Helen1964

Apologies if this is somewhat similar to an earlier thread entitled "Currency" but I would be very interested to know what you would do in my situation.

We are in our early 50s and living in France. We hope to continue living and working here until the age of 60 or 61, and then move back permanently to the UK. Not sure where exactly yet, but Kent seems to fit the bill (drier and more sunny than other parts of the country, and relatively easy to access from where we live now so less hassle when it comes to house-hunting).
We have a fair amount of savings in euros and no property in the UK. We would like to buy a little house in Kent (maximum budget 300,000 pounds).
As you are no doubt aware, the euro/sterling exchange rate is currently pretty atrocious. So my question is, would you wait until the exchange rate improves before buying (and so run the risk of further house price increases in the UK. Bear in mind too that our euro savings are hardly earning any interest) or just bite the bullet, change the money and buy now? Remember we're not due to retire for another 10 years so there is no real urgency.
Many thanks in advance for your sharing your thoughts.

Moses2013

It's not a great time to buy in Kent and the exchange rate is also pretty bad, so I would just wait. Of course you could buy and rent out, but just depends. A lot can change in 10 years, so in my opinion it would be a waste of money. You'd be better off buying a buy to let in the euro zone, in an area that can easily be sold again, or just keep saving and wait until the exchange rate is better.

not2old

do you have to buy in the UK now or can it wait another 5-10 years?


you've basically answered your own question.

Almost everywhere the return or interest on savings is the same - almost zero!

For all you know the euro may collapse, even get better, then again it may drop further. As for the UK housing market, its anyones call unless you are living there now, I wouldn't do anything

If it was me in your shoes considering a move in 5-10 years, then I would sit tight & wait till a year before moving before doing anything. Relax, enjoy your life & don't stress over something that you have no control of.

Helen1964

"Relax, enjoy your life & don't stress over something that you have no control of."

Excellent advice. I will take it!

Mike Gas

As above even the so said currency experts have no idea on exchange rates over a year let alone your time scale

Pulaski

And they never have.

Helen1964

I'm probably watching too much UK TV.
There seems to be a lot of talk about a shortage of housing stock, which makes me think I could well find myself priced out of the UK market in a few years if I don't buy something now.
That said, I don't think I can bring myself to change my hard-earned euros into sterling at the current rate.
Worst-case scenario, we stay in France. Which is, admittedly, not the worst fate.

Michael

Historical trends usually had the Euro in relation to the GDP valued similarly or the Euro stronger. Looking at the following chart, the Euro is currently about 10% undervalued in relation to the USD and the GDP is about 5% overvalued. If historical trends hold true for the future, they should equalize or the Euro becomes stronger than the GDP.



Purchasing Power Parity

With the Eurozone as the UK's main trading partner, that wide spread should eventually put pressure on the GDP to drop or the Euro to rise. Without equalizing, the UK is at a disadvantage competing with the Eurozone.

not2old

From my 'old codger' armchair, from which I know absolutely zip about anything, because I watch the world go bye....

Paranoia is the worse thing, especially when what's in the media or this that and the other analysts, down to common folk that tell you things based on historical factors or that the world will come to an end, so buy gold, that the oil dump blaming the Russians - when oil is going back up, the FX is moving around, the middle east will blow up in everyone's face & there will be an Armageddon. You just love how the Americans live for their conspiracy theory & the banks & fat corporations manipulates the global economy.

just saying all of that .....

In the meanwhile, in middle UK & France life goes on, folks living life to the fullest, doing what they do best, or what they need to do at the time its right for them

Likely all the worry will make folks sick to the point they'll have heart failure & any money they have will out live them

My suggestion is as first posted to sit tight till about 12 months before you're ready to move & hopefully you will be healthy enough to enjoy your sunset years

not2old

if you were to buy a single currency, converting 100,000 US dollars of your own money - which would you buy & why?

Pulaski

How do you overvalue GDP? Wasn't it overvaluing GDP that got Greece and Italy into the mess they're in today?

Michael

That's a real tough one but if I had to, I'd probably go with the Euro. The US economy was chugging along nicely and seemed to be picking up steam when the USD was undervalued but now that Euro is undervalued, that is putting a hurt on US exports since Europe is the main competitor for US exports (airplanes, tech, machinery, etc.). If the US economy slows too much, the USD will likely sink. But if it sinks, that puts a hurt on European exports. It's a repetitive loop since when the US was doing things to grow the economy, Europe was in austerity and now that Europe is trying to grow the economy, the US is considering monetary tightening. Only if internal growth remains strong in the US will the repetitive loop be broken.

If the US and Europe had developed similar strategies from the beginning, we may now be looking in the rear view mirror as it being a bad dream but now, everyone is pulling in different directions. If both had a growth policy from the beginning to kick start internal consumption, both could have prospered and there wouldn't have been a need to go in different directions.

Not quite the same. Greece and Italy use the Euro and because the German economy was doing well and Germany dictates monetary policy, that created a strong Euro so Greece and Italian exports outside the Eurozone were hurt. In the Eurozone, they have structural problems to compete.

For the UK, an overvalued GBP could possibly stall the economy but that should cause the GBP to drop in value and allow the economy to start up again.

not2old

in the not to distant futue, should the EU collapse, or the UK exit the EU - would you still today buy euro's?

in the not to distant futue, should the EU NOT collapse, or the UK STAYS the EU - would you still today buy euro's?

under what circumstances would you not buy euro's?

Michael

That is why it is hard to determine if the Euro would be a good buy. I have serious doubts that the EU could possibly collapse in the near future but may be modified which shouldn't be a big deal. A EU collapse would be a total disaster and then I wouldn't buy the Euro since without an EU, it's almost impossible to have a Euro. If there isn't a free trade zone and common markets, a common currency doesn't make much sense.

If the UK exited the EU and/or if Greece leaves the Euro, that may create a short term lack of confidence in the Euro but over the longer term, it shouldn't have a significant impact on the Euro unless others follow. If it appears that others will follow, then I wouldn't buy the Euro.

If the Eurozone split into two currencies, one for the stronger economies and the other for the weaker economies, that actually might help since the stronger economics can have a strong currency and the weaker economies a weak currency allowing the weaker economics to grow without the difficult political decisions of restructuring.

not2old

too many if's Michael

On the basis the EU zone remains as it is today with a few counties having the usual financial troubles with the stronger countries supporting them as always - what other currency other than the euro would you pick & why?

On this topic, I have thought long & hard in the past [concerned with the what-if] & in my 50 years in Canada having seen the up down market swings, the high & low interest rates, the housing market, the commodities & precious metals swings - I have come to the conclusion that outside of the Canadian dollar, the GBP & the swiss franc, I would choose no other currency.

The qualifier is

a) where I am living

b) where do the royal families of the world keep their money (key)