Savings question

Thomask

HI people

I'm faced with a dilemma.

I have about 4840 pounds which I am leaving in an account to earn interest on. I have 2 options:

1/ Leave it in the UK earning 6.10%AER.

2/ Send it to NZ (exchange rate is quite good at the moment or wait until it gets even better) and earn 8.15% in a 30 day deposit or 8.00% ON CALL!

I'm not very good at maths and am trying to work out whether it's actually more benefical to earn 6.10% but be earning it in GPD (with the intention to change it later and earn 2.7 times what I had) or earn 8.15% but be earning this in NZD. IF you're earning a strong currency, although the interest rate is less, does this work out better overall?

Aegis

Where are you likely to be spending the money, and are you wanting to take a risk that the NZD will devalue against the GBP and lower the UK value of your account?

Essentially this boils down to what you think the ForEx movements are going to be like over the next few years, and personally I wouldn't even know where to start on that one!

Steve_xx

Thomask wrote: »

HI people

I'm faced with a dilemma.

I have about 4840 pounds which I am leaving in an account to earn interest on. I have 2 options:

1/ Leave it in the UK earning 6.10%AER.

2/ Send it to NZ (exchange rate is quite good at the moment or wait until it gets even better) and earn 8.15% in a 30 day deposit or 8.00% ON CALL!

I'm not very good at maths and am trying to work out whether it's actually more benefical to earn 6.10% but be earning it in GPD (with the intention to change it later and earn 2.7 times what I had) or earn 8.15% but be earning this in NZD. IF you're earning a strong currency, although the interest rate is less, does this work out better overall?

Depends what the tax rate on savings in NZ is?

Why NZ? Are you going to live there for good?

Have you thought about an ISA? You wouldn't have to pay UK tax on that and you could earn 6.30% tax free.

If you leave it in the 6.10% account I assume you will have to pay 20% tax on the interest?

Thomask

Thanks for the replies. I'm not sure where most of the money will be spent. Let's assume 1 pound continues to buy 2.7NZD for the sake of this equation.

Tax rate is similar to here, arond 20%. NZ because I used to live there. I may or may not return to spend this money - I'm more thinking about which option would increase it the most (NZD but at over 8% earnings or GPD around 6% earnings!). I would decide where to spend this money later.

Is such an equation possible, assuming all criteria I mention?

Thomask

Latest NZ interest rate I would be considering is now 8.60% Gross for 9 months, interest paid on maturity.