Currency payments – the right tool for the job
So many people are either retired in overseas destinations or are planning to be there as soon as the gold carriage clock has been handed over. So much so that the challenge of mastering the foreign exchange aspects of retirement are as important as arranging pensions and healthcare.
Exchange rates can look a bit daunting to those who have only ever had to deal with holiday cash in the past and, because it looks pretty complicated, some will avoid the worry by just letting the bank apply the current exchange rate and be done with it. But that would be a shame because, for the unaware, bank payment systems will tend to apply the tourist exchange rates that you see on the bureau de change board and, if you take a closer look, you will be taken aback by the yawning chasm between the ‘We buy’ and ‘We sell’ rates on those boards. For cash transactions, that makes sense but for electronic payments, there are better options.
As soon as you know you have a currency payment to make, the fluctuating exchange rates are adding or detracting from your funds. It makes sense to keep a wary eye on the rates and to try to buy at the appropriate time. In an average month, most exchange rates will move around by 2 or 3 percent and if you add the savings that a broker can offer in comparison with Bureau de Change rates, that could boost your funds by 8% or more. Booking an exchange rate for immediate delivery is known as a ‘Spot Contract’. Think in terms of ‘on the spot’ exchange.
But what happens if the rate is fantastic but you are not quite ready to exchange your funds? Maybe the money is still invested elsewhere or tied up in your house or pension. In this instance, you can still book a contract to secure the exchange you need at a rate agreed (usually with a specialist broker) but delay the actual exchange of funds until a date in the future that suits you. Some brokers can book up to 2 years ahead but that may be overkill. Nevertheless, whether you are only a few weeks from needing to move funds or a year or so away, you can, with the use of this kind of ‘Forward Contract’, have the peace of mind that comes from certainty over your finances.
There are often monthly needs for retirees and those in throes of making those plans. It may be a mortgage payment, receipt from rental arrangements, a pension transfer or perhaps a salary that you receive each month. Whatever the reason, it is often better to have a set amount arriving and departing each month rather than having the market fluctuations alter your numbers each month.
Some brokers offer a facility that turns your monthly currency exchanges into a standing order arrangement. Using the same principle of forward contracts, the broker will agree a set amount of funds to be exchanged at a set exchange rate on the same day each month. For retirees, living on a fixed income is simpler than trying to guess how much will arrive each month and this arrangement is very popular with those who need this kind of budget certainty.
Whatever your needs, when it comes to foreign exchange payments, as with so many things in life, there is a tool that does the job. If you would like to discuss what might work in your particular circumstances, please feel free to contact us.
To find out how you can take advantage of positive fluctuations in the market and exchange your currency at the right time to get the best possible rate, call 020 7350 5474 or visit www.halofinancial.com
Authorised by the Financial Conduct Authority under the Payment Services Regulations 2009, FRN: 528727.
Her Majesty’s Revenue & Customs MSB registration No. 12197454.
© 2015 Halo Financial Ltd. Registered in England No. 5155787.
The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.
Latest posts by Silversurfer's Editor (see all)
- Freedom and confidence for colostomates - April 23, 2018
- Over 50s Travel Insurance from Just Travel Cover - April 23, 2018
- Do you think St George’s Day and St David’s should be made national holidays? - April 23, 2018
- The Queen – her life in pictures as she celebrates her 92nd birthday - April 21, 2018
- Back-Roads Touring brings the small group experience to Asia - April 19, 2018
Leave a Comment!
Community Terms & Conditions
These content standards apply to any and all material which you contribute to our site (contributions), and to any interactive services associated with it.
You must comply with the spirit of the following standards as well as the letter. The standards apply to each part of any contribution as well as to its whole.
be accurate (where they state facts); be genuinely held (where they state opinions); and comply with applicable law in the UK and in any country from which they are posted.
Contributions must not:
contain any material which is defamatory of any person; or contain any material which is obscene, offensive, hateful or inflammatory; or promote sexually explicit material; or promote violence; promote discrimination based on race, sex, religion, nationality, disability, sexual orientation or age; or infringe any copyright, database right or trade mark of any other person; or be likely to deceive any person; or be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence; or promote any illegal activity; or be threatening, abuse or invade another’s privacy, or cause annoyance, inconvenience or needless anxiety; or be likely to harass, upset, embarrass, alarm or annoy any other person; or be used to impersonate any person, or to misrepresent your identity or affiliation with any person; or give the impression that they emanate from us, if this is not the case; or advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse.
Nurturing a safe environment
Our Silversurfers community is designed to foster friendships, based on trust, honesty, integrity and loyalty and is underpinned by these values.
We don't tolerate swearing, and reserve the right to remove any posts which we feel may offend others... let's keep it friendly!