The falling pound

[fountainhall]

Discussing who is at fault is surely a secondary issue. The fact is that various factors account for currency movements and those who gamble on future movements are in a crap game.

For whatever reasons, the pound has tanked. But remember it has tanked before. Back in the 1980s it got so close to parity with the US$ that Margaret Thatcher had to persuade the Sultan of Brunei to buy sterling and avoid a total crisis. In the same decade, pressure from the Reagan administration forced the Japanese to increase the value of the ¥. From almost ¥260 to US$1 it rose to ¥110. Some suggest this was a part of the reason for the Japanese recession which was to last for over 20 years.

I'm thankful I learned the lesson early. I lived in Japan for two years as the ¥ was rising but was paid in US$. Not that it affected me much as I was on expatriate terms and allowances and so shielded from the worst effects. But it was a good lesson with a view to eventual retirement. For the time being most of my funds are in Hong Kong in HK$ which is linked to the US$. Soon I will diversify. Thankfully very little of my income comes out of the UK.

I agree entirely with goji. Anyone planning to retire in Asia should start building up assets within Asia as early as possible. Let's just be thankful that we're not Brits living in Malaysia because the Ringgit is also tanking!

[arsenal]

Put your money international water companies and arms companies because as one becomes an ever decreasing resource the other will be bought and needed to defend it. Or a Chinese bank will give you up to 4% and the rmb is one of the currencies of the future. In fact if you spend a lot of time in Asia a Chinese bank account will be very useful to you.

http://www.bbc.com/news/business-38644971

[fountainhall]

I agree with arsenal. The RMB used to be fixed to the US$ at a rate of about 8.25. Despite Donald Trump's ridiculous statements, the currency rose to 6.15 last year. With the rebalancing of the Chinese economy, it has dropped down to around 6.92 or so. Eventually it has to go up but I'd wait a few months before plunging in. Some Chinese stocks purchased on the Hong Kong or US exchanges should also be in every expat's portfolio.

[sglad]

Falling pound is great for ordering stuff from Amazon UK and the Book Depository! I ordered all my books in July last year just after Brexit and in time for the new academic year in August. Saved a lot of $$$$.

[goji]

I see 2 separate reasons for investing abroad.

1 Currency Risk. For this, even investments listed in London, but holding overseas assets, such as some of the Asian unit trusts and investment trusts will tend to track the underlying overseas investments. Therefore protecting against falls in sterling. As has been seen in the last 6 months.

2 Major economic risk, leading to currency controls. In the past, the UK has had restrictions on taking money out of the country. Iceland had them from the 2008 crisis until recently. China has some restrictions on the amount that can be moved out of the country in one year. For this, accounts located overseas seem necessary to me.

[Dalewood]

Discussing who is at fault is surely a secondary issue. The fact is that various factors account for currency movements and those who gamble on future movements are in a crap game.

For whatever reasons, the pound has tanked. But remember it has tanked before. Back in the 1980s it got so close to parity with the US$ that Margaret Thatcher had to persuade the Sultan of Brunei to buy sterling and avoid a total crisis. In the same decade, pressure from the Reagan administration forced the Japanese to increase the value of the ¥. From almost ¥260 to US$1 it rose to ¥110. Some suggest this was a part of the reason for the Japanese recession which was to last for over 20 years.

I'm thankful I learned the lesson early. I lived in Japan for two years as the ¥ was rising but was paid in US$. Not that it affected me much as I was on expatriate terms and allowances and so shielded from the worst effects. But it was a good lesson with a view to eventual retirement.

Fountain and I may have been in Japan at the same time. As memory serves, the rate was about $1=Y160 when I arrived, so at Y260 life was pretty good!!

To give you an idea...

Train to Tokyo: Y1200 round trip
Decent food dish: Y500
Better food dish: Y850
One drink at gay bar (No go-go boys, etc.): Y500
My share of love hotel: Y2500
Regular hotel room: Y5500
Run of the mill sushi: Y200 per two pieces

No tips expected for drinks and food. NOTE: You could certainly spend astronomical amounts for food and drink if you wanted to, but it was not necessary. My rule of thumb was to avoid places that accepted credit cards to avoid unpleasantness when it was time to pay the bill. It may sound silly, but it worked.

So if I got lucky and my "acquaintance" had his own place, I could have a good time for $25 US in a first-world capital city.

[arsenal]

An interesting article for anyone who has been to Japan. Or likes fish.


http://www.bbc.com/news/world-asia-38566408

[fountainhall]

So if I got lucky and my "acquaintance" had his own place, I could have a good time for $25 US in a first-world capital city.

I never found Japan expensive back then unless I had to take a client out for an upmarket dinner, but then that was covered by a generous entertainment allowance! With an apartment provided for me in Hiroo and just 4 subway stops to work, lunch with soup and a main course in a tiny Japanese restaurant near the office for ¥700, gay bar drinks around ¥500 and no money boys, I saved a lot during my time there.

[Khor tose]

One other way of protecting your currency from devaluation, without investing in another country, is the oldest investment of all. Buy gold--not my first choice--or silver. I prefer silver as it has many more uses then gold, and by buying right and selling right you can make quite a bit of money. So far I have done much better then many of the investments markets.

[cdnmatt]

Don't forget bitcoin. It's been humming quite nicely the last while.