Offshore Accounts

karltsmith · Posted: Tue Feb 10, 2004 3:07 am Post subject: Offshore Accounts

Being now poised to migrate sometime in March...hopefully. My attention is now focused on how to manage my money.

We have sold the house and have given notice on all our term investment accounts.

I am now hinking of opening an offshore account paying 3.6% gross interest until the fortunes of the Kiwi Dollar turn in my favour. The interest will then pay our rent until we find a place to buy.

Does anyone have any money management tips to share?

I am registerdc with a boker for the purchase of currency but the old NZ$ is still too strong to contemplate changing a large sum.

karltsmith · Posted: Tue Feb 10, 2004 3:08 am Post subject:

Just found another offshore account paying 4.15%!!!!!! (Portman BS)

rodders · Valued Member Joined: 25 Nov 2003 Posts: 134

very wise not sending your money over just now karl. kiwi dollar will definitely fall. might take a few months or even a couple of years but then you'll be quids in. Nice One

karltsmith · Posted: Tue Feb 10, 2004 4:13 am Post subject:

my biggest worry is being left behind by the rising housing market. Currently NZ house increases are 18-20% pa but this will drop to 8-9% by the end of the year. Kiwi Dollar is NZD2.66=1 GBP as of today, I would need a return of 8% pa to get a sensible exchange rate of about 3 to the pound but this is pretty unachievable and would be soaked up by the housing market surginf ahead....what a headache!!!!!

richsadams · Posted: Tue Feb 10, 2004 6:30 am Post subject: Investments

Hi Karl,

We're in the same boat (only on the U.S. side where the dollar continues to slide

) We were seriously considering off-shore investments...even Kiwi investments since just about everyone is paying higher interest than in the states. We were even hoping to avoid capital gains.

I'm not sure how it works in the U.K., but our broker did some investigating and found that no matter where our money is invested, we're still subject to capital gains as long as we're U.S. citizens. In NZ we will be subject to income taxes too, but my understanding is that our countries have a reciprocal agreement that prevents any "double taxation". It's pretty complicated and we're working on getting a NZ tax consultant that is savvy in international investments.

Whatever the case, a majority of our funds will remain right where they are until our currency finds its feet or the Kiwi dollar comes back to reality.

And the housing issue is a killer too. Houses we were looking at a few months ago have "increased" by thousands just on the the dollar differential already! Sad

Wish things could be easier eh? Nutcase

But look on the bright side...it IS New Zealand! Nice One

roberto · Posted: Tue Feb 10, 2004 9:49 am Post subject: Interest rates NZ

Hi Karl,
Again, we're in the same boat. About to sell up and move all our funds to NZ. We're looking at going in April after selling up etc, and we'd be looking for a 4.75% return from the bank. We've looked at National Banks Thoroughbred Select which has some good rates for the higher balance. I don't know if the exchange rate will change that much so we may have to accept it as it is.

Rob

JCM · Posted: Tue Feb 10, 2004 3:36 pm Post subject:

Nobody can tell what the future will be for exchange rates, but the feeling on the ground here is that the NZ dollar is too high and will fall - who knows when, though.

I tend to agree with rodders about keeping some UKPounds or US$ (or whatever) and not bringing all your money at what could well be a bad exchange rate.

(This is purely my personal opinion, based on no expertise whatsoever, I hasten to add. So please don't blame me if the NZ$ continues to head for the stratosphere Eek

)

karltsmith · Posted: Tue Feb 10, 2004 8:59 pm Post subject:

Hi Roberto,

I looked at the thoroughbread account too and as I understand it you only get this rate on the first £5000.00 after that the rate drops dramatically...I hope I'm wrong but check it out! Also you will pay tax on your interest unless you fill out a R85 form from the inland revenue and finally check the small print because the UK banking laws may prohibit you opening the account unless you are a UK resident...which technically you won't be after you go!!!!

925exile · Posted: Tue Feb 10, 2004 11:01 pm Post subject:

Think there are many of us in the same boat. I agree that now is not a good time to convert £'s to NZ' s. I heard that it is possible to agree to purchase a property, set the price but dont complete the deal for 12 months and then rent the property for the interim period, does anyone know anymore on this? This might be a solution to the problem of soaring property prices and falling xchange rates, I know this still isnt risk free but then what is?

Silversmith · I'll Hang Around A Little Joined: 19 Nov 2003 Posts: 32

This is definately something that has been worrying me, what has happened to the dollar recently - it was looking like it was making a gradual rise, but recently it has plummited!?
If you do have an offshore account is there any time lag between asking for your money and actually getting it if you see the dollar suddenly dive, like everyday 60 day accounts? Im guessing with an offshore account you may well need to move quickly when the exchange rate is more favourable but dont want to be tied up with weeks of red tape getting at your money!
On a side issue we have requested police certificates and have booked medicals so things are definately moving forward - we may be staying after after being given residence simply due to this dire exchange rate!

karltsmith · Posted: Wed Feb 11, 2004 12:51 am Post subject:

Hi Silversmith,

You can get instant access but at about 3.6%gross, on 15 day notice I can get 4.15%gross. This will pay our rent with some to spare until we find a place or the Dollar weakens! fingers crossed

To move quickly on currency purchases you MUST register with a FX currency broker to get the best rates and and if you buy on a market order (not spot price) you can settle several months later if you like. You pay a 10% deposit on the funds purchased and settle 1,2,3 or even 6 months later if you like. You can also set a market watch, stop losses and purchase points for your broker. Best to buy it in chunks as the rates move in your favour.

