should i buy dollars now or put my money into a savings account

baldyjunior

I have been saving all my loose change for the last 2 years in a jar which is going to pay for a holiday of a lifetime to America for my little daughter who is now 3. I intend to go when she is about 7 so i stil have 4 years worth of saving to do.
My dilema is this, with the pound dollar rate being so good at the moment, do i cash in the £1000 now and buy dollars as i will need spending money, or do i put the money into some sort of investment plan or building society for the next 4 years in the hope that it may give me just as much back? Any advice will be greatly appreciated.
For anyone that has read this, i thank you and for anyone that does leave any advice or thoughts about this then on behalf of my daughter and myself we thank you.
Many thanks Marc

Woodyrocks

This is a tricky one - yes, sterling is really strong right now, but as you intend to keep saving up for another 4 years, I would be more inclined to open an ISA or better still a regular savers in your daughter's name such as the halifax 10%. You can even open two or more if you want. My reasoning is that sterling will always be stronger than the dollar and I would rather have hard cash in sterling any day and tax free is never a bad thing.

Biggles

To be honest, it would be crazy to embark on a four-year speculation on the future value of the dollar, especially as it would earn no interest.

The best plan would be:-
1 Open an ISA or other savings account.
2 Open a Nationwide account.

Before going to the States, move your money into the Nationwide account and draw your dollars from it on their cashcard or debit card. That alone will save you hundred of pounds on foreign exchange charges.

Browntrout_2

When I first read the title of this I must admit I thought you'd be asking about next summer, not 4 years hence.

However there are dollar demoninated savings accounts that pay interest.

Nationwide - minimum $5K
http://www.nationwideinternational.com/accounts/accounts_dollar_tracker.htm

Citibank - gives ATM access in USA - you can be a true citizen of the world!
minimum £2K or charges will be levied
http://www.citibank.co.uk/personal/banking/international/eurocurrent.htm

Or use crowncurrencyexchange.com or travelex online to buy as and when

Traditionally currencies go through cycles, and just when everyone thinks one way the market wrong foots you. So given that the $ is weak and everyone concurrs, it could snap back to $1.80 in a month.

If the current trend were to continue through 2010 you're looking at 2.50 + or - 10%

purch

My reasoning is that sterling will always be stronger than the dollar

It's only very recently that this has been the case....

Anytime GBP is trading below 1.80 ish it is weaker than the Dollar in PPP terms

The Fed clearly in my view wants to devalue their currency and I think you will find better levels in the next year or so to purchase your Dollars.

Whether or not this policy will continue for another 4 years is open to doubt, but anytime GBP/USD trades above 2.20 the Dollar is too weak in PPP terms and that might be your signal to buy the holiday cash