Expats Encouraged to be Smart with Weak British Pounds

Concentrate on saving money during a low-returns period

Expat retirees are understandably tense while the UK takes citizens and investors on a dizzying ride of leader changes, tax plans, and reversals during one of the most volatile global inflationary periods in history. 

Simple, straightforward finances have become fluid, as advisors face daily changes to the financial markets and tax proposals. There are, however, some situations where taking one action over another can help you make the most of the weak British pound. 

Manage exchange rates and fees 

The low value of GBP means that any income received, through UK property rental for example, will be worth less to expats in their country of residence. Consider having that monthly GBP income go to an international currency exchange service instead of your bank. How this can save you money: 

  • Exchange rates can be set and the money converted to your local currency when it reaches that mark to avoid conversion when the GBP is low. 
  • Avoid potential fees and charges imposed by your bank. 

This is also true for your UK pensions. 

UK pension payments to expats living abroad will similarly be worth less. It doesn’t matter if it’s a private or State plan, the income will be worth significantly less in your local currency. 

If you have not yet started to receive your private pension, you may wish to consider transferring the funds out of the UK and into a ROPS which will allow you to take payments in your local currency and negate future currency fluctuations. This option is more viable if you plan to remain in your country of residence for the rest of your life, which will ensure you are not exposed to transfer fees. 

Buy real estate at the right time 

Use your foreign savings and income to buy UK property, especially if you have cash. The decrease in the value of the GBP equals lower prices when using foreign money to pay for real estate. 

It might be worth waiting a bit, as some analysts are predicting that increasing interest rates, the overall cost of living, and other factors are likely to see house prices in the UK fall over the next 12-24 months – potentially by up to 10%. 

Non-fixed mortgages are going to cost you 

If you own a UK property and have a mortgage that is not fixed, or is about to end, your mortgage payments are going to increase. And, you may even find it difficult to obtain a new mortgage, as loans – because of their potential for losses to the lender – are drying up. 

If your UK money is staying in the UK, pay extra on your mortgage with any source you have, to limit the future balance and its potentially (even) higher interest rates. 

Unused cash is losing value 

The continuously rising interest rates are not keeping up with inflation, so your nest egg is losing value as it sits there. It could be more beneficial for you to use the money in ways mentioned above – a real estate purchase or paying down debt – than the interest it’s gaining. 

About the Author

Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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