Pensions and Forex

bigadaj

agarnett wrote: »

Bizarre post? Maybe.

But don't be so silly as to say I can predict the exchange rate. I didn't say I could, but there was very little reason for the pound to be flying where it was last year, right? Sensibly it had to go down again. These things obey rules a little like Hookes Law I think

It's just difficult to see what force is being applied to keep things stretched!

So instead of just wondering wistfully if someone would apply even more force in the markets, and that the pound would go higher, perhaps I should have been more realistic and piled in as it inevitably pinged back down to more "normal" levels when the markets got tired of playing with it?

And I didn't say I had my whole pension invested in the UK, but since I paid the lions share of my pension contributions in the UK, you won't be surprised to learn that's where my pension arrangements are sitting, just like the arrangements of most who are reading this forum.

Like most of my age, I don't get any say in how half my pension provision is invested. It is a very complex (or bizarre if you like) sum, because that part isn't directly a pot of money I can steer.

Its cash equivalent transfer value is steered by others partly in inverse proportion to market trends in bond yields, and partly in jiggery-pokery dreamed up by the likes of Goldman Sachs, and it also depends a great deal now on whether the scheme is in the hands of trustworthy trustees and trustworthy actuaries. Pension Actuaries thesedays might be as questionably motivated as 2007 rating agencies in their published assessments!

And you reckon currency trading is a gamble

Of course, I could I gamble big time and find someone who is brave enough to agree to put their IFA qualifications behind a suitable cash equivalent transfer analysis, so that part of my pension arrangements could be released into a SIPP for example, and then follow your advice and spread it about a bit. In practice though, it will have to stay deferred in a DB scheme, where I am also gambling with the aforementioned unknowns, at least until I reach the scheme retirement date.

It would be a gamble for me to transfer out of others of my pensions too - plans which only an onside with profits expert might be able to advise upon. And there aren't too many of those around any more.

I might however gamble with my cash ISA savings ... let's face it, why not? The banks are having a laugh with the sort of rates they're offering on them, so we might as well gamble those on buying foreign currency or precious metals, if we fancy it, and maybe we could do that with tax free cash we might want to release from a SIPP too?

I haven't read that the OP or anyone else was planning to gamble their entire pension on currency trading. Who is to say whether a bit of currency trading is not right for anyone? You? On the strength of your assessment of the financial reasoning abilities of a single parent ... and your assessment of whether they are "struggling" ... struggling to see a way to control their own destiny perhaps?

Isn't that what you try to do for yourself by neutralising these obvious and manipulated currency fluctuations by spreading the risk 50:10:40 in US equities : UK equities: Rest of the World's stock markets ? Or could you invest via a SIPP or similar in other stuff too which tackles currency fluctuations more directly? Pray do tell, for that is what the OP was asking I think

Bizarre plus.

AnotherJoe

But don't be so silly as to say I can predict the exchange rate. I didn't say I could, but there was very little reason for the pound to be flying where it was last year, right? Sensibly it had to go down again. These things obey rules a little like Hookes Law I think


So you can then. You should be incredibly rich and flying in your own Lear Jet, not Ryanair.

And I didn't say I had my whole pension invested in the UK, but since I paid the lions share of my pension contributions in the UK, you won't be surprised to learn that's where my pension arrangements are sitting, just like the arrangements of most who are reading this forum.

There should be no correlation between where your pension arrangements are sitting, and where they are invested. All my pension arrangements are in the UK. Maybe 15% of my investments are.

agarnett

Well I am not sure which way you two should be flying - you know where the pointy end is, I guess? For the past 100 years, flying machines have been wonderful, but not all that bizarre!

But more to the point, why do you think the OP is asking about ways to speculate on currency exchange rates?

Might it be because he thinks he has seen patterns he may be able to exploit that look a better bet than plain ol' vanilla wrapped stocks and shares you two would seem to be advocate?

Do either of you have a feel for the relationships and patterns between major currencies, and between them and gold and silver, and between all those and the oil price, for example?

Why is silver back at a high point versus gold after being at a low point versus gold just a few weeks ago and before that having sat at around a kind of mid point versus gold for months and then for a few weeks having been at a remarkable low versus gold before springing all the way back the other way?

Why when silver was sitting at that mid point was the pound sterling sitting pretty against the dollar and Euro, but now it isn't?

Do these observations even have anything to do with currency trading? Maybe not in your books.

However, perhaps like the OP, I think it sure would be interesting to be able to experiment with a few ideas linked to our observations of currency movements.

Afterall, unlike some stocks and shares, there is no risk of any currency, or precious metal or commodity like oil suddenly being worth nothing, now is there?

I think many people would like to try their hand at it but haven't yet seen an easy way to trade. Perhaps it is largely just a question of finding a way to neutralise the buy/sell costs?

So back to something like the original question - what's the easiest way to trade currencies?

grey_gym_sock

if you actually enjoy trading forex, or metals, or whatever, then feel free to do it but only with money you can afford to lose.

if you've actually made money at it, that is almost certainly luck, so get out while you're ahead. or keep going (but only with money that you can afford to lose), providing you would still enjoy it when you're losing money.

individual currencies can become worthless. so can individual shares. a broad collective investment in shares (e.g. via a global tracker, or a global investment trust) will not become worthless, and will probably be less volatile than forex or metals trading.

forex is a zero-sum game: 1 currency goes up, another goes down, but there's no basic upward trend achieved by swapped currencies, compared to keeping it in sterling on deposit. with shares, there is an upward trend, because companies make profits every year, which they either pay out in dividends, or retain within the company, which increases the value of the shares, other things being equal. of course, other things are not usually equal, so there is huge volatility in share prices.