Need guidence - leaving the uk, exchange rate is bad, so want left money to work hard

Outovear

Hi MSE peoples.

I have a situation that perhaps you can help with.

I have decided to leave the UK (:T). But, the exchange rate is sooo bad (thanks to the well known financial crisis and the persistance of the gov't to devalue the pound :mad:).

So my options:

1 - take a hit on the exchange rate and put the money to use in another country.
2 - leave the money in the UK.



Option 1 - seems possible but the hit on the exchange rate will be quite reasonable.

Option 2 - I would need access to the funds such that if the exchange rate improved, I could get it transferred easily. I would also want to have maximum performance for the money (high interest rate, please).

As I would no longer be classified as a UK resident I don't know if I can have a cash ISA account - however I could open that before I left (is that ?)...

Seems a strange request for info, but I am sure there are hundreds of people in the same boat. If anyone has experience on this or a recommendation or an :idea: please let us know.

I think that it is reasonable to assume that the pound will be weak for another year at least ... but what if it is much longer ... :eek:.

Thanks in advance.

Outovear.

Baldur

Outovear wrote: »

As I would no longer be classified as a UK resident I don't know if I can have a cash ISA account - however I could open that before I left (is that ?)...

That's quite alright but you won't be able to add further contributions while you are a non-resident - http://www.hmrc.gov.uk/leaflets/isa-factsheet.pdf

Moving abroad

You can only subscribe to an ISA if you are resident and ordinarily resident in the UK for tax purposes.
If you cease to be a UK resident while you already have an ISA open, you will no longer be able to put money into it. However, you will still be able to keep your ISA open and you will still be entitled to the tax benefits on investments held in the ISA. If you then return to be UK resident and ordinarily resident, you can start putting money in again.

gozomark

Outovear wrote: »

I think that it is reasonable to assume that the pound will be weak for another year at least ... but what if it is much longer ... :eek:.
.

The pound has actually been strong this year - up 5-10% v US$ and Euro

why do you think it will be weak over the next year ?

Cook_County

You would doubtless need to report the ISA for tax purposes in your new location...

gozomark

Cook_County wrote: »

You would doubtless need to report the ISA for tax purposes in your new location...

That's not true - not all countries tax residents on their worldwide income. However, many do.

sabretoothtigger

How can we judge without knowing where you are going to.
I dont think the rate would be bad vs every currency but it sounds like you are going to australia or new zealand in which case they are very high performing currency and you'd take a hit right now.

You should convert at least half your money to whichever currency you will pay your bills in future because the rate can always get worse from here

Biggles

If you're leaving the country permanently, it would be crazy to leave the money where you couldn't easily get at it and would have to withdraw it at an unknown exchange rate, possibly taking some time to transfer and go through all kinds of money-laundering checks at both ends, at some time in the future.

The minor inconvenience of the 'exchange rate hit' (nothing like as bad as you might imagine, certainly not as bad as 'tourist rates') would be a small price to pay for having your money available in your own currency where you are going.

Outovear

You are spot on Sabretoothtigger. I am off to the sunny shores of Australia. :j

So, since we are currently re-writing history on the exchange rate, it is reasonable to consider waiting until the exchange rate improved. This would not be all that bad because I think I can survive without the money that is left here.

I will look at the ISA thing as that could be the easiest way to gain something (reasonable interest and access).

Sabretoothtigger - I have also already actioned the somewhat normal practice of transferring about a third to a half of the total in the event that it does get worse. So it is the remainder that I am considering what to do with.

A forex broker can transfer funds quickly and easily, so I am not concerned about getting my hands on it whilst I am already in Australia - but the account type needs to allow access. And as the money is already mine, there should not be any need to do excessive checks on the source of funds. It is easy to proove that it has existed for some time and was thus part of my own savings from prior to going to Australia.

Gozomark - I assume it could get worse because there are strong indications that there will be another £25Billion in quantitive easing in Nov. If that is the case, then the pound will be de-valued further. You cannot print money for nothing. And if we are now on paridy with the Euro and getting 1.6 odd US$ when we were getting up to 1.4Euro and US$2 for the £ respectively, how can we not say that the pound is weak? Surely, it is because the pound has weakened more than the comparison currency. And, add to that I am concerned with the Australian comparison - the Australian economy is strong, and getting stronger. They just raised interest rates and are looking to do it again before the end of the year. They never went into an offical 'recession', and they are almost on paridy with the US$ - closer than ever before.

I like the discussion though people, so please keep em coming.

Thanks.

nomoneytoday

A crystal ball is probably the best bet
An ISA will pay 4% tops, which will easily be wiped out or increased by fx movements. There are no guarantees either way.

Good Luck in your travels

gozomark

The pound was at 1.03 at the start of the year, and 1.40 odd v the $ ie its up 5-10% [actually 7-15%) against its two main trading partners. Its also up over 10% v Renminbi and the Yen. I didn't say the pound was strong compared to where it was a few years ago, I said it was strong this year.
"we are now on paridy with the Euro " - we are 10% above parity

"because there are strong indications" - what moves markets is the unexpected not the expected - if £25bn is expected its irrelevant. How much QE has there been so far this year - a lot more than £25bn, and yet the £ is up, not down

"If that is the case, then the pound will be de-valued further." - will is a dangerous word - maybe it will, maybe it wont
"You cannot print money for nothing" you can when the velocity of money is dropping, as it is now

As for the £/A$ this year, TBH, the A$ is almost irrelevant to the UK economy. Yes, the A$ is up v the £, but that's A$ strength, not £ weakness. Predicting the £/A$ rate is down to forecasting the A$ v $ and €, which I have no view on. However, I do expect £ strength to continue next year

Outovear

I agree. I need a cystal ball. Does anyone know where I can get one???

The US$:£ was at ~2:1 only last summer I recall. At the same time, the Euro was at approx ~1.3:1. And that was as the full impact of the economy slump hit GB. So compared to just prior to the full impact of the economic wave hitting GB to now, the sterling has slid more than the comparison currencies.

And, only this month, the £ slid heavily against all 16 actively traded currencies. This was after the National Stats people published data showing that GDP had dropped in the third quarter. There were wide spread predictions of 0.2% increase, but instead, it was revealed there was a 0.4% drop.

Now GB and other countries predict that GB will be last major economy to exit the recession. Hence, there is a good chance for further QE and that would most likely curtail sterling strength.

The last QE installment was £50billion in August. It was expected and yet once announced the pound slid, and was on the backfoot for over a month.

A month ago, the £ plunged from negative news from BofE Mervyn King and he openly admitted that the sterling weakness was helpful to rebalance the UK economy. It seems that the BofE approves of the sterling slide. So it could be expected that actions seen at the last QE installment will be repeated if the next goes ahead. And for those that are not aware, the current QE is at £175billion.

The above is a little off track though as it is all speculation and hence the predicament I am in. It is for my thoughts above that make me believe that the trend is down for a little while, but should things pick up later next year, I could be better off with an improved exchange rate. The only problem is making the money work hard enough until that time. Bearing in mind that a hit on the exchange rate now would mean that the funds are released to work at higher interest rates in Australia.