Tim, for many years I have had various investment and policies held through my financial advisors, which have always worked out relatively well. However, last year when I came over from the United Kingdom I jumped onto the property wagon and purchased a property in the Springs at Dh3,785,000 in July thinking I would be able to make a quick buck. Now, my property is valued at Dh2,610,505. Do you have any advice on how I can minimise my loss and what currency should I keep my money in? Darren
Investments should be a long term plan with a realistic perspective on your returns. The volatility in exchange rates can make an immense difference to the value of a property – whether you are buying or repatriating funds after selling a property. At Dh3,785,000, when you purchased your property it would have set you back around £504,666 at the time when you brought your money over from the UK and although it has dropped by Dh1,274,495 in actual fact calculating at today's rate you would get around £483,720 – which sounds a lot less painful, doesn't it?
Lucky for you the currency market has moved in your favour. Over the last six months we have seen the sterling/dollar ratio slide from 2.0148 to 1.3501. If you had invested in dollars or dirhams, which you have effectively, your gains are over 33 per cent, which is a fantastic return. Just a year ago, we saw huge debates on the dirham pulling away from the dollar – and thank goodness it is still pegged, as the dollar has strengthened substantially over the last few months alone.
There are many speculating on the currency markets and making huge profits, however, this can also go the other way, especially with today's unstable financial market. To avoid disappointment, again expect to invest for the long term.
To minimise your loss, we have in-house currency specialists working with us to get you the most out of your money. Our currency experts expect a short term further decline in the pound and in the long term see the dollar and euro weakening off substantially.
There is also a service available, which is called 'forward buying' your currency. It is a simple and transparent service, which enables you to keep hold of your money but lock in a rate for up to two years' advance. Many of our clients have saved themselves literally thousands by using this facility.
Even if you don't want to specifically invest in currencies, there is the opportunity to still save yourself money when exchanging your money back to the UK. With banks, you can lose up to three per cent on the exchange rate just from changing currencies plus you will be charged transfer fees and sometimes receiving fees the other end. You are better to seek the services of a wholesale currency trader since they buy in bulk volume and are able to obtain 'wholesale' rates and pass the savings onto you. This ensures a better rate and there are no extra charges.
Tim Searle is CEO of Globaleye, a leader in financial services for the Middle East with over 4,000 clients. Send your queries to: email@example.com