view PoinT
exChanging Times
Graham Wolverson, an Independent Financial Advisor with Pinnacle Asset and Wealth Management with over 20 years’ experience, returns to cast his eye over our readers’ money queries. I am sending money back home on a regular basis and the exchange rate is very much in my favour at the moment. Some of the transfers are for importing goods that are being sold here so obviously this is increasing my level of profits. What can I do to make the most of this exchange rate? There is indeed. Typically, we use our banks to transfer money and rely on the exchange rates that they impose. Banks function with the intention of making a profit and foreign money exchange is a good source of income. Banks buy currency at one rate to sell at another and we’ve seen the difference between these two prices as high as 5%, with an additional fixed charge added to it. A large institution would be able to negotiate a commercial exchange rate much lower than this because of the large volumes of transfers they do. Companies have been formed that can attract these lower rates that you can use as they act on behalf of many clients and therefore have a high volume of business. One we recommend typically charges 0.7%, a huge saving over the bank rate. Opening an account with them is relatively simple and very secure with a large international bank backing it. In your case and for anyone else that is going to make regular payments over a known period, or, know that they have to make a transfer in the future, the exchange rate today can be fixed for up to two years. If you know that you will be leaving local employment and will receive an end of service settlement that you need to transfer home, fixing at today’s rate could be a good move.
I will be retiring to the UK in a couple of years and I have been careful with my money. I’m considering what I should do to provide me 30
QT-Nov.indd 30
with a regular income during my twilight years and I feel safe with buying investment property and living off the rental income. I’m new to this and have heard horror stories in the past of people buying land to build on that ended in tears. Do you have any tips? There are two issues here. The horror stories involve ‘land banking’. This is where you are sold a piece of land anticipating getting planning permission sometime in the future only to find out that the local council has no intention of allowing anyone to build on it, ever. This is not isolated to the UK and should be researched carefully before entering into any such agreement. Simply contacting the local authorities where the land is situated would be a good starting point to find out if they are likely to give planning permission. These activities normally turn out to be a scam and this activity is prevalent in the region. As for investment property, there are projects specifically set up purely to provide good rental yields in areas with high demand. We know of a large London project that looks like it will be owned by foreign investors when it completes, just before the London Olympics in 2012. It is attractive now as the investors are benefitting from a favourable exchange rate and are only required to pay a deposit before it completes. You need to be aware that net rental income is taxable in the UK, resident there or not. Having all your money tied up in property is not wise as if you fall on hard times, you can’t eat bricks. Also, your “returns” will be reduced whenever you have to provide any maintenance for your property, etc. There are other options that you should also consider, which will allow you to have a fixed income that is not taxed which also give you access to cash if you need it. Re-
member, if you have all your investments in one asset class, then if that asset class (such as property) falls in value, you have all your eggs in one basket.
We have a new-born child and we want to contribute on a regular basis for their future. When I was younger that my granddad took out an insurance plan that matured when I was 18. Is this kind of plan still available? It is and many parents do this for their children. Very popular in the region is the ability to take life insurance on your child’s life that has an investment element. Some cultures question the reason why a parent would want to insure the life of their children as life insurance is generally used to replace an income in the event of a death. However, these plans are looked upon as a way of starting something with a long-term benefit for a child when they become an adult as they can take over the payments; and if they fall on hard times, they have access to the investment within the plan. They are also very popular for paying further education fees as money can be taken from the plans to pay for a child to go through university. It is also possible to include a Critical Illness Benefit – a cash payout if the child becomes seriously ill, and the cash is used to pay for expensive medical treatment n
Graham welcomes enquiries for financial advice at: graham@yourmoney-matters.com. Peruse the website at: www.yourmoney-matters.com
Qatar Today November 10
11/1/10 7:28:00 PM