As professional investment managers, we don’t offer specific advice on exchange rates and currencies, but have outlined below how a bank or currency broker can assist you.

As a UK expat living living and working in Portugal, numerous situations will likely require the need to transfer money from your home account in Pounds to your local account in Euros.

It may be a small sum to pay a bill. It could be a regular transfer, such as a monthly pension. Or, you may need to send a large amount to purchase a property or car.

In any case, it is important to be mindful of exchange rates between the currencies.

In the past, rates were fairly simple to predict. In recent years, however, economic volatility and political events have created fluctuations in the value of the Pound and Euro. Not paying attention could cost you more than it should.

A qualified and authorised independent currency exchange provider can assist you with this. Currency brokers are specialists in this field. They watch the markets closely, offer better rates than banks and can provide personal money transfer strategies based on your own unique circumstances. As well, they have a number of tools to help reduce the risks of adverse movements in currency exchange rates, thereby making your money go that much further.

Of course, safety and security of your funds are of paramount importance. In using a currency broker who is authorised and regulated by the UK Financial Conduct Authority, you can rest assured that any funds you send via them are protected under UK law and as safe as they would be in your own bank account.

So how does it work?

A Currency Broker buys and sells currency at the same rates as the bank: at the wholesale price, which is not available to the public. They do not have the large overheads or other priorities like the banks. Currency is the only thing they do and because they work in bulk, they do not need to inflate the cost of the currency to you as the customer.

Of course being a business, they need to make money too, but this is done by adding a small mark-up to the currency exchange – much the same as any shop selling stock they have bought – which translates to a small margin on the exchange rate offered to you as the customer. Out of this small margin taken, they also pay the bank charges associated with sending your required currency to you, making the service they offer free of charge.

Case study

John receives a monthly pension of £2,000 sterling, and wants to transfer it from his UK bank to his Portugal account.

Typical Bank Transfer
The current exchange rate the bank will offer is €1.097 (based on rates in Jan 2017). Add on a transfer fee of up to £25, and the amount he receives in euros is €2,167.

Utilising a Currency Broker
Making the same transaction on the same day using an independent currency broker, John receives a far favourable rate, such as €1.15 to the Pound. With no fees charges, the amount John receives is €2,300. There is a difference of €133.

Given this is a monthly occurrence, the send scenario saves John €1,596 over one year.

Imagine the above scenario when transferring Pounds to pay for a €500,000 property. Transferring through a bank would cost £455,788. Using a currency broker might be £434,782. This is a saving of £21,000.