Michael

The Swiss Franc has been very strong for a very long time held up by it's bank secrecy laws causing capital to flow into the country. A few minor holes have been punched into the bank secrecy laws but nothing serious. If countries such as the UK which has the greatest amount of money in Swiss banks get serious about what politicians say they want to do, the money flows out of Switzerland. Many countries are hurting for tax revenue and if they go after tax evaders, Switzerland may be one of the causalities.

For a couple of years, the Swiss central bank held it's currency constant to the Euro and then made a surprise release burning a lot of speculators and costing the Swiss central bank billions of francs. Currently the Swiss Franc is about 60% overvalued against the Euro. Can it continue to maintain that exchange rate and export anything other than their bank secrecy laws.

As far a Canadian and Australian currencies, both are very based on natural resources and I'm not a betting man on natural resources.

If the UK leaves the EU, that could possibly have a significant impact on the GBP. Without free trade, automobile assembly and other plants may possibly move to the EU.

So there are risks in all of the currencies.

Pistolpete2

I'll throw in some 'stuff' here because I'm one of those ' I want my ducks in a row' type of people and I've already been through the process of buying well ahead of time and I'm currently looking at relative currencies because I'm looking to buy in the UK but occupy one year hence.

I think it would be a mistake to look at current euro/sterling exchange rates as there are abnormal influences at play.

The Euro was negatively impacted by the embarkation on a Quantitative Easing (QE) programme for ultimately upwards of 1.2 trillion euros. This had many expecting that the euro would reach parity with the US dollar by this Christmas. HOWEVER, the QE programme and loose money and green shoots had the eurozone pick up in such quick time that in no time flat many were looking to its end ("taper").

Thus in spite of GREECE, the euro is actually showing remarkable strength but GREECE is causing the pound to rise as a safe haven. There are admittedly better (in this case higher) inflation, employment, trade and GDP numbers in the UK which has helped it against all currencies this week and particularly the dollar.

When/IF Greece gets settled (for now) in some fashion, one might expect the Euro/sterling exchange rate to move smartly in the euro's favour.

One thing to remember is that the eurozone overall achieves a large trade surplus while the UK forever runs a large overall trade and invisibles deficit as well as a whopping budget deficit. Of course Greece could lead to other eurozone crises which would further negate this advantage.

I moved to the Caribbean in 2006 and had already bought there some three years previous. As it turned out, I would far rather have rented as it would have provided far more flexibility in terms of actual living there over the eight years we were there. All of this quite aside from any financial considerations which would have definitely favoured renting.

Prior to moving to the UK last year I had decided that I would rather not live in Kent, in what I owned there, so liquidated to provide the cash for the final choice when this came, but put the funds in US dollars.

Kent is a lovely county but has huge variations in terms of places to live both on plus and minus sides - the Weald can be lovely but the Medway towns and Thanet not so lovely.

I had decided that (London) commutable properties, in my part of Kent, were pretty much maxxed out there last summer as London property seekers had moved into other commuter areas seeking value. I has also decided that sterling couldn't go up much more because there was so much resistance if only in terms of exports. Personally, I think that pressure on exports is going to be another issue for Sterling now. The EU In/Out vote issue will start to play on Sterling later this year, along with other politics.

I think that indeed UK property (as with ALL properties and most assets) is now for the most part completely maxxed out due to cheap money and few places where you can get investment yield, leaving precious little room for gain for those entering the market now IF they worry about the investment side of owning property.

Down here in Dorset, there are a multitude of properties that show a very wonky track record of pricing over the last few years (as per rightmove property history) often with declines from where they were eight years ago. This seems to suggest there is no real sense of urgency in getting onto the property ladder in this area.

That said, IF one could find a really attractive property in an up and coming area which one knows (through trial and error?) is going to be exactly what one wants then fine go ahead and buy. The problem with doing this well ahead of time just on a property consideration basis, let alone considering currencies, is that there are loads of other things to consider.

One now has UK Capital Gains Tax even when non-resident. Will the tenants look after your 'baby'? The baby has to be generally maintained. You have French tax to consider as well as UK tax.

Down here in Weymouth, there is an extremely buoyant summer vacation market for holiday let properties.

There is also an extremely professionally run letting agency which, along with a huge portfolio of property throughout Dorset, Devon and Cornwall, provides excellent guidance and support for those entering the market as landlords, including marketing and tax considerations which are actually very favourable for holiday lettings that meet the tax concession requirements. The agency also has an extensive pool of varied maintenance crews to keep the properties in top shape.

