Home » Currency 101 » Should you invest your savings into an overseas property?

With UK inflation at 9.4% and set to rise throughout the year, the purchasing power of savings is set to decrease. So, could your savings be safer when invested in an overseas property?

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Inflation impacting savings

Recent analysis from savings and investment business, Standard Life, reveals the impact that high inflation could have on savings.

It found that £10,000 in savings earning 1.5% in interest would drop in buying power to just £8,910 after two years of 7% inflation.

If inflation rose to 10% for two years, the first year of savings would reduce to £9,135 whilst the second year would reduce to just £8,345.

Are your savings better off in property?

Putting your savings into a property is not risk-free, but depending on where and what you buy, it can be an excellent investment.

As well as the fact that property prices are continuing to rise, investing in a property can also provide an income stream if you decide to rent it out. Property is also a tangible investment – it’s easy to see where your money is going and to keep track of how your investment is faring.

Do keep in mind that there are extra and ongoing fees to account for during the buying process and after you’ve bought your overseas property. Property is also typically a longer-term investment and can be time-consuming.

However, if you buy in an area that is popular and has rising property and rental prices, your savings could be well-spent. You’ll also have a brilliant property abroad to enjoy, if you wish!

Protecting your overseas property purchase

When investing your hard-earned savings into a property abroad, you’ll want to ensure that your money is safe from currency market fluctuations.

Currencies fluctuate all the time. It’s impossible to know exactly where they will move next and by how much, and your property buying budget could be impacted by this.

The best way to avoid this situation is to lock in an exchange rate using a forward contract. You can lock in the rate for up to 12 months, so you’ll know exactly how much you’ll pay when it comes to buying your property.

When you open an account with us, you are assigned a dedicated trader that you can speak to and offer advice if your plans change. They’ll be able to listen to your exact requirements and find the best solution for you.

Find out how we can help you

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