Advice on savings Euros while earning AUD

Discussion in 'Currencies' started by Revils, Jan 16, 2015.

  1. Revils

    Revils Well-Known Member Silver Stacker

    Joined:
    Jun 20, 2013
    Messages:
    1,043
    Likes Received:
    298
    Trophy Points:
    83
    Location:
    Australia
    Hi All,

    Looking for some advice on what to do in my current situation.

    My wife and I earn AUD and save about 40% of our disposable income, our goal is to buy a cheap apartment in Berlin sometime in the second half of 2016 (and move there for a while to study/relax for a few years)

    Since saving for this apartment I have seen the AUD/EUR exchange rate at anywhere from .63 to .86 (and it was .50 when I first swapped my AUD and moved to Europe for a year in '09)

    Based on a .7 exchange rate I'll have my target amount by around June next year - my worries are that
    a) if it is lower, say .6 or .5 it'll be months/years more saving - so I don't want to wait to transfer all my AUD next June if this is the case
    b) I don't want to transfer our current savings now as sentiment is that the Euro is on the downtrend

    My current strategy is to transfer some each month that the rate is above around .71 (the 2 and 5 year average) and my Euros are now about 16% of total assets
    Is there a better/smarter/different option to take?

    Part of my getting in to metals was as a way to hedge against both the AUD and Euro falling - but in reality this has fallen too

    Advice and thoughts welcome
     
  2. tolly_67

    tolly_67 Well-Known Member

    Joined:
    May 17, 2010
    Messages:
    1,826
    Likes Received:
    84
    Trophy Points:
    63
    Wait until the Greek election. If they vote to split from the European Union and return to the Drachma, it is game over for the Euro very quickly. More so if they elect to walk away from their debt. European banks hold the sovereign debt as collateral when it is actually worthless paper. The banking industry in Europe is about to be smashed and the Euro with it. You may find that by 2016 you will be able to buy 2 apartments instead of 1 by waiting. Any form of q.e. in europe will knock the Euro even further down.
     
  3. Revils

    Revils Well-Known Member Silver Stacker

    Joined:
    Jun 20, 2013
    Messages:
    1,043
    Likes Received:
    298
    Trophy Points:
    83
    Location:
    Australia
    I don't think the Greeks are voting to split from the EU, even Syriza don't want to drop the Euro so I don't see it happening. I think a lot of QE has already been priced into the current rate too, as the vast majority of economists are betting on it happening this month. I see downside potential for the AUD as well, so even if the Euro drops against the USD it might not impact the EUR/AUD.

    I don't have any experience in futures/options - is there any way I can use these so that I can lock in a future rate that is higher than the current rate but not necessarily as high as the future rate might be?
     
  4. whinfell

    whinfell Well-Known Member Silver Stacker

    Joined:
    Mar 22, 2012
    Messages:
    3,327
    Likes Received:
    174
    Trophy Points:
    63
    Location:
    Australia
  5. phrenzy

    phrenzy In Memoriam - July 2017 Silver Stacker

    Joined:
    Oct 19, 2014
    Messages:
    2,493
    Likes Received:
    15
    Trophy Points:
    38
    Location:
    R.I.P
    Use your stack. Chances are that gold denominated in euro will do well. Also, I'm sure you are already but if your exchanging cash use proper eft transfer forex provider like ozforex. Seeing a 3 or 4 cent spread in each direction at a bank or exchange booth just floors me.
     
  6. tolly_67

    tolly_67 Well-Known Member

    Joined:
    May 17, 2010
    Messages:
    1,826
    Likes Received:
    84
    Trophy Points:
    63
    Foreign exchange dealers would have been bleeding from the sudden rise in the Swiss Franc.
    Using gold as a proxy for the U.S. dollar will only work if gold does not suffer another large fall.
    The only game in town is the U.S. dollar so it would be wise to place savings into the dollar because the Euro is heading for par or below against the dollar.
    The Euro is dead...d.e.a.d.......The European banks removed the mark to market rules which would have made obvious to the world that the bonds they hold as collateral are in fact worthless and that most of the European banks, like their American cousins, are actually trading insolvent. This is something the E.C. want to hide for as long as possible but it is unavoidable.
    You could possibly have a double win, much higher U.S. dollar and a property slump in Germany as they will be under enormous pressure to return to the Deutschmark.
     
  7. phrenzy

    phrenzy In Memoriam - July 2017 Silver Stacker

    Joined:
    Oct 19, 2014
    Messages:
    2,493
    Likes Received:
    15
    Trophy Points:
    38
    Location:
    R.I.P

    A few of them did. It was a massive balls up on the SNB's part. I can imagine there after plenty of angry ECB folks. I think there's a bit of a chance we might look back at this moment a pile of straws were stacked on the back of an already overloaded European camel. Maybe this isn't the one that broke it's back but it's already more than it should have to bear.

    We might end up with an even bigger influx of South West European immigrants. In my families ancestral town of Gort in Ireland about half the residents are born in Brazil. Get ready for that in Australia. Not such a bad thing really.
     
  8. tolly_67

    tolly_67 Well-Known Member

    Joined:
    May 17, 2010
    Messages:
    1,826
    Likes Received:
    84
    Trophy Points:
    63
    The SNB were warned not to tell anyone about breaking the peg, especially not the IMF, or the corrupt banks would be informed and they would front run and the losses to the Swiss bank would have been far greater. They finally realised they were pegged to a dead man walking and mainting the peg meant buying Euros high and eventually having to sell low. If they had of waited, it would have cost them a hell of a lot more.
     
  9. Revils

    Revils Well-Known Member Silver Stacker

    Joined:
    Jun 20, 2013
    Messages:
    1,043
    Likes Received:
    298
    Trophy Points:
    83
    Location:
    Australia
    Thanks for the advice, yes I do use ozforex for eft into German bank, hadn't looked in to the forward contract facilities yet.

    There has been a lot of negative Euro sentiment before the last Greek election and since and I still haven't seen this result in better rates for the AUD. I will wait until the ECB starts quantitative easing though before making more transfers and probably keep transferring every new spike. I don't want the Euro to crash too hard though because then it'll be too hard to leave our current jobs when thinking about how much we're making in Euros!
     
  10. phrenzy

    phrenzy In Memoriam - July 2017 Silver Stacker

    Joined:
    Oct 19, 2014
    Messages:
    2,493
    Likes Received:
    15
    Trophy Points:
    38
    Location:
    R.I.P

    Hopefully house prices are down by the time you get there. The way things are going though you might end up using neu deutsche marks to buy the house. Even better chance you might be spending drachma on holiday in Greece. Shame they won't take old notes, I just picked up one of these:
    [​IMG]
    Source:I'm rich in Germany bitch!

    What are you studying? Depending on when you time getting into the market and when you leave it might turn out to be a good investment as well as brilliant fun. I'd love to live in Berlin.
     
  11. Revils

    Revils Well-Known Member Silver Stacker

    Joined:
    Jun 20, 2013
    Messages:
    1,043
    Likes Received:
    298
    Trophy Points:
    83
    Location:
    Australia
    I speak some German but want to vastly improve, then I'd like to study brewing science.
    Unlike Aus German prices are pretty stable and education is free ( no HECS) but wages are much lower and unemployment higher so perfect place to spend some savings and enrich oneself
     

Share This Page