Some areas of Kent are also admirable vacation centres and it just MIGHT be that your property choice fits with this. If so, then your carefully constructed holiday let business has multiple advantages which would make it an admirable investment choice no matter what.

Again, down here in Dorset, it seems that a very significant portion of property investors (and basically that is what you would be for the intervening ten years) see opportunities ONLY in the holiday let area, due to the multiple attractions it offers if done right.

I had thought that this was a thing to do myself - splitting our time here (in the let off-season) and somewhere else - but upon further reflection I've decided that we are, at least for now, better off settling once and for all in one desirable location that ticks all of the boxes.

As for other exchange rates? They've got me down in the dumps right now.

not2old

This

as well as the following




My guess is Pete chose US dollars because he & his family want the flexibility to rock back & forth between the UK & the Caribbean?

The OP it seems may be in a bit of a quandary deciding retirement in the UK or France and maybe likely thinks [is my guess] that it would be the UK [take it or leave it] so it all comes down to the property market of what they can buy - or maybe an emotional attachment [just a guess].

As for buying now or when you retire, I gave you that suggestion up thread.

OP, my suggestion is take some pointers from Pete when the time comes & if you are still stuck on France or possibly spend time rocking between the UK & Europe to consider liquidating to cash & to do rental for a few years prior to final settlement.

One thing I would suggest (and this is me) is to not own property in two different countries for the reasons of running cost, maintenance, what-if downturn & liquidating, and lastly the FX.

Something along Pete's line of thought, on any move back to the UK or any country, one thing the missus & I have looked at as a retired expats with no kids or responsibility for anyone other than the two of us is to rent for a minimum of 6-12 months. To consider buying an inexpensive sheltered housing apartment which we could get for under 60k GBP.

Use that as a base to continue to travel to one of or many countries from Europe (renting) or back to North America, even OZ/NZ again always renting. Health dependent, making us nomads with an inexpensive base in the UK - should that be the home base that we'd want.

I have looked at the US, which as Canadian's we can buy cheap & spend a lot of time during each 12 month period. There is always the health consideration & insurance costs to factor in.

After the money side, its down to lifestyle choices, safety, heath & quality healthcare, culture & language of course.

Pistolpete2

Actually I already had some savings in USD from my Bermuda days and thought that USD was the best way to go growth-wise and currency-wise.

If there were to be rocking it would be more likely within the Eurozone and UK, but with just smatterings of the Caribbean, possibly.

Today I'm not sure anywhere has real growth potential from here so I think that I will be happier to buy UK property that I intend to live in rather than have to earn the money to pay the rent. Trying to invest successfully in today's market has me weary and stressed and that's before the crash.

That said, there are some solid UK investments - as always not without risk - that offer good returns and are tax-paid because they are UK company dividends, which is very nice at tax return time. These work IF one is of the (correct? ) view that growth is going to be a struggle from here on in and inflation is therefore unlikely to be a major issue. IMHO these are a reasonable alternative to UK real estate investment if one is not sure exactly where one ultimately wants to be here, and still needs something better than bank savings rates.

With the passage of time I have grown to like being here more for what it offers for me personally - because it is of course all so very subjective - and I think that I now know the boxes that need to be ticked so that I can go out and try to tick them.

I seem to recall we had a thread on here a long time ago about carefully choosing locations to settle by trial and error (Location Location Location?? or maybe some other), wherein we discussed trying all sorts of different urban and rural spots before taking the actual plunge and buying. That's what we have tried to do, exhausting though it can be.

not2old

Slightly off topic from the OP since its 'preservation of wealth & growth income'

One has to be savy investor & to never take the word of an investment advisor.... just saying

As one becomes older & wiser its best to stick with less risky investments, sometimes even a savings account paying 1% interest or an ISA, even something such as a guaranteed bond fund (where capital never loses its value) is generally safest as is gilts. Premium bonds another.

On dividends, well if they are pubic trading companies its down to earnings & will they continue to prosper & to pay dividends?

That goes with my earlier comment 'where I live' & that all the money that one has is used in that economy. Never offshore or foreign investments IMO, because most people want to be able to sleep at night without the worry of FX or if their investments will be gone when they wake up in the morning

Michael

One last thing. Very few people speculate directly on a currency over the long term since the currency movement is only one part of the investment. Although there can be fairly significant moves in major currencies over a relatively short period of time, putting the money in a bank paying near 0% interest rate over the longer term seldom produces a decent overall return. Therefore to get a decent overall return, the investor needs an overall plan such as purchasing securities or property to have a chance of getting a decent overall return over the long term.