The Kiwi Dollar is a commodity currency that is heavily traded and prone to big swings on the money markets. Many investors who have already made a killing will have short stops placed with there brokers to protect there position. If any gloomy economic news comes out from NZ they will bail and the currency will swing very quickly indeed as everyone jumps ship!

925exile · Posted: Wed Feb 11, 2004 1:52 am Post subject:

Hi Karl if you dont mind me asking, as you seem to be well researched on the subject Clapping

what is the process for registering with and FX broker, can this be done over the net? ...........regards

karltsmith · Posted: Wed Feb 11, 2004 2:29 am Post subject:

Hi 925,

you can do most of it over the net and a phone call. I use Halewood because they have offices in NZ, UK and USA etc www.hifx.co.uk, also try www.moneycorp.com and www.forex-brokers.com for further info.

It cost you nothing to register and can be set up in a few days afetr you send the necessary ID's etc. Oncxe your account is open you can trade whenever or instruct your broker to keep an eye on the markets.

The website usually have some pretty reliable economic data on them aswell.

incidently you must be able to pay within 3 business days once you have bought so you need to have immediate access to at least some of your funds!

tomparis · Posted: Wed Feb 11, 2004 10:02 am Post subject: Moneyfacts website

Hi all,

We're in the same boat too, selling flat, expecting significant equity released and can't decide which side of the world to invest it in, or if we should invest in both sides, and then if it should be shares, bonds, property, savings, etc.

Consistent advice from IFA's/accountants so far, is go for a split between offshore "no notice" and notice accounts in sterling, until we're settled and know this if this is a 2 year or long term move, and then make a commitment one way or the other.

good offshore account comparisons can be found at this website

http://www.moneyfacts.co.uk/

Gerry · Posted: Wed Feb 11, 2004 4:16 pm Post subject:

Now this may be very obvious (most things I come up with ARE very obvious), but if you haven't thought of this and it works for you, then you owe me big-time (at least one bottle of Allan Scott Reserve chardonnay!)..

Problem: You don't want to exchange your money into NZ$ while they are expensive, BUT you are afraid that you will lose out on a rising housing market.
Solution: (and this only works if you are moving into an income generating position in NZ - retirees of dole bludgers need not apply) Buy a house with the maximum mortgage available, exchanging only the deposit - a 95% loan is not out of the question but you will attract a one off mortgage insurance premium on everything over 80%. Obviously the amount that youc an borrow depends on your new income but mortgages are relativelyeasy to get here. Make sure the mortgage is on a floating rate so you can repay without penalty.
I'm sure you are all ahead of me by now, but just in case, I'll finish the story.
You are paying, say 7.2% on the mortgage loan, but that money is earning say, 3.7% invested offshore, so really the loan is only costing you 3.5%. I am conveniently ignoring the fact that the income from the overseas investment is taxable but it doesn't affect the calculation change too much when you consider....
Scenario 1. The NZ$ could drop say 10% virtually overnight - you exchange the balance and pay the house off on the spot
Scenario 2. The NZ$ takes a year to reach your target level. In the mean time your newly acquired house has risen 10% in value. Now you exchange the balance and pay off the house. You have now made a 10% gain on the capital invested in the house AND the 10% gain on the exchange rate, all for paying a Net 3.5% on the loan.

And keep in mind a 10% change in the exchange rate is quite a conservative target, given the present level.

Hell, you should buy two of the buggers!

If your New Zealand "income" (Ha!) doesn't allow you a big enough mortgage to buy the house you want, start with something smaller. At least it keeps you abreast of the market and you can upgrade later when you bring in the rest of your loot. Your container of household goods may even have arrived by then...............

I think we all get a little focussed on coming to NZ so that we can be mortgage free and forget that sometimes it is a good idea to use someone else's money to get what we want.

Of course, if the property market slumps or the NZ$ continues to fly, you might have enough to buy a packet of razor blades...........

Now I think I explained that really well.

Of course, Rick is wondering how he's going to persuade the bank to loan him money when he's going to be self employed - simple, if you have last year's figures from the business (well, not simple but at least possible)

Good luck and I'll see you all in Nelson - everyone gets there in the end.

P.S. If this idea is so painfully obvious that nobody else even bothered to mention it, please don't tell me. It took me ages to type all this and it was done with the best of intentions........

Gerry