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Archive for March, 2015

Pensions abroad

March 15th, 2015 at 11:57 am

Let me tell you about an email I got from a J. Doe (I didn't get a permission to republish this story so I'm careful with it). This guy has retired a few years back. Had a decent salary and was eligible for a nice pension at around 5.5K GBP per month.

His children moved to Germany, so him and his wife decided to follow their steps.

They bought a small house, and also brought a large sum of their wonga so they can help their children and spoil their grandchildren. John would transfer the whole sum of 5,550 Pounds a month from the UK to Germany, every month, for the past 2 years, as well as approximately 200,000 Pounds to purchase their current residence, and help their children financially .

All exchanged from British Pound to Euro, of course.


John reports paying what he calls an OK margin for the big transfer (asset purchase), and then paying just about 2% including fees on all other transfers.

He assumes he paid somewhere in the area of 5,000 Pounds in fees. He heard good things about FX companies, but didn't trust them, and ended up paying a lot more than he should have in commissions.

He encountered some of the articles I wrote in that regard, and is now glad to report he pays about half of what he used to pay with his bank, and that the service is good as banks or better.

Good to hear that, and glad to help J Doe Smile




The world of FX

March 12th, 2015 at 09:49 am

Got my first comment on my previous post, nice!

"I would like to know how you do it now. Particularly for small amounts... My father in law sends small checks to my husband for his birthday, too, and the entire thing is eaten up by a $25 fee just for cashing a foreign check." - Buendia.

So I would dive a little further into it. Pardon me for not giving the full in and out analysis of the Forex industry, but it's a rather complex topic and I'm limited in time. So I'm it post by post, so eventually this blog could serve as a source of knowledge.

Answer

- Cashing a foreign check is a big no-no, and as you said common fees are 25 Dollars in the states, and even higher fees in Europe.

- The way to transact funds without paying that ludicrous commission is via bank to bank transfer.

- Wait! banks charge approximately the same amount of money as they do for foreign checks in "transfer fees". On top of that, they will take a margin of 2-3% on the exchange rate, and you'll end up in the same situation.

- So how would one conduct bank to bank transfers internationally without paying fees nor commission?

Specialized FX companies at your service

The market is booming with companies that provide the same service as banks (transferring funds internationally) but we smaller or no fees, and much better exchange rates.

Which companies are recommended? Well I have inspected the market for quite some time now, and even work for a site that does exactly that.

I will speak about the characteristics of all companies on a latter stage here, but for now I can introduce Currencies direct (review available here - http://moneytransfercomparison.com/currencies-direct-review/). This is an example of a nop-notch company that can address your need Buendia.

The key elements are:

- you can send money from the UK, and from the US, to almost 100 different countries so I am assuming this will fit your requirements (if not, let me know).

- the min amount is low at $100.

- no fees applied.

- better margins than banks.

- intuitive platform, easy, phone support, you do it once with their escort and then you can do it yourself quickly.

How does Curreices Direct direct and other FX companies work?

Simply enough they create an account on your name. You get online access to it. you transfer funds to that account in your local currency via domestic transfer (which costs between nothing to a few dollars).

Once money is stored in your account, you can ship in short time spans to wherever you want.

There is a lot more to it and more advanced options but I wanted to address that inquiry. I hope it helped.


Cheaper Money Transfers

March 11th, 2015 at 06:43 pm

The first topic I would like to address is the topic of FX transfers. To some people this concept might sound foreign, but to the majority of people it won't.

Some people don't even think about it. When they needed money transferred abroad, or require their local currency exchanged to other currencies, they go directly to their bank branch and perform the transaction. They don't know how much they pay, or else, they would not have done so.

I have personally lived in several countries in my short life. When you transfer thousands of Dollars a month, you become much more aware of this topic. At first when I traveled to the east, I used the first FX company I heard of, and probably the only one to this stage, together with MoneyGram, which is Western Union. With their travelers checks, together with some transfers to India, I started noticing very high fees. I was transferring about $750 to a friend's bank account in India to pay off for my monthly expenses. The fees were $25, and I was losing $40-$50 more on the exchange rate compared to the interbank rate.

That sounds not a whole lot, but when you're talking about 10% of the money I transferred each time, that was definitely annoying.

Quick jump to the late 2000's when I'm transferring hundreds of thousands of Dollars for asset purchases, and before I hit the send button on my online bank account, I start re-thinking and investigating through the market.

I figure out that the margins that banks have almost worldwide are at about %1-%2 on liquid currency pairs (where trade volumes are high), and as much as %5 on less common pairs. When you have to pay an additional 2 to 5 per cent on each dollar you transfer, and you're purchasing an asset, that becomes very highly effective in terms of your financial situation.

Our tendency to approach banks with any financial inquiry, service or consultancy we need, is rooted within us, but it is sometimes the worst thing to do.

I will write more about this topic, and what are the alternatives to foreign exchange transfers, as well as almost all aspects relating to one's savings.

Eventually, I think that over a person's lifetime, saving where it matters, could save 5-10% of that person's expenses. Imagine you're getting a 10% salary raise, how much would you work to make it happen? Now think how little you should work in order to educate yourself financially and stop acting like a robot when you have to perform any financial activity, and understand how valuable this advice might be for you and your family.

Me

March 11th, 2015 at 05:27 pm

Welcome to my blog. My name is Matt. I want to help everyone with advice in regards to personal finance. My focus is on financial products you can find outside of bank.

If you do the following activities as per your bank's recommendation, and don't look sideways for better opportunities, you are not maxing out on your saving.

Here are a few examples of things you can do outside of banks:

- Borrowing money - besides Payday loan companies that have a different functionality than the bank loans people usually take, there are many other alternatives.

The focus of my blog will be on peer to peer lending which is a very sustainable option, and for some, will be preferable to bank loans.

Another topic I will focus on are grants, social lending, and crowd funding.

- Investing money - again I vote for Peer to Peer investing, that allows you to act as a bank (to some degree), and do what banks do with your money (after taking a big chunk of it) which is peer to peer investing.

Other means of investing I shall cover include private investment companies, equity investment, crowdsourcing investmens, and anything I can find OUTSIDE of banks that will have higher returns on your money and shall not feed the monster.

- Transferring money for remittance or business. There are plenty of FX firms that serve this purpose much better.

- Credit cards - there are credit card offer that are better than what banks can propose you.

- Bitcoin and alternative coin as mean of

a. investing
b. shopping
c. remittance transfer

This is only a selection of the topics I want to cover, and I have much to say about.

About me -

Matt, 31, PR Officer for a financial data website, an enthusiastic blogger, that hopes to participate in the senior Olympics, when he's old enough to do so.