For example, the USD and Swiss Franc have been strong over the past year but because of that strength, neither country's stock market has been particularly strong and the day the Swiss central bank announced that it would no longer peg the Swiss Franc to the Euro, the SSMI dropped 12% but Eurozone markets have been strong because of the weak currency and loose monetary policy. The opposite was true when the USD was weak producing one of the strongest stock markets during that period.

Unless someone is going to be a FX trader with high leverage trying to judge the direction of a currency over short periods of time, the investor normally has to have a multipart plan to get a decent overall return. In my case, I'm a securities investor so therefore I would also have to believe that securities held in that currency would also do well. Many think that investors that purchased Euros a year ago made a bad investment but that is not necessarily true since many of the Euro stock markets have been strong during that time offsetting the currency loss.

Mike Gas

Think you nee to look again US stock markets up nearly 10% year on year not a bad return in any ones books.
http://news.morningstar.com/index/indexReturn.html

not2old

from that link....

16.22% over the last 5 years, is that good?.... just asking

And you know stock market investing including the indexes can be a crap shoot with the mutfund managers feeding folks for their own benefit or try to get an advisor to pick the right equity or commodity stocks that will return you YR/YR & then get you out at the right time or the investor waiting till the market goes up

Like every book or report out there you read - its 'buy low sell high' ... just saying

Michael

You are right. I was thinking of more recent returns from about November 2014 when Draghi hinted that the Eurozone would be implementing QE. After that, several of the Eurozone markets (DAX, CAC, FTSEE MIB, etc.) shot up over 20% but have since corrected and lost some of that gain while the S&P500 remained nearly stagnant.

Mike Gas

depends on what your comparing it to savings rate then yes very good.
But you commented on a year in your original post, do you not think your comments were wrong?

Mike Gas

I have been heavily self invested in the stock market for twenty years plus, just checked my spread sheet for last five years my total return including dividends and trading costs was 39.015%.
I have recently adjusted my stop loss on stock holdings and the most I could lose is 5% of my total investment although I am more than 50% gold and cash at the moment.
I can be out of the market quickly try that with real estate.

Michael

16.22% return per year for a total market index doesn't occur that often. That number is the return per year.

S&P500 5 Year Chart

Many investment advisors claim the US market averages 12% per year including dividends but that's not correct. To get to 12%, you have to start when the market hit it's low during he Great Depression and stop when the market hit it's high in 2000. If instead, you started when the market hit it's high in 1929 and stopped when the market hit it's low in 2009, the return is about 5% per year. So the real annual return of the US market is likely about 8% but that also depends on when you get in and out. For example, if you would have invested when the market hit it's high in 2000 and got out during it's low in 2009, you would have lost money even with the dividend payments.

A 16.22% annual return compounded for 5 years would more than double your money but most of that gain was just recovering from the market crash of 2008.

The vast majority of equity mutual funds are a rip off since you are paying a lot of money for returns that are typically below the market. Although mutual funds advertise expense ratios (typically about 1% per year), 12-1b fees if applicable (typically 0.25%), front load fee if applicable (typically 5%), and redemption fees if applicable (variable), there are other hidden costs that typically add up to 3% or more per year.

So even if you buy a mutual fund that only has an expense ratio of 0.90% and no other fees, expect the total cost to be over 4% annually. If the market is growing at 8% annually and your mutual fund manager does as well as the market, your return will only be half of the market return.

The Real Cost Of Owning A Mutual Fund - Forbes

Therefore I wouldn't touch a mutual fund with a "10 foot pole". However ETFs (especially market funds such as SPY, IVV, or VOO) track the market at a very low expense ratio (less than 0.10% annually) with no hidden costs. Since the S&P500 pays about a 2% dividend, the expense ratio is taken from the dividend and therefore the ETF tracks at 1/10th the index.

Also many US discount brokers have a list of commission free ETFs. TD Ameritrade has a 100 commission free ETFs including IVV as well as many of the low expense ratio Vanguard ETFs. ETFs don't have hidden costs since they just track an index so there is very little that the fund manager does and they are traded and not redeemed.

TDE Ameritrade Commission-Free ETFs

A financial advisor that charges for his services knows nothing more than what you can access on the internet for free. They advise by a script and that script is based on risk tolerance. A financial advisor that doesn't charge for his services but invests for you are the worst. The rfecommend mutual funds that have a front load fee (that is his commission from the mutual fund company), annuities where he gets a commission from the company, or if you want equities, he'll charge a $50-$100 commission per trade instead of less than $10 that a discount broker charges.

