Transferring money to Euros?

[umpteennamechanges]

I don't know whether it's best to post this here or prepping?

Is anyone transferring money to Euro ahead of Brexit?

For those of us with only small(ish) savings pots - is it worth it?

I can't really get my head around the best option...will I lose more in commission than I might lose in the in my opinion inevitable decline of the £ post Brexit?

[BookMeOnTheSudExpress]

But the exchange £-€ is dreadful. What would be the point?
I know of people doing it the other way round while the € is strong against the pound.

[Mistigri]

There are better, safer and easier alternatives to buying euros. You could buy a fund which invests in Euro denominated shares or bonds through an ISA - which wouldn't require you to open a euro bank account which could be a hassle to manage after Brexit. Or depending on how much you have to spend and how risk averse you are (or not) you could buy gold (via an exchange traded fund) - gold is quoted in dollars so if sterling tanks the gold price in pounds will go up.

Personally I would only buy euros if you are going to be spending in euros in the foreseeable future eg you have a major European holiday planned or you are planning to move to Spain or you live in NI and can shop over the border.

Of course if brexit gets cancelled then the pound will rise and you will likely lose money if you have your savings in dollars or euros. The risk isn't one way.

[Mistigri]

Basically - if the amounts are small not sure the risk is worthwhile. But buying some sort of low risk euro-related fund via an ISA would probably be the easiest way of getting euro exposure if that's what you want.

I have quite a bit of my sterling invested in precious metals for Brexit-related reasons - but I live in the eurozone so I can't spend pounds and don't want to buy euros at current rates!

[bellinisurge]

Totally get why you are considering this. However, I would flag up a couple of things based on experience of living in the USSR where currency exchange calculations were a daily consideration. US dollars back then.

1. It will do your head in.
2. You will inevitably make a bad call although hopefully not with all your money.

Consider, if you want to, buying new white goods if you need them. Anything you actually need and that will hold its value.
Unless you are experienced at currency speculation and have a buffer in place to deal with mishaps, it is a risky and stressful business.
And I'm a prepper.

[Mistigri]

Yeah Bellini is wise.

Do you have any non-cash savings? Because if you have for example a FTSE tracker or similar in an ISA that already gives some protection against sterling movements (big companies in the FTSE 100 often earn a lot of their money in other currencies so when sterling falls the FTSE tends to rise as it did after the referendum).

[Ta1kinPeace]

I've got every penny of available savings invested through my IFA
they are hedging my money around the world
and I may lend a load to DD (in the Eurozone) in mid March

[umpteennamechanges]

Thanks...this is the kind of info I needed. In reality I suspect we don't have enough savings for any of it to make much difference but something for PILs to consider.

My massive 'no deal' leaver supporting parents shall be left to their own devices

[BoyMeetsWorld]

Can I just check what we're talking about here - is it likely that savings in UK banks could be lost if Brexit goes badly?? Or is it the risk of the value of the £ falling? I'm rubbish with economics type stuff so this has worried me as apart from an ISA all our savings are financial and not invested in anything clever. Also are white goods fridges etc- sorry for being utterly stupid Bellini but why would you buy a load of those? Genuine question.

[bellinisurge]

@BoyMeetsWorld , I didn't say buy a load. I said buy a white good (or white goods) if you need them because they hold their value and are useful.

[Mistigri]

I think the OP is talking about protecting the value of her savings if the pound tanks, not about banks going under (which is much much less likely).

Tbh I think this is only really a big issue if you intend to take money out of the UK at some point.

[1tisILeClerc]

Of course the irony to this is that if you transferr money into Euros or buy stuff earlier than you might (a form of stockpiling) you actually feed the argument that the UK is doing well so some unscrupulous MP can claim it is all 'project Fear' or whatever. Of course if you buy a washing machine now, that you might not have for another 18 months it will distort the 'spending plan' in that you won't of course be buying another at a time when manufacturers would have reasonably predicted you might. Manufacturers that have a 'regular' flow of goods are already reporting increased sales up to March, but then practically no orders into April. Possibly interpretable as a bonus now and closure in the middle of the year.

[Ta1kinPeace]

No UK bank has failed since the early 1970's
it has not happened since
it will not happen with Brexit

rate movements are another matter
but without hedging I'm not willing to risk it
as a last minute blink by TM could bankrupt a lot of short sellers
she says hopefully

[BoyMeetsWorld]

@Talkinpeace you've lost me. So if the banks won't crash what is it you won't risk?
@Bellini sorry, was trying to clarify what White Goods actually counted as but you have. I've never thought in terms of a fridge or microwave etc holding its value...Would people sell those in times of need? Otherwise, having bought one surely its financial worth becomes irrelevant - it's not an asset so much as filling a useful need for you?
@Misti yes this was my logic, that if not leaving the UK, even if the value of the £ drops then everything drops alongside so savings should still be of the same value, comparatively?

[Ta1kinPeace]

Boy
Money in a UK bank is safe
but the value of those pounds relative to other currencies is not
BUT
the pound is a big enough currency that I think the short sellers will bottom it out at a bearable level

[Mistigri]

savings should still be of the same value, comparatively?

It depends on inflation and interest rates. If brexit is very chaotic and inflation rises sharply then there is a risk that your money will buy less. It's not a completely stupid idea to buy things now that you think you will need in the next year.

[BoyMeetsWorld]

Thanks both!

[1tisILeClerc]

BoyMeetsWorld
I think what Bellini was meaning is that if you are intending to be buying a piece of expensive equipment in the next year or two, it may be financially better to do it before March as the value of the pound may change wildly when for example the real details of big manufacturing are known. The money markets may well go bonkers (the ERG are hoping it will as they can manipulate where money is and 'bet' on it doing various things). You would not be buying stuff you wouldn't use of course!
'Betting' on a rise or fall of currency is a game you should only play if you can afford to lose and you can work out how much and when to 'play'. UK banks are backed by the treasury/BoE so very unlikely to 'lose' your money. I suppose it things got totally out of hand a mass crisis like 2008 could occur but eventually (with a lot of legal arguments no doubt like Northern Rock) 'normal' customers would get the money. This sort of scenario is approaching civil war in the UK and as such practically no risk, or if it were, the shortage of money might pale into insignificance.

[BoyMeetsWorld]

Ah ok thanks LeClerc that makes sense :)

[bellinisurge]

Thank you @1tisILeClerc , that is what I was saying.

[Efferlunt]

I’ve cashed a lot of Isas / shares in recently in order to buy a new car in cash (was overdue for one) and pay a chunk of the mortgage. I don’t want to keep large amount of £s at the moment but I hope our much reduced monthly outgoings will give us a cushion.

[Mistigri]

If you think interest rates are going to rise, then using available cash to pay off your mortgage is a very sensible strategy.

[Auntiepatricia]

I think you can assume (but nothing is totally sure) that a crash out brexit is currently priced in. You’re taking a risk of the crashing out not happening and the pound strength increasing leaving your euros at a loss.

[Ifailed]

Gold has hit a 6 month high.

[Auntiepatricia]

If you’re worried about mortgage rates do a 5 or 10 yr fix.

[Mistigri]

I think you can assume (but nothing is totally sure) that a crash out brexit is currently priced in.

Why would you assume that? Sterling ticks down every time something happens that makes no deal more likely; at some point if no deal becomes inevitable there will be a big move. Indeed, this is the whole point of May's cliff edge strategy: if parliament won't vote for the WA, she'll let them stand on the edge of the abyss as the markets "vote" on no deal.