20 Mar | Moving Money Overseas
In the modern world, more people than ever before are sending money to and from countries, and for a variety of different reasons. The problem is, many still don’t really know how the whole process works and, when it comes to large amounts of money, that lack of appreciation and understanding can come at a cost. It pays – literally – to be aware of the circumstances in which you may need to transfer money internationally. There are steps you can take to protect your money.
Regular visitors to Investor Trader will already be fully aware of the foreign exchange, or Forex market – it’s the largest financial market in the world, now calculated to trade more than a staggering $4trn every single day. Around a third of this is traded in London alone. Forex doesn’t sleep: the market is open 24 hours a day from 20.15 GMT on Sunday through to 22.00 GMT on a Friday; thousands of factors can affect each individual currency, from elections in one country to flooding in another. As we know, rates continually fluctuate. It’s a fast-moving, adrenaline-soaked environment.
How, then, does this relate to the individual? You’d be surprised. It may feel as if the life of a trader is far removed from our own, but what happens in the world’s financial markets impacts on us all, at some point. Trying to understand the currency markets may seem a daunting prospect but it isn’t that tricky – by understanding the exchange rates, you could save money when making an international currency transfer. This free information guide, prepared by World First Foreign Exchange, is a useful introduction.
There are a range of different scenarios which may require someone to transfer a large amount of money internationally – it’s not just about taking spending along on holiday and changing it at the airport, or the bank, before hopping on a plane.
These scenarios include buying and selling property overseas, or managing overseas property investments; paying international school fees – say you’re the parent of a child who lands a place at a college overseas and you’re required to pay regular tuition fees; working abroad, and required to send your salary back to your home bank account, so it can meet your monthly financial obligations; pension transfers; emigrating or moving back home; making one-off purchases – whilst on holiday, you spot the sports car of your dreams!
If you’re not on top of it, any of these situations can end up costing quite a bit extra in lost funds from poor exchange rates. The higher the amount of money, the more there is to lose; imagine buying a house overseas. With a foreign exchange company, you can set regular payments, and the payment will be made automatically at the best exchange rate every day. Or, you can even set an exchange rate in advance – this is known as a forward contract – and pay the same amount every month. If the rate drops, you won’t lose money as you’ve set the amount in place. It makes budgeting a whole lot easier.