate moves against you.

Currency options
A currency option, like a forward contract, allows you to exchange one currency for another on a future date, thereby protecting you from negative movements in the exchange rate. However, with an option, if the rate moves in your favour you can still take advantage of this. There are very few brokers that can offer currency options to clients as it requires additional FSA authorisation. One such broker is World First.

Regular Payments
If you will be exchanging a set amount of funds on a regular basis for mortgage payments or pension transfers, you can set up a regular payment order which will automatically transfer the funds on a regular basis.

It is worth noting that most of the above transactions cannot be made through the bank, and you would need to talk to a specialist currency broker to see what would be best for your specific needs. Using a broker will also allow you to receive commercial exchange rates, free market updates and a personal service with professional market knowledge.

Elisabeth Dobson of foreign exchange broker World First warns, “don’t leave your foreign exchange transactions to the last minute. It could leave you exposed to the prevailing exchange rate and you may not have adequate funds to move overseas.

With some of World First’s products you can protect yourself against negative exchange rate fluctuations. The options above are becoming more and more popular especially given the recent volatility and unpredictability of the currency markets. Forward planning will ensure your emigration can go ahead as planned”.

If you would like to speak to a dedicated foreign exchange expert about your individual requirements, please contact World First on +44 (0)207 801 9080. Alternatively you can view their website at www.worldfirst.com

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{ 3 comments… read them below or add one }

Property Loss Lawyer November 20, 2009 at 9:40 pm

I would invest to forex and earn even a little. That would really help a lot. But I won’t probably facing financial transfer problems anyway.

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