Returning to Ireland

[Laphroaig]

Hi all

moving back home in July after a number of years in Oz

will have circa 130k euro to bring back; all of which we have paid Aussie tax on.

we have 5 years left on a 25 year tracker (approx 1k/month inc insurance); no other debts so question 1 is - should we pay it off.?

question 2 is- is there a smarter way to bring this money back than simply transferring to our Irish bank account?

all thoughts appreciated
thanks

 

[RonnieShinbal88]

On 2. I've used a forex broker in the past, you can set a price to buy euro at any time between now and when you move back if it drops to that, if the currency is trading in a range with volatility around that and is at the higher end of that it means you take advantage of the time you have left to wait for it to hit a lower price in the range. Of course if euro trends upwards in your remaining time (relative interest rate hikes would be a big factor) this means the rate you would get by exchanging immediately would have been better. Brokers generally also charge less commission than retail banks on the exchange. I think Wise are also very good on rates for direct transfers.

 

[NoRegretsCoyote]

I've used a forex broker in the past, you can set a price to buy euro at any time between now and when you move back if it drops to that, if the currency is trading in a range with volatility around that and is at the higher end of that it means you take advantage of the time you have left to wait for it to hit a lower price in the range.

This is pointless. You cannot predict currency movements. Simply pick the means of conversion with the lowest commission.

A large transfer like this may be subject to AML checks so just be ready to prove the source of funds.

Good luck with the move!

 

[Horatio]

have 5 years left on a 25 year tracker (approx 1k/month inc insurance); no other debts so question 1 is - should we pay it off.?

question 2 is- is there a smarter way to bring this money back than simply transferring to our Irish bank account?

all thoughts appreciated

If you were to pay it off, it'd be 60K max, right? You'd have 70k left in hand to invest or go to the casino with the peace of mind that the house is in the bag. It sounds like a nice notion to me.

Try to have targets in mind for your excess cash before you land in Ireland. You'll have done your time overseas, you'll have returned with enough to own your house outright & a wad burning a hole in your pocket which can fritter away over a couple of years if you don't have a plan. Figure it out before you land back home. Moving & setting up in a new country can be expensive & if you've got cash it is very easy to throw money at problems that could have been prevented or mitigated by good planning.

You've presumaly worked & saved hard during your time in Australia - don't drop the ball now.

Do take note of high tax rates on capital gains in Ireland if you do start investing as an Irish Tax Resident. I find it to be quite high at between 33% - 50%.

Use Wise to convert your money - works well & is very good value.

Best of luck with your move back home.

 

[RonnieShinbal88]

This is pointless. You cannot predict currency movements.

So how do you decide when to do the transfer?
If you do it now you are predicting that it will move against you in the future.
If you do it in the future you are predicting that they will move in your favor in the future.

Like it or not either way you are making a prediction.

Edit: even within a single day the currency can move in a significant range and as a percentage of 130k it could be significant, it's rarely advisable to just submit a market order in any market.

 

[NoRegretsCoyote]

So how do you decide when to do the transfer?

I'm buying USD via Revolut at the moment. I just transfer EUR 1,000 once a month to avoid fees. Market fluctuations are beyond my control and I have zero insight into them. As a consumer all I can do is minimse the transaction fee.

Edit: even within a single day the currency can move in a significant range and as a percentage of 130k it could be significant, it's rarely advisable to just submit a market order in any market.

So what? You can never get a different rate than the one on offer at the point you choose to make the currency conversion. You can split it into a series of smaller transactions but the expected value is the same.

If you or I had useful insights into short-term currency fluctuations we'd be in a hedge fund in New York or London and not on an Irish consumer finance forum.

 

[Gervan]

we have 5 years left on a 25 year tracker (approx 1k/month inc insurance); no other debts so question 1 is - should we pay it off.?

If you will have income in Ireland so that the house payment is affordable, and the interest you are paying is very low, you don't need to pay the loan off. Does it make a difference if the house is rented out, or if you are going to be living there?
Are you likely to sell the house any time soon?

If you don't need to bring back the whole amount, you could leave it in Australia at a higher deposit rate than you would get here, and transfer smaller amounts as needed.

 

[RonnieShinbal88]

You can never get a different rate than the one on offer at the point you choose to make the currency conversion

But the OP can choose when they do the transfer between now and July or any point in the future really, they are not forced at any point to make a conversion.

The risk of a market order is that you get a rate that is high even relative to the average rate on the day, here's a Bloomberg article on dangers of market orders:

Bloomberg - Are you a robot?

1k and 130k are very different, a 1% swing on 130k is 1.3k it's worth submitting a limit order to save 1.3k in my view, for smaller transfers it isn't worth it.

 

[NoRegretsCoyote]

But the OP can choose when they do the transfer between now and July or any point in the future really, they are not forced at any point to make a conversion.

This presupposes that an individual consumer has any actionable insight into future market movements. They don't, and further discussion on this topic is pointless.

 

[RonnieShinbal88]

This presupposes that an individual consumer has any actionable insight into future market movements. They don't, and further discussion on this topic is pointless.

Lets assume someone has no actionable insight, zero information.

In that case exchanging now or exchanging in July are equivalent from their perspective.

In that case exchanging now involves taking a position on exchange rates, i.e. that it is a better rate now than in the future.

Being willing to wait until July and setting a limit order at a lower price in the interim makes no assumption on the exchange rate at all, it just uses the optionality the OP has on deciding when to exchange in their favor. The lower limit might be hit due to normal volatility with the currency going nowhere but trading in a range as they do, if it isn't hit you just exchange in July as you would have anyway.

If you have no view on the exchange rate that appears to be a better strategy because you have a bonus chance of getting a low price due to normal volatility without taking any view on the direction of the currency.

 

[Laphroaig]

Thanks very much for all the feedback and good wishes

I can’t see a like or thanks button, but I do appreciate it
I’ve used online currency exchanges for smaller amounts, always without issue. I’ll certainly look at wise
We will move back to our own house' with no short term plans to sell

 

[ArthurMcB]

Lets assume someone has no actionable insight, zero information.

In that case exchanging now or exchanging in July are equivalent from their perspective.

In that case exchanging now involves taking a position on exchange rates, i.e. that it is a better rate now than in the future.

Being willing to wait until July and setting a limit order at a lower price in the interim makes no assumption on the exchange rate at all, it just uses the optionality the OP has on deciding when to exchange in their favor. The lower limit might be hit due to normal volatility with the currency going nowhere but trading in a range as they do, if it isn't hit you just exchange in July as you would have anyway.

If you have no view on the exchange rate that appears to be a better strategy because you have a bonus chance of getting a low price due to normal volatility without taking any view on the direction of the currency.

Good point, well made.