mrken30

Aren't all economic disasters based on fear? That's why there was a run on Northern Rock. That's why many insurance companies have suspended trading on property funds. Isn't that why Lehmens eventually failed? So even if the truth is not exactly factual a lot of the markets run on emotion rather than logic. Same reason as stock of some companies are priced at a crazy level.

lansbury

I am in that corundum at the moment. Problem is we are in uncharted territory and there is no history to base deciding what is stable and what a reasonable (happy) exchange rate is in the current circumstances.

My UK pensions go into a UK bank and I can wait until July 2017 before I need to transfer any over. I am torn between waiting and transferring every other months pension over to hedge my bets.

Giantaxe

Exchange rates usually track purchasing power parity, but can overshoot into undervalued or overvalued territory for long periods of time. With the current exchange rate, the pound is vastly undervalued on a purchasing power parity basis. I certainly wouldn't move money into dollars unless I absolutely had to.

mrken30

I was in a similar situation in 2009. I had sold my house in the UK and wanted to buy a house in the US. I ended up just taking the hit at around $1.40 which today seems like a good deal. You can buy currency futures, I wish I had done that with hindsight.

If you can hold out for the exchange rate , I probably would, otherwise adjust your budget accordingly and only exchange what you need to exchange.

mrken30

The pound never really recovered from the 2008 fallout, I think with this Brexit issue it may take a while to come back up. Things were finally looking up in the UK and then Brexit came along.

In 8 years the pound has dropped almost 50% that's a long way, I would hope it would recover some day. The issue is that Asian markets are looking stronger compared to Europe and hence attract more investment.

And with the LSE merger who knows where the European financial center will end up.

Giantaxe

It's very difficult making predictions about exchange rates. For example, you could conceive of a situation where the UK has to increase interest rates to tame inflation that may be caused by more expensive imports. That would make the pound more attractive in comparison to other currencies. Otoh, if the fed continues to raise interest rates in the US, the reverse would be true.

mrken30

Inflation is so low at the moment it won't need taming for a while. The measures the UK put in place in 2008/2009 with stimulus were not as effective as the US stimuli. The UK needs to put money into peoples pockets to make them feel good and want to borrow money. Just giving the banks extra capital does not necessarily make people want to borrow money and go out spending. And now they UK has probably antagonized France and Germany with the proposed reduction in corporation tax.

britmick

I'm thinking your reply is my only option, & hopefully the GPB will get back to a better exchange rate with the $ & that because l'm lucky enough to be able to "put off" drawing my UK state pension for 3yrs at least then I won't be as *unlucky with money as l have been in the past!!!

* I lost $30k on the xchange rate when l emigrated over here in 2006 compared to what the GBP/$ rate was 6 months later (or earlier, l can't remember now), but the BIGGY was losing $200k on a property loan scheme in 2008/9 when the housing/property market crashed!!!!

Still, it's "only" money, & l have my health.....(I try not to eat "American" food that is designed to boost the medical industries growth!)....

lansbury

That is the way I had been thinking. I am assuming it is still going to drop in value for sometime, it is trying to decide if I am able to wait until it is at least back to today's value.

mrken30

Maybe things will look better after the UK and US gets a new leaders in September. That's not to far away.

Asg123

I don't know if I'm right on this, because I don't have specialist financial or economic knowledge, but the way I look at it is: the top experts in the world are sitting in banks etc betting on future currency movements, and the level is a reflection on their bets, so anybody who says it's going to go up or down and it's too high at the moment or it's too low at the moment must think that they're smarter than the world's top experts who stand to lose their jobs if they get their bets wrong. So I don't think about whether it's going to go up or down at all, I take it to be 50-50, if I need to transfer money I will, I never time it. That's how I look at it, but as I said I may not be right.

lansbury

In normal times I would totally agree with you and the differences are usually not large. But these are not normal times and the swings in the rate are wiping considerable sums off peoples pensions, so it is understandable if some (me) are trying to minimize those loses.

I went to visit family in Yorkshire last month and the dollar reduction in my pension, since the Brexit vote, is twice what that 3 week trip cost me.

mrken30

The state pension doesn't pay out that much money, so the loses are minimal. If you have a personal pension and wish to retire outside of the UK, I recommend buying an annuity in your local currency ie dollars.

If you have a final salary pension, you are guaranteed a pension, unfortunately it will be subject to currency fluctuations instead of market fluctuations.

If you are a hedging type of person you may have one of each.

Each type of pension has pros and cons.

lansbury

Unless of course you need that pension to live on, then the loses will not be minimal and may make quite a difference to someone on a tight budget.


Can you buy a dollar annuity in the UK, and what sort of exchange rate do they give. If you can't buy them in the UK and need to buy a dollar annuity in the USA then the exchange rate gets you at the outset at the moment.

I think most of us trying to figure out how to make the best of the current situation, and have been receiving a pension for some years sort of know that currency fluctuations come into play.


No really who would have known.

mrken30

I saw something like this on moneysavingexpert sometime back. My thought was whether you could roll a UK pension into an annuity in the same way you could convert a 401k into an annuity.

It's possible to buy swiss annuities in the US http://www.swissprivacy.com/swiss-im...ent-annuities/ not sure about the other way round or sterling.