New Zealand Dollars - Exchange and interest advice please.

pimento

Hi all,

I have 58,000.00 NZ$ sitting in a instant access HSBC account earning me the grand sum of 0%.

I'd like to exchange some or all of the money into sterling and put it somewhere that will earn me some interest until I want to spend it.

HSBC do not charge for changing the money from dollars to pounds, but their rate is not the same as XE.com (which is what I've been looking at online to follow the rate). While I've been watching the rate over the past three months, the difference between the top and the bottom of the rate is about a thousand pounds, so it's quite a difference to me.

Is there a way of getting a better rate than HSBC's? I know that you can get xe.com's by creating an account with them, but I don't really understand the nuts and bolts of how it works and if there is any risk involved.

Once I do have it in sterling, I was thinking of buying some premium bonds with it rather than putting it into an account paying 1%. I don't really want to tie it up for a year.

Unless anyone has a better suggestion. I'm really open to ideas.

I'm a no or low-risk saver.

Thanks

bendix

Where is the money located? Is it with HSBC in New Zealand?

If so, I can't understand why you would be getting no interest on it. I have over NZ$750,000 in term deposits with various New Zealand banks, spread across different maturity terms. Over half of it is earning 8.55% interest. Others are earning 4.7%% and 5%, with shorter maturity terms of course. All of it is protected by the NZ bank asset protection scheme, and - even better - as a non-resident, it's not taxed. Only 2% of the interest earned is deducted at source as a levy.

The Kiwi dollar is currently very strong against the pound at around NZ2.45. Given that historical averages are around 2.8-3.2, I wouldn't worry about the odd swing here or there. If you need the money now, get it over now.

You will never get the xe.com rates. They are wholesale rates. Banks work on retail rates, and obviously there is a margin there. Don't sweat the small stuff.

As for the idea of buying premium bonds, are you sure? No interest paid at all, and the prize pool is at historic lows because it is linked to BofE rates and can only pay out so much in prizes each year.

If you MUST go this route, why not find a low-risk term deposit. You can easily earn 4% per annum which, on the amount you are discussing, will generate around £900 per annum. If you still want the chance to win a big sum, use £5 a week to buy a lotto ticket. You'll still be better off than premium bonds.

pimento

Hi Bendix,

It's in the UK in a HSBC International account that is a NZ$ account. I specifically queried the 0% interest and was told that I needed to have more than $500k on deposit before I earned any interest.

I would like to leave $10k there because we plan on visiting NZ in the next couple of years and I figured that we would lose money if we exchanged the money twice.

I did open an ING account recently because they were giving away £25. It pays 2.75% if you leave the money there for a year.

It's typical, all my life I've never had a penny in savings and now I do (courtesy of an inheritance) the interest rates are rubbish.

bendix

Forget the 0% interest rate. You have made a very good return on the currency exchange movements.

In Feb this year, for example, the £ was a 2.8 kiwi. Today it is at 2.45. That is nearly a 15% gain for you in just six months! It puts your tiddly 2.75% ING account into perspective, doesnt it?

pimento

It sure does when you put it like that.

If I do change it into UK£, should I put it into the ING account, or is there a better option?

Re: The Premium Bonds option, I'm feeling all rosy because I just (this month) had my first ever win of £25 after having the bonds since October 2008.

bendix

Personally, I wouldn't put it all in that account.

You're obviously risk averse, so you are not interested in stocks and share-based investments. But there are other ways to get a better return.

According to my calculations you will have around £23600. Stick £3600 into a cash isa. Plenty of options to earn over 3% there. Then there are numerous deals out there to earn 4% or more on deposit accounts or bonds.

Premium bonds are neither savings nor investments. They are where grannies put their money.

pimento

Thanks Bendix.

laffer

I have generally found the HSBC exchange rates on AUD/NZD to be quite poor. Xe.com operate a currency trade service which you can use although you will NEVER get the rates which are seen on the market movements site as these are wholesale rates.

It is great if you are bringing NZD over here at the moment. Sadly I am looking to go the other way and the collapse of the pound is a disaster.

bendix

Don't worry laffer. It will change again soon. The Kiwi is one of the most volatile of the 'leading currencies' and it never stays in one place long. If you miss the best time to convert, don't worry . another one will be along soon.

I lived there for years. It's such a small country and economy that the troughs are steep and severe, but short, and followed briefly by peaks that a huge, dizzy, high . . . and . . you guessed it . . . short too.

sabretoothtigger

Long term I think down under might be a better place for your money. They have one of the highest interest rates in the world I think, so really you could do better on that front, hsbc are having a laugh 500k minimum :laugh:

Short term the dollar might strengthen a few people speculate and that would be in line with a pullback in asset value gains we have seen this year.
Convert what you need seems a reasonable idea and sort out a proper account with interest for the rest


Bendix, do NZ have much commoditys. All I heard is of farming and dried milk export auctions
One of the few places in the world to have such diverse eco systems also I believe, great for tourism.
I used to know people from there and they said the weather often wasnt that far off Britain alot of the time

bendix

sabretoothtigger wrote: »

Bendix, do NZ have much commoditys. All I heard is of farming and dried milk export auctions
One of the few places in the world to have such diverse eco systems also I believe, great for tourism.
I used to know people from there and they said the weather often wasnt that far off Britain alot of the time

Not a huge amount. There are a few oil fields in Taranaki. I think they still mine gold in places, but not extensively. There is natural gas offshore too.

Wool, of course.