Jump to content

How do expats protect against exchange rates


Recommended Posts

Planning on retiring in Thailand in two years. I have just about started to understand how to invest in retirement in the uk. I will probably use stocks/bonds 50-50 and planned on investing in vanguard platform. 

 

The obvious problem is the strength of the bhatt. If it go’s back to 37 to the £ then that is very bad. 

 

An obvious solution is to move all my money to thailand and invest in a similar portfolio in bhatt. 

 

Is this feasible? I get the impression expats keep their money invested in their home countries and transfer when needed? 

 

 

 

Link to comment
Share on other sites

I suspect I will do the same. 

 

I am assuming at the time you thought the risk of transferring everything was too high? Political changes, relationship risks (not being able to get back if it went  bad).....I certainly don’t feel confident transferring everything as I don’t feel I understand thailand the same way I think I understand the uk.

  • Like 1
Link to comment
Share on other sites

You have to make the decision as to whether you want to retire or become a currency trader.  Look at the £/baht rate history and make a plan A for one end of the spectrum and plan B for the opposite end.

 

And stick to the old adage of never having all your eggs in one basket.  There are multiple opportunities that have opened up since the Thai baht hit 37 and those opportunities will cease if it ever gets back to 70.

  • Thanks 1
Link to comment
Share on other sites

19 hours ago, neytil said:

The big boys do it with currency swap forward contracts.  For small fries, many funds and ETFs also hedge currency risk using forward contracts.

And the majority of them lose money.

  • Like 1
  • Confused 1
  • Thanks 1
Link to comment
Share on other sites

I used to hedge with a UK company called World First the biggest currency traders in the world. I have small assets in the UK, but a lot in the US and when I retired a lot in Japan. For the few years before retiring I would buy other currencies eg Swiss franc, Canadian Loonie, Aussie dollar on the theory that not all currencies go down together. I was not trying to make money understand, but just to hedge and preserve purchasing power. It worked very well for a period until my account was moved from Britain to Australia where World First is not a deposit taking institution. I had to get rid of the money with in a month. Basically I changed it all into baht (which was the currency I was spending in). At the time the US dollar was 33 to the baht and is now 30. Other currencies were similar.....I built my house with Japanese yen that I earned at 120 to the $, it was about 80 to the dollar when I paid for the house. My advice is not the speculate but to try to conserve your purchasing power.

  • Like 1
  • Thanks 1
Link to comment
Share on other sites

22 hours ago, LeeUklondon said:

I suspect I will do the same. 

 

I am assuming at the time you thought the risk of transferring everything was too high? Political changes, relationship risks (not being able to get back if it went  bad).....I certainly don’t feel confident transferring everything as I don’t feel I understand thailand the same way I think I understand the uk.

I didn't transfer nearly everything until September 2005 when the pound went to 75 - £ , I thought at the time that can never last it didn't and has gone down everything since. 

When my bonds tied up in Nationwide finished I got the rest of my money over it was about 60 - £ then from memory.

By then it was about 5 years to go before my UK pension. 

My private pensions took a hit 2008 but by 2012 when they were due they recovered a bit and weren't as bad as I thought they gonna be. 

  • Like 1
  • Thanks 1
Link to comment
Share on other sites

23 hours ago, LeeUklondon said:

Planning on retiring in Thailand in two years. I have just about started to understand how to invest in retirement in the uk. I will probably use stocks/bonds 50-50 and planned on investing in vanguard platform. 

 

The obvious problem is the strength of the bhatt. If it go’s back to 37 to the £ then that is very bad. 

 

An obvious solution is to move all my money to thailand and invest in a similar portfolio in bhatt. 

 

Is this feasible? I get the impression expats keep their money invested in their home countries and transfer when needed? 

 

 

 

I keep money in the USA.  Bring it here as need to a US dollar account at Bangkok Bank and exchange when the rate is favorable (not anytime recent).  I invest with Fidelity.  Excellent support, easy to use website and also Active Trader Pro that can show minute to minute action with options to buy/sell.  Good to watch if you are waiting for a particular price to buy.  Outstanding historical information and research.  The Thai SET as  have looked into it typically displays 30 days of history and little else in the way of research. 

  • Thanks 1
Link to comment
Share on other sites

Leave the bulk of your capital invested in the UK. Make sure you have adequate liquidity to withdraw pounds and transfer when you need to. There should be tax-favourable retirement investment funds available.

 

Keep enough Baht in Thailand to live for up to a year if exchange rates take a dip (e.g. you can wait maybe 12 months before you have to transfer more funds across and, hopefully, the exchange rate may recover). It also serves the same purpose if the stock market dips and you want to avoid withdrawing any money for a year.

 

I used to use my 800,000 Baht kept in a Term Deposit for my 12 month retirement extension for this purpose. If the exchange rate (and market gains) were reasonable/stable, I would transfer a sum each month. But if the exchange rate dipped, I would draw on the 800,000 Baht until it improved. Unfortunately, they changed the rules a year or two back so it is no longer so easy.

 

I did change to a marriage extension (400,000 Baht) where there is more flexibility and figure I could draw it down (10 months at 40,000 Baht per month) if I had to. I started doing this early last year, when the Aussie dollar dipped, and the stock market also crashed due to Covid.

 

Fortunately both the Aussie and the stock market have recovered so I will shortly withdraw and transfer enough to replenish my 400,000 Baht (needs to sit for 2 months before renewing my extension).

 

 

  • Like 1
  • Thanks 1
Link to comment
Share on other sites

1 hour ago, davemos said:

Gold ?

