There’s never been a better time to be a Forex broker than now. The United Kingdom has always been fertile ground for brokerages, as businesses and holidaymakers interact with the Continent daily.
However, things have sped up lately. Ever since the resounding victory of Boris Johnson’s Conservatives, the Brexit train has passed the point of no return. Thundering down the track at breakneck speed, there is little doubt 2020 will be the year the UK will depart Europe.
With this comes harsh realities, though. Finance and real estate experts are sounding the alarm. A drop of 10% or more in the GBP lies well within the realm of possibility. Housing could also take a nasty tumble. According to KPMG, a plunge of 10%-20%, if panic ensues, could occur.
These are all scary scenarios. And so, it is tempting to stick your head in the sand whilst hoping for the best. Things could turn out better than expected – but what if they don’t? You shouldn’t play games with your net worth, especially when you’re not the one pulling the strings.
As such, we recommend hedging at least a portion of your assets abroad. However, in doing so, it’s crucial to choose the right broker. The more you transfer, the more you could lose to bad faith actors – like your bank.
In this blog, we’ll show you how counterproductive moving capital through traditional financial institutions really is. Then, we’ll show you where to get the best Forex deal possible.
The UK Is On An Irreversible Course Towards Brexit
It’s settled. In the December 2019 elections, Boris Johnson ran on getting Brexit done. Brexit means Brexit, he said. With the Corbyn-led Labour Party in disarray, he won in a landslide.
Yet, amid campaign fervour, few stopped to consider what exactly that meant. With the election and the holiday season over, the cold reality of Britain’s impending exit is dawning on Britons. The Conservative Party, for the first time in years, singing off the same song sheet. With the withdrawal agreement passed, it’s done – on 31 January, the UK will officially leave the EU.
But, that’s not the end of it. In fact, it’s only the beginning. On the trade front, the UK has until December 2020 to come up with a brand new UK-EU trade agreement. If they don’t, all the horrible scenarios associated with a no-deal Brexit may yet come to pass.
Already, trouble is brewing behind the scenes. Even as the Transportation Ministry removes contraflow barriers from the port of Dover, the Whitehall EU Exit Operations Committee is said to have met in secret.
Don’t fool yourself – trade negotiations are delicate and fraught with disagreement. The Europeans are already digging in their heels. Worse, initial meetings might not happen until March.
Banks Are Set To Profit MASSIVELY From Pre-Brexit Chaos
What does creeping dread sound like? If you’re a Briton with significant assets, it sounds like a ticking clock. Brexit is no longer up for debate – the UK is leaving on 31 January. Not only that, but we only have until 31 December to broker an EU trade deal. All while signing deals with the rest of the developed world.
At this point, there are two things you can do.
#1: You can either place your faith in BoJo to hammer out a trade pact with The Continent by year-end. Or
#2: Plan for the worst, as the Conservatives have bungled these talks in the past. And, this time, there are NO extensions.
So, it’s settled then – open a Santander account in Barcelona, and then transfer funds via RBS? Before you lift a finger, stop – this is precisely what every banker in the country is counting on.
Banks make a DISGUSTING amount of money from every international money transfer they broker. For starters, they charge MASSIVE fees. For instance, RBS levies a 15 GBP fee on urgent international transfers.
However, it’s on the exchange rate where banks make the BIG money. Let’s look at the Royal Bank of Scotland’s GBP/EUR rate – at press time, they offered 1.1200. Compare that to the interbank, or the wholesale price of exchange. According to XE, the GBP/EUR interbank rate was 1.18432, as of 22 January.
If you’re playing along at home, that’s a spread of 5.4%. Try to move 50,000 GBP offshore, and you’d end up paying RBS 3,216 EUR to click buttons – outrageous!
Got Modest Assets? Transferwise May Be Your Best Bet.
“Well, what choice do I have?” you say with a resigned shrug. You’ve gone through your bank for every conceivable financial service in the past – who else is there? Sure, you may have heard whispers about online alternatives – but aren’t they all scams or something?
News flash: The overwhelming majority aren’t. They are fully-licensed businesses that follow the diktats of the FCA to a tee. What’s more, they have a growing track record of saving everyday people SACKS of money annually.
Transferwise is easily the most famous of these players. Founded in 2010 by two Estonians frustrated with big bank shenanigans, they now move 4 billion GBP per month. The secret behind their growth? Moving money at the interbank rate.
Now, that sounds wildly unprofitable – and without the nominal fee they charge on transfers, it would be. The result? Compared to their bank, customers spend a fraction on international money transfers with Transferwise.
Let’s revisit the RBS example above. Unfortunately, you don’t have tens of thousands of quid to move – but you’re able to spare 3,000 GBP for an offshore hedge. You know, just in case it all goes pear-shaped.
Through RBS, after paying 15 GBP to move your money, you’d end up with 3,343 EUR over in Spain. Compare that to Transferwise – through them, you move your cash at the interbank rate. In return, you pay a fee of 0.378%. Your take? On the other end, you’d get 3,538 EUR – that’s almost 200 EUR more!
Moving Tonnes Of Quid? Contract The Services Of A Full-Service Firm.
Is your retirement at stake in BoJo’s grand chess game? Transferwise has its strong points, but when it comes to substantial capital transfers, we recommend a full-service brokerage. Firms like WorldFirst and Global Reach Group are regularly named as the best UK money transfer service. It’s no wonder, as each firm has decades of experience catering to high net-worth individuals.
As such, they have a wealth of knowledge on HOW and WHEN to execute your transfer. They also have tools that will help further hedge your bets. For instance, a forward contract can guard against suddenly fluctuating rates.
By locking in a rate for a future transfer, it protects you against suddenly plunging prices. Any bad news coming out of EU trade negotiations could shave THOUSANDS of GBP off the value of your assets. By setting up a forward first, you can rest easy at night.
Time Is Running Out
There are no more takebacks. The Brexit train has crested the hill and is now racing uncontrollably towards a post-Europe future. Do you trust Boris to make everything right in the end? Or do you have creeping doubts that this affair could cost you dearly?