A Capital Investment Bond Experience

Old Jan 19th 2006, 10:25 pm
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Default A Capital Investment Bond Experience

Hi All,

I've just emptied my bank account of 100K in pursuit of the hallowed yellow envelope and just thought I'd share my experience of purchasing the currency in case it helps anyone in the future.

Basically, I have been following this forum and the mid-market rates on xe.com for what seems like forever, hoping for the halcyon days of 2.40/2.50/etc forever.

But I had to bite the bullet over the last week or so as my deadline approached so I signed up with HIFX. Trader #1 offered me 2.3116 (or thereabouts) and recommended a quick purchase due to market volatility around the pound and a possible BofE interest rate cut the following day. The mid-markets were in the 2.34s but I never expected to get that as that it is how they make their money, isn't it? Anyways, I decided to sleep on it, then procrastinated, too busy at work/play, etc for about a week, whilst keeping my eye on the mid-markets which bounced around the 2.34s but no major movement. Eventually decided it just had to be done and spoke to Trader #2 a day or two ago, ready to settle for the initial offer, hopefully 0.5 of a cent higher as mid-markets had just touched 2.35. So, gave my details, asked the rate and with no further interaction from me was offered 2.34 flat at which point I bit the proverbial hand off!

So, the moral of my story? Well I'm not dissing HIFX as their post-trade service has been superb and I think I got a good deal pre-trade. The moral is how and why - definitely luck rather than judgement on my behalf? Was Trader #1 a true barrow boy with both eyes purely on his margin and bonus, ready to take a rookie like myself for all he could? Or was Trader #2 an angel of the city or just lacking his early morning caffeine injection and keen to get any deal on the table to get the juices flowing? The mid-markets had moved less than 1 cent between my two quotes, probably closer to 0.5, yet the offers moved by the best part of 3 cents, saving me £600 in the process without even asking for it.

So, I guess my advice is, the markets move, we can't affect that, just try and get in when the going looks good. But whenever you do, don't take the first offer you get and push for as close to the mid-markets as you can get. My differential was definitely less than 1 cent at time of purchase, yet I had made call #2 prepared to accept a differential closer to 3 cents as I really knew no better as buying 40K+ worth of currency is not something most of us probably do too often in life.

Hope that helps and best of luck to you all.


Last edited by hunser; Jan 19th 2006 at 10:30 pm.
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