Although mutual funds are typically very expensive, hedge funds are far more expensive. In fact George Soros recently stated that hedge funds can no longer beat the market because investors are afraid of high leverage hedge funds since investors got burned badly during the 2008 crash (high leverage is one of the few ways to beat the market since costs are so high). However rich people appear to be stupid when it comes to investing since the average hedge fund has underperformed the market every year since the 2008 crash but rich people still keep investing in hedge funds and hedge funds are normally taxed at a high rate since the gains are normally short term.

Michael

I was completely out of the market prior to the 2008 crash and got back in during the summer of 2010 playing the market fairly conservatively with mostly ETF market tracking indexes, blue chip stocks, and large bank and insurance preferred shares.

My tracking indexes and blue chips stocks over doubled including dividends and my preferred shares have averaged about 6.7% dividends annually (about 35% total in qualified dividends during 5 years). My preferred shares include Barclays, HBSC, JP Morgan, Wells Fargo, Bank of America, Met Life, Deutsche Bank, ING, and Aegon N.V.. My Met Life and Aegon N.V. preferred shares were called on me so I no longer own those so now I am 100% invested in large bank preferred shares for my fixed income part of my portfolio. My Wells Fargo preferred shares which can't be called are also up about 20%. My other preferred shares also have some capital gains. I've owned someBarclay's preferred shares for several years that pays over 8% dividend and I keep expecting the shares to be called but every quarter, they pay the dividend and don't call the shares. However occasionally I do get surprised that one of my lower yielding preferred shares (6.25%) does get called but that is not a big deal since it is trading near it's par value so I look for high yielding preferred shares that I pay slightly above par value and that has worked out well since my higher yielding shares haven't been called.

My best stock performer is Home Depot which I bought on 8/8/2011 on the dip for $29.35 and is currently up over 300% plus dividends at $112.43.

Home Depot 5 Year Chart

Mike Gas

]

Yea I own home depot as well good stock/company

Michael

Gold is not for me for the following reasons.

Gold has a tendency to go up in spurts and then remain flat for an extended period of time. For instance, gold hit a high of $850 in 1980 and then dropped to the $300-$400 range until early 2000s. Up until 5 years ago, central banks were selling gold as gold ETFs were buying gold but are now buying about 450 tons per year (over 1/3rd of the 1,100 tons per year needed by industry) to try to support the price of gold since the demand for gold ETFs have been dropping and the gold funds have been destroying creation units putting the gold back on the market. The largest gold ETF (GLD) has dumped over 500 tons back on the market over the past couple of year. Also hedge funds are shorting gold and several large hedge funds that are holding gold are selling.

Central Banks Are Boosting Their Gold Reserves - Bloomberg Business

Hedge Funds Are Shorting Gold at Highest Level Since 2006 - Bloomberg Business

Memo from Jim Rogers to Hedge Funds: Gold will Decline Even More – Hedge Fund Letters

Gold Bull Paulson Cuts SPDR Stake by Half in Bear Market - Bloomberg Business

George Soros sells gold as prices sink - Feb. 15, 2013

If central banks don't continue to buy a lot of gold, Russia may sell gold raise hard currency because of the sanctions as well as the Russian ruble is 65% undervalued (about a 50% drop from last year) tempting the Russian central bank to sell gold, and demand continues to drop for gold ETFs, the price will likely drop further. Since the Russian central bank was the largest buyer of gold last year (173 tons) and the ruble is now very weak, selling gold will nearly produce a 100% profit in Rubles over that one year.

USD/RUB 1 Year Chart

An over supply of just 1%-2% can cause a significant drop in the price of gold. A recent example is crude oil where the over supply was only about 1%-2% and caused price of oil to collapse but crude oil doesn't have central banks to buy excess supply. The world uses about 90 million barrels of crude per day and there was an estimated over supply of 1-2 million barrels per day.

The problem with gold being at $1,200 and central banks buying gold is that high cost gold producers keep mining gold so there isn't a natural supply/demand situation that would cause the high cost producers to close the mines to bring supply/demand into equilibrium. Finally with very low inflation around the world, that is not a good sign that gold will rise in the near term since it doesn't pay dividends and it costs money to store the gold.

The price of gold could rise but there are currently headwinds against it rising.