Actually, yes. Instead of converting a chunk of money to the baht and parking or investing it, metals provide a third option. Metals have historically been a hedge against unstable fiat currencies and still are. 

 

Thailand represents a particularly attractive opportunity in that respect. 

Jewelry is easy to purchase/sell, fungible, highly likely to be what it claims to be, easy to store and transport, and requires no identification to buy or sell. That eliminates the tax issues that most western countries impose on profitable sales and minimizes interactions with third parties (banks and authorities) almost completely. 

The key to financial security is asset diversity. 

  • Thanks 1
Link to comment
Share on other sites

2 hours ago, Kwasaki said:

I didn't transfer nearly everything until September 2005 when the pound went to 75 - £ , I thought at the time that can never last it didn't and has gone down everything since. 

When my bonds tied up in Nationwide finished I got the rest of my money over it was about 60 - £ then from memory.

By then it was about 5 years to go before my UK pension. 

My private pensions took a hit 2008 but by 2012 when they were due they recovered a bit and weren't as bad as I thought they gonna be. 

I guess that sums up the problem pretty well. One of my uk pensions has gone up 250% since 2000, or about 10% a year. So I am pretty comfortable with uk trackers. Looks like the bhatt is up 50% over a similar time period. I think that means I have still earned a good return even after the bhatt rise. This is obviously past performance and who knows what will happen in future. 

 

I will I’ll have to get the calculator out

Link to comment
Share on other sites

20 hours ago, LeeUklondon said:

Many thanks. Do you now if there are good etf products in Thailand? Similar to vanguard in uk/us? 

 

I would be be interested in converting at least some of my money to bhatt and buying etfs in bhatt in Thailand, just for peace of mind on exchange rates. 

Check out Aberdeen Asset Management, a UK company with an office in Bangkok and a regional HQ in Singapore. 

Cheers, Din

  • Thanks 1
Link to comment
Share on other sites

I use crypto as a hedge. I was alarmed by the dollar's drop, relative to THB, at the start of 2019 and moved everything into Bitcoin.

Although I expect the THB to strengthen greatly against the USD, GBP and, in particular, the EUR, I expect it, along with all fiat currencies, even the "strong" ones, to devalue massively relative to hard assets. So, I'm saying our dollars will buy us fewer baht, but our baht will also buy us fewer things.

I pay very little attention to the daily ups and downs of crypto. My simple goal is that, by the time I retire in a few years, the money I had saved to buy a house, a nice car, and a few rental income condos in Thailand will still be able to buy those things, regardless of how much the THB prices of those things may have inflated. So far, it is working out pretty well, even if, as I expect, prices double in Thailand within the next two or three years.

I expect metals will do very well this year, in particular silver, but crypto is where the real action will be this year.


 

Edited by Poet
  • Like 1
  • Thanks 1
Link to comment
Share on other sites

As many have said, you should plan for what you consider to be the worst possible expected rate over the time you expect to live here and be sure it works for you. The only step I took over the past 10 years (I was actually here for a month in 2003 when I was getting 45 THB to the USD - heaven), was when the rate hit 28.x THB to USD, I stopped moving money over, and spent the money I banked at a rate of 32 THB to USD. When the exchange hit 36 THB to the USD, I moved about 6 months worth of expenses in cash over here to lock in that nice rate. I put half in gold and the rest in the bank. Thus, if the rate were to drop to 28 again, I could just use what I transferred at 36 waiting for the rate to improve. Rates will go up and down, and averaging it out a little over time helps take the bite out of it. Aside from that, pray to the exchange rate gods.

  • Thanks 1
Link to comment
Share on other sites

4 hours ago, scubascuba3 said:

She'll want gold, motorbike, pickup, house

 

38 minutes ago, timendres said:

As many have said, you should plan for what you consider to be the worst possible expected rate over the time you expect to live here and be sure it works for you. The only step I took over the past 10 years (I was actually here for a month in 2003 when I was getting 45 THB to the USD - heaven), was when the rate hit 28.x THB to USD, I stopped moving money over, and spent the money I banked at a rate of 32 THB to USD. When the exchange hit 36 THB to the USD, I moved about 6 months worth of expenses in cash over here to lock in that nice rate. I put half in gold and the rest in the bank. Thus, if the rate were to drop to 28 again, I could just use what I transferred at 36 waiting for the rate to improve. Rates will go up and down, and averaging it out a little over time helps take the bite out of it. Aside from that, pray to the exchange rate gods.

One of the recommended approaches to retirement investing that makes sense to me is to have your money in “ boxes”. 2 years of expenses in cash. Next 4 years in less risky assets( 50% shares, 50% bonds). Anything you don’t need in the next 6 years, put 100% shares.  

 

The theory being the markets usually recover in 2 years. So your cash means you don’t need to sell assets at a loss. 

 

Sounds similar to your approach. Maybe just need to treAt exchange rate variation like stock market variation? 

  • Like 2
Link to comment
Share on other sites

On 1/25/2021 at 12:04 PM, LeeUklondon said:

Planning on retiring in Thailand in two years. I have just about started to understand how to invest in retirement in the uk. I will probably use stocks/bonds 50-50 and planned on investing in vanguard platform. 

 

The obvious problem is the strength of the bhatt. If it go’s back to 37 to the £ then that is very bad. 

 

An obvious solution is to move all my money to thailand and invest in a similar portfolio in bhatt. 

 

Is this feasible? I get the impression expats keep their money invested in their home countries and transfer when needed? 

 

 

 

I do keep the majority of my money out of Thailand not because of the exchange rate though. When I need money in Thailand  I transfer it in from my bank, again not in my country of birth.

  • Thanks 1
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.




×
×
  • Create New...